Stimulus and Bank Bailout Won't Work

Spend Spend Spend. These days republicans and Democrats may disagree on the nature of the stimulus, Democrats want jobs and social spending and Republicans want tax cuts, but they both agree that something has to be done now. Even waiting to examine the plan for mistakes is too big a mistake in itself. Obama tells us we need stimulus to avoid disaster. Bush told us the same thing last year. This is an emergency. Nevermind that the first stimulus and the first bailout didn't work. We need action! And Fast! It doesn't matter what caused our problems, spending has always worked in past recessions, so spending is the answer to this recession. Hurry!

But what if this is not a recession? A friend of mine recently told me "nobody I've seen has started calling this a depression yet. things haven gotten THAT bad!" Well I fear that depends on who you ask. It has gotten that bad for more people than you think. And its going to get worse, because spending your way out of debt is non-sense and we all know it. Fundamentally, we all know this can't work.


Here's a chart showing the debt to income of the USA. This doesn't include "off the balance sheet" obligations like Social Security and MedicAid. It also doesn't include the stimulus bill that just passed (which will add another 30%) or the final cost of the actual bank bailout. Our GDP has grown at 3-5% per year, yet the growth in debt has been much faster. It is taking increasingly larger units of debt to fuel the same unit of growth in the economy.

And that is the biggest lie of all. GDP. It is not Gross Domestic Product any more. We are not producing anything, we are consuming it. It is really GDC, or Gross Domestic Consumption that our government is trying to grow. And we all know on a very fundamental level, that once you borrow enough, you have to stop spending, if only because you are forced to by your creditors, who stop extending credit.

What is happening to America today, is we are running into a wall, and the government is pushing us head-first into it by moves like the spending bill that just passed. Supposed to be about creating jobs, infrastructure and tax cuts, it instead has items like a $8 billion for high speed rail lines, $200 million in compensation for WW2 injuries, $2 billion in grants and loans for battery companies, money to build schools in towns who are losing population, an AMT rollback costing $70 billion, and much much more that simply doesn't relate to the task at hand, regardless weather or not they are good programs.

Honestly, instead of giving me $13 back per paycheck, Obama and Congress should be asking us for $26 and sinking it into a better healthcare plan for all the people who are losing their jobs.