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Ok, so I'm trying to figure out this whole economy crisis and how it can be fixed. I'm listening to both sides of the aisle, republicans and democrats, and they both make sense. Republicans claim that if the government provide tax cuts to corporations, this corporations would proceed to hire more people, therefore unemployment rate would decline. Democrats on the other side, believe in creating new jobs by expanding government infrastructure programs, and aliviate the economy by providing tax cuts to the middle class so they can go and spend money. Now, I' not too clear why Intel and all these other big businesses are layng off people. Is it because loan/credit banks are going under and businesses can't get loans to finance their operations? Or is it have to do with the stock market and stock trade? Now, one point against the republicans, Bush generated tax cuts for big buinesses, so, how did we get in this situation? One point against democrats, I think Obama'a stimulus package have a lot of stipulations that seem like wasteful and non sense spending. The more and more I read about this, the only conclusion I can come up with is that the government, if they really have to, should put the money on the loan/credit bank hands, but with some degree of regulation over that money. Extend the tax cuts on capital gains and make govenment jobs more available to the people by doing job fairs (There are tons and tons of jobs in the federal government). What are your solutions and why you think they can work?
Actually the Republican plan was to cut taxes for the lowest income brackets and small business to encourage growth and more spending.
We need more spending like we need a hole in the head.
We need to focus on savings and production for export purposes only. Americans don't need any more cars. If you want a car, pay cash for it. If you want a house, put down 20% minimum.
No. And for the record, that was probably one of my least favorite aspect of Reagan. Nobody is perfect though (but he sure came close).
Besides, trickle down economics is actually called neo-Liberalism, something I found rather unusual coming from someone like Reagan. The Conservative approach is called 'trickle up', which means those corporations and businesses are rewarded for doing well by us consumers; Not paid for during a shat job by the government.
It's trickle down both ways. One is in the form of tax cuts the other is in the form of debt. Both go to businesses and are expected to trickle down. One will be controlled by government the other controlled by the market.
It's trickle down both ways. One is in the form of tax cuts the other is in the form of debt. Both go to businesses and are expected to trickle down. One will be controlled by government the other controlled by the market.
In that case we are screwed because neither is trust worthy!
The republican versus democrat approach couldn't be more different. The former is based on a belief system, that corporations somehow care about hiring people. It is like giving a billionaire a $100 bill and expect him/her to spend it like it was needed.
The problem with this idea is, for government, tax cuts will do nothing but create deficit. So, it is akin to spending, except that they never had an income. Corporations won't hire, because nobody's buying the goods and services. When there is no demand for goods and services, why would they hire? The result is a negative return on investment. This was also evident in policies that have been in place for last several years. The tax cuts program run by Bush was rendered ineffective because only 10-20% of the spending made it back.
The democrat idea is one that has promise of being effective, and it has been in the past. It is how we got out of depression, and out of recession in 1960-61. Personally, I'm not aware of tax cuts getting us out of trouble, much less the size of trouble we're dealing with today. An economic stimulus requires that it has a ripple effect, which multiplies investment. For each dollar the government spends, it must get back more. A study at Moody's, done last year, reveals a fact that tax cuts tend to be at the bottom (and can have negative returns) whereas efforts to create job, extending UI etc multiply the investment. (Link)
And it is easy to see why. If we put people to work, they earn, and pay taxes. They also go out and buy goods and services, and now businesses have a reason to not only exist but grow. As they grow, they hire. As they hire, we have more jobs created, more money flowing.
Instead of that billionaire, now imagine the same $100 bill given to someone making $20K/year. Chances are, the first thing that will happen is... the money will be spent on something. That helps business, instead of getting lost in an ocean.
Things can't get any simpler than that. But then, I'm afraid, republicans would rather maintain status quo. Any improvement in economy on proposal by the democrat would be political suicide for them.
Last edited by EinsteinsGhost; 01-28-2009 at 12:29 AM..
Actually the Republican plan was to cut taxes for the lowest income brackets and small business to encourage growth and more spending.
That was part of it but most of their package was the biggest cuts (both percentage wise and in dollar terms) cutting the rates on just the top two income tax brackets. In short it was nothing but more of the same failed trickle down nonsense with a tiny bone thrown to small business.
The telling part is that Republicans grudgingly admit no one would get this tax breaks for another 15 months and that it likely wouldn't directly result in much new happening so this is just political nonsense. It's also telling that Republicans didn't even propose a plan until after the press pillared them for declaring they'd oppose any Obama plan but failed to produce any alternative plan. That's when Republicans hastily scraped together this rehash of old failed trickle down policies.
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