Stimulus Issues: What's The GOP's Answer?

[soupy11]

I think income should be verified and I agree that you should be able to afford your house but 5% and even 3% down IMO is okay - again if income is verified. Houses are way too expensive for those 20% down payments now. Everybody is not blessed with inheritable income. VERY few individuals would be able to do that. I have a modest home. No glamour - only paid $130,000. It would have taken us 10 years to save $26,000 + closing on a house. The closing on this house was $9000 - just to close. And that didn't include the ernest money - which went toward the house.

Ah, but the fact that everyone and their brother can buy houses now with nothing invested is why the market went crazy and houses became so bloody expensive....

 

[SteveInBrooklyn]

GOvt spending still leads to growth. How can it not? I think it is a component of GDP. I understand that it is deficit spending, but some economists say that is what is needed at a time like this.

 

[JMD]

GOvt spending still leads to growth. How can it not?

It was just explained 3 or 4 times.

 

[SteveInBrooklyn]

It was just explained 3 or 4 times.

But govt spending is a component of GDP, isn't it?

 

[Master Mason]

But govt spending is a component of GDP, isn't it?

Well as I undestand it, yes. But, if the money is raised via taxes, it becomes a zero some game, if it is raised via printing more money or deficit spending, it creates inflation, which negates any actual rise.

 

[SteveInBrooklyn]

The more I think about it, the more I am convinced that government spending is a better stimulus than tax cuts. Government spending is 100% spending, all of it is an addition to GDP. Tax cuts may or may not result in an addition to GDP. For instance, some people may choose to save the money, others may choose to spend it on foreign goods and services.

 

[DawnCt1]

Why doesn't government spending create economic growth? I don't get that.

The goal is to lower the water level in a lake. Nancy Pelosi is at one end bailing with a bucket. Harry Reid is at the other end, dumping in a bucket at a time. The water level will never change.

 

[DawnCt1]

The more I think about it, the more I am convinced that government spending is a better stimulus than tax cuts. Government spending is 100% spending, all of it is an addition to GDP. Tax cuts may or may not result in an addition to GDP. For instance, some people may choose to save the money, others may choose to spend it on foreign goods and services.

As long as Americans don't save money in the mattress, it goes into the bank, creates more capital and is lent out. Interest, such as it is, is also earned. Most Americans spend their money here, in this country . It may be for goods bought overseas, but money is changes hands here. It takes someone to receive that money. Its job creation.

 

[SteveInBrooklyn]

The goal is to lower the water level in a lake. Nancy Pelosi is at one end bailing with a bucket. Harry Reid is at the other end, dumping in a bucket at a time. The water level will never change.

I still don't get it. What do you mean by "lower the water level?"

 

[JMD]

The more I think about it, the more I am convinced that government spending is a better stimulus than tax cuts. Government spending is 100% spending, all of it is an addition to GDP. Tax cuts may or may not result in an addition to GDP. For instance, some people may choose to save the money, others may choose to spend it on foreign goods and services.

Government spending is part of GDP, and some government spending is required for economic growth. But the economy shrinks as government spending as % of GDP increases. As stated several times, the goverment must first tax, borrow or print money. All three reduce economic wealth, which will decrease consumer spending and investments, which are also a part of the GDP formula.

 

[DawnCt1]

GOvt spending still leads to growth. How can it not? I think it is a component of GDP. I understand that it is deficit spending, but some economists say that is what is needed at a time like this.

The same way that bailing out water at one end of a lake and dumping it in on the other side, does not change the water level.

 

[moburg]

The more I think about it, the more I am convinced that government spending is a better stimulus than tax cuts. Government spending is 100% spending, all of it is an addition to GDP. Tax cuts may or may not result in an addition to GDP. For instance, some people may choose to save the money, others may choose to spend it on foreign goods and services.

After several explanations to the contrary, you become more convinced of the opposite.

 

[Zippa D Doodah]

The more I think about it, the more I am convinced that government spending is a better stimulus than tax cuts. Government spending is 100% spending, all of it is an addition to GDP. Tax cuts may or may not result in an addition to GDP. For instance, some people may choose to save the money, others may choose to spend it on foreign goods and services.

I'm just catching up on the thread, and I must say that I have learned a thing or two.
Please don't think I'm picking on your post Steve, because I catch a similar theme in several posts here. YOur post made a handy reference point. But it makes me scratch my head to think that individuals saving money, NOT spending irrationally and continuing to pile up debt, is a bad thing.

 

[SteveInBrooklyn]

As long as Americans don't save money in the mattress, it goes into the bank, creates more capital and is lent out. Interest, such as it is, is also earned. Most Americans spend their money here, in this country . It may be for goods bought overseas, but money is changes hands here. It takes someone to receive that money. Its job creation.

Instead of consumers spending money on goods made overseas, isn't it better for the economy if the same money was spent on 100% American goods? Government spending can guarantee that it is.


As for putting money in the bank, my understanding is that there is very little lending going on so I don't know increasing savings by a tiny bit will help much.

 

[JMD]

I still don't get it. What do you mean by "lower the water level?"

The economy is the lake. If you take out a bucket of water ($1 Trillion in tax dollars) and dump it back in($1 Trillion stimulus plan), its has absolutely no effect on the level of the lake. You just took a bucket of water from one place and dumped it into another.

 

[SteveInBrooklyn]

I'm just catching up on the thread, and I must say that I have learned a thing or two.
Please don't think I'm picking on your post Steve, because I catch a similar theme in several posts here. YOur post made a handy reference point. But it makes me scratch my head to think that individuals saving money, NOT spending irrationally and continuing to pile up debt, is a bad thing.

I'm not advocating that individuals pile up debt, I'm advocating that the government pile up debt.

 

[Christopher Robin]

I think someone is intentionally trying to imitate an angle greater than 90 degrees.

 

[Zippa D Doodah]

I'm not advocating that individuals pile up debt, I'm advocating that the government pile up debt.

Yes you are.

The more I think about it, the more I am convinced that government spending is a better stimulus than tax cuts. Government spending is 100% spending, all of it is an addition to GDP. Tax cuts may or may not result in an addition to GDP. For instance, some people may choose to save the money, others may choose to spend it on foreign goods and services.

Again, I didn't set out to parse your earlier post. I sense and share your frustration about what would be the most effective way to help the economy.

 

[SteveInBrooklyn]

The economy is the lake. If you take out a bucket of water ($1 Trillion in tax dollars) and dump it back in($1 Trillion stimulus plan), its has absolutely no effect on the level of the lake. You just took a bucket of water from one place and dumped it into another.

In the long run your analogy makes sense. But in the short run I think this is what we should try to achieve:
In a recession, dump extra water into the lake. In a period of expansion, pay back the extra water by taking it out of the lake.

During an expansion, there are many sources of water being dumped into the lake, so we can afford to take a bucketful out.

 

[SteveInBrooklyn]

Yes you are. .

Why not? That's what Keynsian economics is all about, I think. It sounds like a good idea to me.

Again, I didn't set out to parse your earlier post. I sense and share your frustration about what would be the most effective way to help the economy

Actually, my real frustration comes from trying to understand economics. I wish I paid closer attention in school.