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Why We Need Economic Stimulus?

Jan 29, 2009 | By: Mr_Blue | Tags: economic stimulus, american recovery and reinvestment act

The economic stimulus package, American Recovery and Reinvestment Act, faced its first legislative hurdle yesterday. House Republicans chose to exhibit a futile sign of unity when they placed (failed) ideology over what is right for our country. Our economy is in a dangerous down ward spiral and government spending particularly in infrastructure is the only thing that is going to help right now.

Consumers are not spending, businesses are cutting back and are not investing, financial system is frozen. Who is left? That is right - the government. They are the only player in the economy that can do something to start economic activity. No one likes deficit spending and that is what is happening with government spending but what are we suppose to do. House Republicans would have liked to provide more tax cuts particularly to people who don’t need them. We’ve been there and done that and it didn’t work.

There is a higher return on investment with government spending than with tax cuts. The higher return on investment translates into more jobs and that is what our economy needs. No one is saying tax cuts are bad.

In fact, the stimulus package has several targeted tax cuts included in it. These targeted tax cuts are not the “right” type of tax cuts for republicans. The percentage breakdown of government spending and tax cuts in the economic stimulus package is roughly 65% government spending and 35% tax cuts.

It is more than ironic that republicans now are so concerned about government spending after running up the largest budget deficits in U.S. history the past 8 years. Now that is priceless.