Obama's Economic Stimulus Package: Why The Republicans Lost.
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http://ezinearticles.com/?Its-Time-For-Change---The-Barack-Obama-Food-of-the-Month&id=2015949/
Obama understands Economics 101; the Republicans do not. That is why the Republicans lost the presidency and control of Congress. It was, and is, a definite time for change. This quote from a statement by Sen. Lamar Alexander, a Republican, about the Obama economic stimulus plan, that "This is a spending bill, not a stimulus bill," indicates that they have lost touch with economic reality. They, the Republicans, don't seem to understand that spending IS economic stimulus, or else they are just being politicians. The U.S. national production of goods and services, referred to as the GDP (Gross Domestic Product), is determined by expenditure (spending).
Consumer spending accounts for about 70% of the GDP, while government spending for goods and services is about 20% and business investment spending is 10%. The spending by these three broad national sectors is what determines the GDP and its rate of growth.
When the U.S. economy falls into a recession it is because national spending is slowing or declining, and it is the consumer sector that accounts for the vast majority of the spending.
Obama's stimulus package provides 2 avenues of stimulus to the economy. First, an increase in Federal government spending to provide jobs, income and more consumer spending. Second, tax cuts for lower-income wage earners who will spend a high percentage of any increase in income. Further, Obama's package will provide more funds for unemployment benefits and food stamps, also providing an increase in consumer spending.
Soooo, we need to tell our Republican politicians to review Economics 101. Their general approach to economic stimulus is spending less and cutting taxes for the rich. Their reasoning is that the rich will take additional income from tax cuts and invest it so that there will be more spending by corporations on capital goods, that is on new equipment that will provide jobs. Wrong, the rich will take their extra income and buy existing stocks and bonds in the financial markets so they can make more money. And this provides no new spending or stimulus to the economy. The rich get richer and the poor get poorer, that is the Republican philosopy. It is time for change, and us average people have figured it out. We don't need the Republicans controlling government anymore. We can't afford them. They are why our economy is in such a mess.
Check out my other articles on how we got into this financial & economic mess. Two key words: "banks", "sub prime, option pay mortgages".
http://www.socyberty.com/Economics/Anatomy-of-the-2009-Economic-Crisis-Laymans-Primer-1.551801/
http://www.socyberty.com/Economics/Anatomy-of-the-2009-Economic-Crisis-Laymans-Primer-2.551837/
http://www.socyberty.com/Economics/Anatomy-of-the-2009-Economic-Crisis-Laymans-Primer-3.551859/
Economic Tsunami. Is It Approaching, Or Is It Already Here?
The news is not good and is getting worse. What's going here. It's all about spending. While we may not, as a consumer sector, have spent carefully enough during the last 5 or so years, spending is what will bring us out of the depressed state of affairs we are presently in. Too many of us used credit cards to finance excessive spending, and bought mortgages that were too high relative to our income. Much of the excessive credit supported spending was induced by the banking system and mortgage companies who flaunted easy credit card acquisition, and sub prime, option pay mortgages. They are the root cause of our present crisis, first financial and now economic. My other articles, listed above explore this in detail. So we need to evaluate here, what to do about getting out of our economic mess.
Believe it or not, the way to get our economy back on track, is spending. Remember that 70% of the US GDP(national production of goods and services) is purchased by the consumer sector, and 20% by the government sector. That is spending.
Right now consumers are not spending, for two reasons. A lot of us don't have income to spend (the growing ranks of the unemployed), and the fear of what is happening to the economy and financial markets, is bringing a knee-jerk reaction by the wealthier class, to save more of their income. Now while saving (being thrifty) is a good thing, it is also "not spending". Ooopts, right now is bad timing for being thrifty. Soooo, consumer spending is slowing at an alarming rate, which pulls down the GDP, businesses produce less and lay off more workers, with less consumer spending.
Remember, the government sector spending accounts for 20% of the GDP. Right now we need more government spending, a lot more given the nature of the present economic crisis.
Obama's stimulus package is and should be a spending program. And we need not be deterred from this by our conservative and Republican friends. After all their prior actions led to the quasi-nationalization of many of our largest financial institutions. The problem the present powers in Washington face now, is that the stimulus is not enough. To stimulate the economy, that is consumer spending, will take more spending than is presently proposed.
Government spending takes two forms. Government purchases of goods and services that provide sales and income to businesses who will then employ more people. Employment, income and consumer spending increases. A much needed stimulus.
The other type of government spending takes the form of direct income payments to needy, lower income families. But that's welfare spending. Yes and we have to have it. And, fortunately, they will spend most, if not all of any income they receive from the government. We need their spending. It also will increase business sales, income, and employment.
So we need to encourage the current administration and congress to get their spending plans going fast. Fortunately we have the right people in control in Washington to more quickly get this done.
Believe it or not, the way to get our economy back on track, is spending. Remember that 70% of the US GDP(national production of goods and services) is purchased by the consumer sector, and 20% by the government sector. That is spending.
Right now consumers are not spending, for two reasons. A lot of us don't have income to spend (the growing ranks of the unemployed), and the fear of what is happening to the economy and financial markets, is bringing a knee-jerk reaction by the wealthier class, to save more of their income. Now while saving (being thrifty) is a good thing, it is also "not spending". Ooopts, right now is bad timing for being thrifty. Soooo, consumer spending is slowing at an alarming rate, which pulls down the GDP, businesses produce less and lay off more workers, with less consumer spending.
Remember, the government sector spending accounts for 20% of the GDP. Right now we need more government spending, a lot more given the nature of the present economic crisis.
Obama's stimulus package is and should be a spending program. And we need not be deterred from this by our conservative and Republican friends. After all their prior actions led to the quasi-nationalization of many of our largest financial institutions. The problem the present powers in Washington face now, is that the stimulus is not enough. To stimulate the economy, that is consumer spending, will take more spending than is presently proposed.
Government spending takes two forms. Government purchases of goods and services that provide sales and income to businesses who will then employ more people. Employment, income and consumer spending increases. A much needed stimulus.
The other type of government spending takes the form of direct income payments to needy, lower income families. But that's welfare spending. Yes and we have to have it. And, fortunately, they will spend most, if not all of any income they receive from the government. We need their spending. It also will increase business sales, income, and employment.
So we need to encourage the current administration and congress to get their spending plans going fast. Fortunately we have the right people in control in Washington to more quickly get this done.
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