Thank you for writing this.

Now, can we please get a copy of this to every member of congress? And a special glossy copy to the President himself?

The stimulus package is designed to create
over 3 million jobs.

Why not use tax cuts instead to stimulate
the economy?

Because there is no guarantee that the extra
money that people keep (because of these tax cuts)
will be spent on job-creation.

The $600 stimulus checks (under Bush) are a perfect
example. Most of the money that these checks cost,
did not get spent on hiring painters or other
job-creation activities, instead most of the
money was spent on savings and paying down debt.
A rational and prudent way for individuals to
spend these $600 checks, but not at all an effective
way to create jobs.

If the 800 billion was made up of tax cuts, then
the money could be spent on, and to a certain
extent will be spent on:

- buying stuff that was made abroad
- saving and or paying down debt
- Foreign investments
- Vacationing abroad
- etc.

Why do jobs matter?

1. An unemployed person, especially if their
benefits have run out will spend very little.
An employed person spends much more. Jobs
stimulate the economy.

2. America is losing jobs at a rate not seen
since the Great Depression. Once their benefits
run out we'll have an army of angry and desperate
people with nothing to do, and no hope. This sets
the stage for a huge increase in crime and social
breakdown.

3. You could be next to lose your job. Would your rather
have a tax break and a greater chance of losing your
job, and of not finding a new job. Or would you
rather have no tax break (or at least no tax breaks
for the very wealthy), but less of a chance of
losing your job, and more jobs available
in case you do.

Consider the Roman Empire. The Roman Empire was not
exactly a bastion of bleeding-heart liberalism, yet
they provided free grain to the poor. Even they
understood the grave dangers of a mass of desperate
and starving people.

Hi John :)

Can you please give advice on where the most effective/helpful places to spend money would be for the general consumer? If I need to buy groceries or basic items, are there certain types of stores that would have more bang for the economic buck? (Local vs. big chain, etc..)

If I'm going to spend money, I'd like to channel it into places that don't dead-end..

I realize we're all connected (or at least our money is :) so does this even matter?

While the little guys out here may not have any influence on Obama, we can at least make choices in our individual lives to both help ourselves and each other so advice on this would be appreciated.

Thanks :)
YG

I agree with this story. Taking money from one person doesn't and giving it to someone else doesn't stimulate anything.

While your arguments here do make sense, I do not agree with them. Bonds are being bought not because investors would rather buy corporate bonds with higher yields; currently, I believe the perception among investors is that corporate bonds are far too risky in these rocky times and that the current preference for investors is the risk-free U.S. Treasury bonds.

There is also the issue of the U.S.'s deteriorating infrastructure. Funds spent on repairing the nation's bridges/airports/etc. would probably not create long-term growth, but it seems unlikely that a fixed bridge would tear itself down immediately after rebuilding (barring poor workmanship), does it not?

Corporations also do not seem to have either sufficient funds or incentive to begin new investments like new factories (I think Chrysler is asking for even more bailout money as of this comment, and why would they build a new factory to boost production with demand as weak as it is presently?). Families are also pinched, given the unemployment rate increases. Who else is there to turn to when both firms and private citizens cannot stimulate our economy?

Actually, the stimulus plan (along with higher tax rates on the wealthy) will take money that is WASTEFULLY used (or hoarded) and put it to use on labor-intensive projects that more vigorously grow the GDP.

When CEO's get their $100 million bonuses at the end of the year, most of that money goes into the bank. They DO NOT spend it all. They ACCUMULATE wealth.

If $50 million of that is instead taxed and spent on new schools or an electric grid or even unemployment benefits for those people between jobs, it increases the GDP MUCH MORE than it being in the bank.

And even if the rich person did spend it, a $50 million home or yacht or personal plane or 100 carat diamond is NOT a productive use of that money. It is wasteful excess when there are people who are dying from lack of healthcare, going in debt for 20 years just to get a college education, or ending up homeless on the street because of predatory lenders.

Just because the wealthy have been ABLE to work the system in their favor, doesn't mean it's right. Things are going to change--and for the better for the greater number.

I noticed that you didn't reply to the issue
of people spending extra money from tax cuts
not in the USA, but on:

- foreign investments

- travel abroad

- foreign produced goods

As for paying down debt, you say "This in
turn increases the money that the bank can
lend to businesses and other people who
want to expand their businesses, or spend
it on 'stuff'."

Again, there is no *guarantee* that any
extra money for lending will be spent on
employment here in the U.S.A.

On the other hand, tax money spent by the
government for job-creation will (to a much
greater extent) be spent on job creation here
in the U.S.A. and not on tourist spots, or
factories in other countries.

The government is unique in that it can invest in broad infrastructure projects that stimulate business productivity on a national level. Eisenhower's interstate program is one such example.

If government spending is done wisely and in a way that actually generates wealth, I do not think it should be opposed merely because of principles.