Dear Obama,
I understand that you are in a tough position right now. You inherited a catastrophic financial and economic landscape. The newspapers read like nothing I have ever seen in my lifetime. On Monday a headline read, "Bloody Monday: over 70,000 Jobs Lost." That's in one single day. We are only 28 days into the New Year and over 200,000 jobs have disappeared and they are being cut from many of the once prominent, strong, "American" companies like Caterpillar, Microsoft and Pfizer. So, what is the solution? I have no CLUE! I'm not going to solve the financial apocalypse in this post. That would be pretty dam ambitious. Plus, if I could I certainly wouldn't be making this measly salary working for a company hell bent on running itself into the ground. Anyway, what I’m trying to say is that in school we were always told to learn from our mistakes. When you got a problem wrong on a homework assignment the teacher would say well, learn from your mistake and get it right on the test. Well Mr. Obama...you are about to propose a stimulus bill to congress that is close to 900 BILLION dollars. That's only 100 billion away from a trillion which, until fairly recently was an almost inconceivable amount of money. Think about it, 900 billion is NINE HUNDRED THOUSAND Millions! I mean, these numbers are just staggering. Anyways, back to my point.
1. Last year Bush signed a 200 billion dollar stimulus package. Most Americans received a check between $200 and $1,200. Bush called the package "a booster shot for our economy to stave off a recession." Well, first of all, we were already in a recession at the time the Bill was signed but more importantly it hasn't prevented the economic situation we are in now. The checks were sent...with good intent...people spent...but to the extent it was meant to prevent...we still went into a decent. Sorry, I don't know where that came from (but I kind of liked it). Anyways, below is a picture of good 'ol Bush signing the bill. Look at how proud he is of himself.
Ron Edmonds / AP
2. Keynesian economic policy is based on the idea that the solution to depression is to stimulate the economy ("inducement to invest") through some combination of two approaches :
- a reduction in interest rates.
- Government investment in infrastructure - the injection of income results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment.[1]
Keynesian monetary policy is a short term strategy not a long term solution. FDR implemented the New Deal which built massive infrastructure and created tens of thousands of jobs. This was great if you didn't have a job but didn't bring us out of the Great Depression. The other problem with massive government spending is the fact that eventually someone has to pay back the loans. REALLY!?!? Yep, and by someone I mean my generation (I’m 25). Bush left us with the largest budget deficit in history and we are about to pile on trillions more. In the end, the government should look out for its citizens and help where possible. Job creation during an economic recession of this magnitude is warranted but we shouldn't become complacent and expect stimulus packages to get us out of this mess WE created. Like I said earlier, if I knew how to fix this mess I wouldn't be sitting at my desk writing this rant (even though it's more fun and interesting than working).
We need to learn from the past and have a plan for the future. Education needs to become a national priority. So, in conclusion Mr. President Obama, don't spend money for the sake of spending money. Sure it looks good on paper and people will certainly appreciate it but there are real consequences. Go ahead and propose this stimulus package but please have another plan hidden away somewhere.
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