Analysis on stimulus proposal

By Richard Leonetti,

The stimulus package being discussed, now, I believe is too much. Spending beyond just the “safety net” (unemployment, health payments) is not going to be cost effective. Great politics but lousy economics.

Tax rebates will be saved, not spent, just as they were with the earlier stimulus. No one will hire for a tax credit: they either have jobs available or not. In fact lower wages would take long periods to show up in lower prices and more hiring. Infrastructure spending given to states etc., are usually very slow to happen and then only with high costs from the states overhead and Davis Bacon requirements. Generally poor investments compared to what private sector entities would make if funds are not taxed away from them.

Protect the unemployed workers, but don’t try and spend to create jobs. It has never worked in a cost effective manor.   And lastly, keep in mind the increased debt service costs that all this increased spending would cause. Those amounts are significant and would crowd out other needed spending for years to come.

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