Rand Pauls Plan For Detroit

[Hoonose]

Originally Posted by hoffdano

GM and Chrysler would still be here without the bailout. It might have been a big uglier going through traditional bankruptcy. But it would have sent a powerful signal to every large company - don't screw up or you suffer. That's how it should be. The feds should have done this with the first Chrysler bailout.

Timing is/was of the essence. No one would propose such an outrageous GM resolution today or during more normal times. But you don't toss 1% of your GDP down the toilet when your GDP is already taking the tanking of a century.

[EugeneOnegin]

Originally Posted by Frank DeForrest

Rand Paul wants big tax cuts for Detroit, other distressed areas

Devotees of the failed Keynesian economic policies that wrought Detroits destruction will hate this plan.
Solyndra, Fisker, Ecotality etc. come to mind.
Nobody allocates resources better than when ownership risks its own capital.

Why would they hate a plan that's completely consistent with Keynesian economic theory? In Keynesian economics tax cuts and/or deficit spending are used to increase aggregate demand during recessions.

An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed by the British economist John Maynard Keynes during the 1930s in an attempt to understand the Great Depression. Keynes advocated increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the Depression. Subsequently, the term “Keynesian economics” was used to refer to the concept that optimal economic performance could be achieved – and economic slumps prevented – by influencing aggregate demand through activist stabilization and economic intervention policies by the government. Keynesian economics is considered to be a “demand-side” theory that focuses on changes in the economy over the short run.

http://www.investopedia.com/terms/k/...neconomics.asp