Tag Archives: spending

Needed Stimulus

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…or not. Mostly—nearly entirely—not.

real per capita disposable income in [Wuhan Virus situation-ridden] 2020 grew 5.5%

The Wall Street Journal noted that this is all before the December-passed $900 billion stimulus “took effect.” It’s also after that stimulus—which still hasn’t had much effect since much of that money hasn’t even been sent into the economy by Government.

What happened to the $2.6 trillion Government had already lobbed into the economy?

Preliminary data for 2020 show total savings for 2020 was $1.6 trillion higher than in 2019.  And that was before the $900 billion stimulus.

It’s also after those $900 billion….

Some folks are squawking that the money wasn’t really all that stimulative—it was saved rather than spent, which was the purpose of the stimulus. Some folks misunderstand. Savings do get spent—in the short term, if not immediately, on short-term needs and wants. Savings that aren’t quickly spent become deposits in financial institutions, where they join the pool of what economists call loanable funds—and get lent to borrowers, who then spend. Loanable funds might not be promptly spent, but they most assuredly do get spent.

Given this and the fact that the December stimulus remains uncommitted to the economy, why the urgency, and the need, for an additional $1.9 trillion in stimulus? According to the CBO,

The office said gross domestic product would return to pre-pandemic levels by mid-2021 and will continue growing until 2026 as a vaccine reduces the number of new infections and the need for social distancing.

And

Labor market conditions continue to improve. As the economy expands, many people rejoin the civilian labor force who had left it during the pandemic, restoring it to its pre-pandemic size in 2022[.]
The unemployment rate gradually declines throughout the period, and the number of people employed returns to its pre-pandemic level in 2024[.]

All that without the $1.9 trillion mess currently being rammed through Congress by Progressive-Democrats.

Why, then, do we need the additional $1.9 trillion national debt stimulus? We don’t. Progressive-Democrats do, or rather they want the money, so they can continue to virtue-signal. Those new trillions that Progressive-Democrats are insisting they’re going to jam down our throats, and rip from our children’s and grandchildren’s wallets (not that I mix metaphors or anything), in a strictly partisan fashion will be, in the longer run, nothing but destructive of all things economic.

There is urgency: to stop the train wreck that is this new $1.9 trillion package of froo-froo.

Taxing and Spending

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Progressive-Democrats are shocked—shocked—that folks want to hang onto their money rather than send in to Government. Thus, when State profligate spending and confiscatory tax rates were exposed by the Federal income tax reform that capped SALT deductions at $10,000, and folks on whom the cap had material effect decided to relocate their incomes, their money, and their lives to other States, Progressive-Democrats squalled most loudly.

The lawmakers say the cap, created in the 2017 tax law, punishes their constituents unfairly and pushes residents to move to low-tax states such as Florida. They are pitching the break as crucial to their states’ economic recovery.

Here’s New Jersey State Congressman Josh Gottheimer (D), for instance:

Folks have been moving away in droves since our state and local tax deduction was gutted. This is key to the health of our economy, key to keeping our state strong.

Never mind that those State governments could readjust their spending and taxing priorities.

No, it’s how dare those Government subjects leave and go where they can better hang onto the money that’s rightfully theirs. It’s that money doesn’t belong to the folks who earned it; that money belongs to those States, and the Progressive-Democrats of those State governments have only to carve out a pittance and toss it back to their subjects.

The arrogance of Progressive-Democrats and their contempt for us ordinary Americans knows no bounds.

Stimulus Checks

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Brittany De Lea wrote in FOXBusiness that $1,400 in checks for the next round of “stimulus” spending might not actually be necessary for all of us.

I agree with the point of the article—not all of us truly need the $1,400. However, the unspent money wouldn’t be wasted or lost to the private economy. The money must still go somewhere: ultimately, it will end up in a bank as savings or in a bank as debt payments.

Money put in a bank, for any reason, becomes loanable funds for the bank, and so makes its way back into the private economy. The only thing here is the time lag: the money won’t be a prompt economic boost.

That boost wouldn’t be necessary anyway, if government—at all levels—got out of the way and let businesses reopen and let us citizens go back to work and go back to spending/saving/paying down debt with our paychecks.

An Empirical Test?

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Ex-Progressive-Democratic Party Presidential candidate and ex-entrepreneur Andrew Yang now is running for mayor of New York City, and he wants to implement there his Universal Basic Income scheme.

We can eradicate extreme poverty in New York City. If you put just a little money in their hands it can actually be what keeps them in their home and, again, avoids them hitting city services that are incredibly expensive.

Or not.

Keep in mind that demand is not the number of people who want a product, it’s the amount of money being spent for the product.

The problem with giving unearned money to everyone—using the $1,000/mo, or $12,000/yr, from his Presidential campaign for concreteness—is that you increase demand (this time artificially) by those $12k/yr. Since production won’t increase much—the money representing demand won’t be earned from production, it’ll be printed, or it’ll come from taxes, or it’ll come from borrowing (future taxes)—the result will be pure inflation.

That inflation will rise to fully absorb those $12k, leaving buying power where it was before the UBI started getting handed out. The $2 candy bar will cost $24, and the UBI will be completely absorbed. The recipients will be no better off than before.

In fact, everyone will be worse off. Inflation will leave everyone’s buying power fundamentally unchanged, but money taken out of the economy by those taxes or that debt will lead to an overall reduction in economic activity. Taxes or debt (either one) will reduce businesses’ ability to innovate—which is jobs—or to give bonuses/pay raises—which is jobs—or to improve existing plant—which is jobs—or to hire more employees—which is jobs—since absent innovation, there’ll be reduced ability to expand.

Or, Yang is onto something.

If so, what better place to run the test than in the aftermath of Bill de Blasio’s New York City?

“We Cannot Erase the Last Four Years”

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That’s Majority Leader Steny Hoyer’s (D, MD) lament as he closed the Progressive-Democrats’ case on the floor of the House during Wednesday’s impeachment “debate.”

We cannot erase the last four years.

Though the Progressive-Democrats tried every day of those four years. They and their Obama Executive Branch bureaucrats spied on the Trump campaign and trumped up charges against General Michael Flynn, false charges it took all this time to clear.

They and their Democratic National Committee commissioned a salacious and false dossier in an effort to besmirch a President and to serve as the foundation of an investigation that culminated in finding that President Donald Trump had done nothing wrong.

They and their FBI agent-assistants lied to courts in order to get subpoenas and warrants to “investigate” Trump’s team.

They ran a sham impeachment.

They obstructed financial aid to Americans fiscally harmed by government shutdowns ostensibly due to the Wuhan Virus situation—done as Speaker Nancy Pelosi (D, CA) admitted after the election was done solely for the purpose of interfering with Trump’s reelection.

Here’s what Hoyer and his Progressive-Democrats want to erase.

A major tax rate reduction for American businesses and a major income tax rate reduction for Americans. This kept his campaign promise.

Unemployment endured by blacks, Hispanics, women reduced to historic lows. This kept his campaign promise.

Income inequality reduced to multi-decade lows—by previously unemployed minority citizens actually getting jobs while the rich got no better off. This kept his campaign promise.

Historic support for Historically Black Colleges and Universities by increasing Federal funding support for those schools and making that support multi-year. This kept his campaign promise.

An improved trade deal with Mexico and Canada to replace NAFTA. This kept his campaign promise.

Working toward improving and strengthening NATO by getting the European NATO nations to increase their financial and equipment commitments to NATO—commitments that those nations had voluntarily committed years ago but welched on subsequently. This kept his campaign promise.

Bringing American soldiers home from Iraq and Afghanistan—for good or ill, but this kept his campaign promise.

Overtly and concretely facing the People’s Republic of China over that nation’s trade, technology, intellectual property depredations. This kept his campaign promise.

Overtly and concretely facing the People’s Republic of China over that nation’s seizure of the South China Sea and the islands and resources therein, and its attempts to seize the East China Sea. This kept his campaign promise.

Strengthened our ties with the Republic of China. This kept his campaign promise.

Strengthened our ties with Japan. This kept his campaign promise.

Improved our defense arrangement with the Republic of Korea. This kept his campaign promise.

Attempted serious diplomacy with northern Korea vis-à-vis that nation’s nuclear weapons program. This kept his campaign promise.

Withdrawing from the Paris Climate Accord, an accord that our compliance with would seriously damage our economy while strengthening, in relative terms, the PRC’s and so increasing its leverage over our Asian allies and over us. This kept his campaign promise.

Withdrawing from the JCPOA, which authorized Iran to freely develop nuclear weapons as soon as it expired. This kept his campaign promise.

Strengthening our physical border with Mexico, thereby strongly reducing illegal entry into our nation by illegal aliens. This kept his campaign promise.

Reducing Federal regulations that interfere with American business development and growth. This kept his campaign promise.

Reducing regulatory barriers to our hydrocarbon-based energy industry, thereby making us a net energy exporter and virtually eliminating our dependence on foreign energy. This kept his campaign promise.

I’m sure there are more; this short list is just the high points.

This is the economic, social, and political strengthening of the last four years that Hoyer and his Progressive-Democrats want so desperately to erase.