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Stimulus & bailouts or tax cuts?
Original post made
by jimf01, another community,
on Mar 31, 2010
It's not right vs left, it is right vs wrong. $2.5 trillion spent on stimulus and bailouts. The federal government collected $2.2 trillion in personal, payroll and corporate income taxes in 2007.
Astonishing to realize that the government could have suspended all taxation on individuals, payrolls, and corporations for 1 year and it would have cost less than the bailouts and stimulus.
Here we are, just over 6 months out from the November midterm elections. 9.7% unemployment nationally, CA at 12.5%, I wonder where those rates would be if we had cut taxes and let the free market stimulate the economy and let people take their full paychecks home so they had money to pay mortgage payments instead of applying for government programs?
Posted by Rae
a resident of Mohr Park
on Apr 1, 2010 at 8:46 am
Personally, I don't think we'd be in any better shape than we are now if we'd just let the "free market" continue its free fall, waiting for it to bottom out and begin recovery.
The free market in 4Q08 wasn't in shape to stimulate anything in the near future, let alone the economy. Small businesses were folding, big businesses were not expanding, and in fact were beginning to layoff, unemployment was on the rise, the housing bubble had already begun to implode, and we were headed into a recession that everyone was trying to ignore. The Bush tax cuts did nothing to stimulate the economy because most Americans needed any "extra" funds to pay bills, not into purchases. Those folks already caught up in the economic meltdown didn't have a paycheck TO take home; the middle class was disappearing and the poverty level rising.
The free market is driven by greed. I mean really, when it comes down to it, the basic tenet of capitalism is for private industry to make and retain as much profit as it can. It doesn't matter what for-profit industry you pick, they're all the same.
Take for example oil. While big oil was quadrupling its profit, did they lower the price of gas at the pumps to stimulate travel and all of the associated businesses that would have benefited from, say, increased business travel or family vacations? How about wall street? Even after the TARP loans, did they pump that money back into the economy in the form of business loans or mortgage refis? Or did they keep the money to better their bottom line and pay big bonuses to those same executives that started this mess? Health insurance providers? Are they going to lower monthly premiums when they pick up millions of new clients? I think not.
What do you think that the free market without intervention, made up of for-profit businesses, would have done differently to stimulate the economy? I venture to say nothing. While the free market is free-falling into recession, or maybe, even into depression, there's no way a CEO is going to not look at his company's bottom line . . . and in a recession/depression that means not expanding, trimming the overhead, and no start-ups . . . because heaven forbid that CEO not make his bonus. Meanwhile, the middle class would continue to disappear, unemployment would rise along with the poverty level, the housing bubble would completely flatten, and no one would be buying anything new . . . except for maybe those fat cats still getting their big bonuses.
As much as I hate sending in my estimated taxes every quarter, I think the consequences of suspending all taxation for a year would have been disastrous, especially for those Americans who don't draw a paycheck like children, the elderly, the rising number of unemployed and those living below the poverty level. You think we've seen government services falter in the current situation? With no tax money revenue every government service would be affected even more than they currently are and we'd be in no better shape than we are now, and in fact, as bad as it is, I think it would be worse. A free market free-falling into recession/depression would take much longer than a year to hit bottom and begin to recover. An individual's recovery, unless you're in the top 2% of the wealthiest, takes years beyond the free market's recovery if one ever recovers.
I wasn't particularly in favor of the Bush TARP, let alone the second one under Obama. I especially did not like the fact that both TARPs, and most especially the loans to wall street, were made without any kind of plan, (i.e. tracking, measurable goal, and defined consequences for failure) something you better believe all those free market businesses have in place to protect their profit. Congress did a better job with the automakers, but obviously, wall street hasn't learned a thing since they continue to pay big bonuses to the same executives that got us into this fix before paying back the American people.
Wall street's behavior is definitely a clue as to what happens when free market for-profit businesses get a windfall. Lots of bottom line and internal bonus stimulation, but not so much in the economy. So to answer your question jimf01, I don't think we'd be in any better shape.