Bush calls for $145 billion stimulus package (credit, debt, borrow, buy)

[bigdummy]

I'm not too well steeped in economic theory, so perhaps some of you can help explain what the benefit of this will be?

Bush calls for $145 billion stimulus package - Stocks & economy - MSNBC.com

Lets say we all get a nice check in the mail from Uncle Sam, for a few hundred bucks. Most people will go out and spend it immediately, while others will put it in the bank. Yes, this would provide a short term boost to the economy, but what will it do in the long term, other than increase our national debt level another $145 billion (plus interest paid to China)?

How is this going to do jack squat to help our house-of-cards economy. Is the point just to push the impending disaster off a few more months, so the next administration gets left holding the bag....or is this actually somehow going to help?

[bale002]

You pretty much summed it up.

The only possible positive I glean from this are proposals for tax incentives for business investment.

However, what this country really needs is a comprehensive policy to restore low/medium-technology manufacturing in a framework that makes sense for the current energy environment.

Stupid or corrupt, or both, the ruling classes have led the country in the exact opposite direction over the past several years, and the way forward does not look too bright.

[Huckleberry3911948]

debt = prosperity?

[70Ford]

It's the classic "borrow your way out of debt" scenario. Wait. That makes no sense.

[sean98125]

The whole idea is to spur spending. Roosevelt boosted the economy by using government dollars (and debt) to creat jobs for public works. Reagan boosted the economy by using government debt to create a massive amount of jobs in the defense industries during the massive military build up in the 80s. And Bush is trying to boost the economy by using government debt to put money in consumer's pockets so they go out and spend.

Me? If we get the money it's going in a Roth.

[Shazam72]

Originally Posted by sean98125

The whole idea is to spur spending. Roosevelt boosted the economy by using government dollars (and debt) to creat jobs for public works. Reagan boosted the economy by using government debt to create a massive amount of jobs in the defense industries during the massive military build up in the 80s. And Bush is trying to boost the economy by using government debt to put money in consumer's pockets so they go out and spend.

Me? If we get the money it's going in a Roth.

Roosevelt's programs were a dismal failure and it took major sacrifice and rationing in the 40's while fighting a war to recover from the depression.

The government debt in the 80's was probably a more necessary evil due to an increasing soviet empire. Then again, if we knew they were doomed to fall in 1991, we probably should've curtailed our outrageous defense deficit spending.

This will make the problem even worse. But, it preserves GWB's legacy and is a valid attempt to pass the buck to the '08 "winner". But, the recession will be that much deeper when the real stuff hits the fan. We haven't seen anything yet.

[sean98125]

It's basic macroeconomics - the government is the only entity that can pump money into an economy to stimulate spending, which in turn stimulates investment and employment. Roosevelt and Reagan and Bush took us into debt to stimulate the economy.

[baystater]

Originally Posted by 70Ford

It's the classic "borrow your way out of debt" scenario. Wait. That makes no sense.

Smith and Merritt Institute's Abundance: Spending Your Way to Wealth Financial Program Nominated for Best Product of the Year

Yep. Maddening isn't it?

[Bob The Builder]

Originally Posted by sean98125

It's basic macroeconomics - the government is the only entity that can pump money into an economy to stimulate spending, which in turn stimulates investment and employment. Roosevelt and Reagan and Bush took us into debt to stimulate the economy.

And there is the multiplier effect in that for every dollar spent, it gets re-spent 5 times. Thus, the 800 bucks creates 4,000 per person. That was what I remember from Macro 101. It is not just made up stuff.

You spend 800 to buy an iPhone. The vendor pays employees, rent utilities, taxes. In turn, Apple gets revenue etc and so on.

[Lincolnian]

Listening to Bernanke discuss this with Congress it made me cringe. I believe he said 70% of the economy was dependent on the consumers spending habits. The consumer is tapped out on credit so the best way to get things going for the bottom 50% is to give them money not to pay down their debt but to go right out and spend!

This is like giving an alcoholic trying to quit a case of beer and fifth of vodka!