Archive for February 12th, 2009

The economic stimulus package that Congress agreed to with the White House yesterday, was originally thought to have been expected to be scheduled for a vote in the House today. The vote now appears to be postponed until tomorrow, while legislative language is still being added and deleted to the bill.

The package which had been discussed and debated for several weeks in both houses of Congress and across the universe of economic punditry, prior to President Obama becoming becoming President, has had more rewrites than an Oliver Stone film. Affectionately referred to as the American Recovery and Reinvestment Plan, the package which promises to create or at least save 3, 3.5 or even 4 million jobs pending the spin of the day.

Though we have not seen the latest version of the stimulus plan, we have watched the plan assume Everest proportions of spending as it hurdled toward a trillion dollar package. We are now asked to believe that sanity has returned to the Congress as the economic stimulus bill will be less than $800 Billion.

The premise behind any stimulus package should be to quickly inject extraordinary stimulus into the economy, thereby increasing consumption, decreasing supply and creating demand for additional goods and services to be produced or provided. In turn, the increased demand moves through the economy in a multiplier effect that at worst will result in eliminating further job cuts in the economy and should create new employment.

The challenge, with the soon to be revealed and approved package, is that it will fall short on real stimulus initiatives by limiting tax cuts and credits and not allowing additional incentives for business investment. The stimulus package is representative of a bill that was prepared by a Democrat party that is indebted to a variety of special interest groups and is out of touch with or fails to understand the fundamental aspects of our economy. We have a Democratic Congress, that is more concerned about levelling the playing field relative to executive compensation than it is concerned about creating the proper fiscal environment for those executives to expand their businesses and create additonal employment.

A stimulus package should encourage private investment to create sustainable employment via the appropriate tax cuts and investment credits. It should allow for substantive tax credits for home purchases and provide merchandise vouchers to all taxpayers with a finite redemption period. these initiatives would  provide substantially greater stimulus than the package that has been rumored to have been agreed upon which will only result in big government becoming bigger and more intrusive in our economic lives.

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