Minority Leader Sen. Mitch McConnell compared the plan to President Franklin Delano Roosevelt's "New Deal" public works program -- which he said did not help the nation out of the Great Depression.
"We're talking about an extraordinarily large amount of money, and a crushing debt for our grandchildren," said McConnell, of Kentucky. "Now, if most Republicans were convinced that this would work, there might be a greater willingness to support it. But all the historical evidence suggests that it's highly unlikely to work."
So the stimulus package got debated and trimmed a little. Its probably enough to pass. Its a Keynesian approach to fixing this problem, something republicans hate. I am unsure why, its completely hypocritical of them to say anything about deficit spending when they have doubled the debt in their short 12 years of rule. Even Keynes made it clear that large deficit spending is a last resort (the fed lowered interest rates to 0% last year, look like we are at last resort status), but when you do it, do it big.
Think of the Powell Doctrine, if you are going to invade a country, do it big, but make sure you have assessed all other possibilities.
The quote i started with just makes me laugh. What hypocrisy! Never have I seen a republican present evidence that providing tax cuts actually improves the economy, all we get is things like “it just makes sense”. Seems to me that what makes sense if that if I am the owner of a business, and I get a 100K tax break, then I can be 30K richer while the rest of my 500 person staff can each have an extra 140 dollars, Woohoo! they can feel really comfortable with that! I bet that will make them feel good about buying a new boat!
I was unhappy with the bank bailouts. I wasnt sure if they were needed, but after learning about it and seeing the both candidates supported it, I was able to understand the need. But I can’t believe oversight was not provided, and was not surprised about the huge tax payer paid bonuses handed out (disappointed, but not surprised). Most of this money from the Obama stimulus package, on the other hand, is going to projects that require people to work to get done (although I do have to agree with many republicans that there are some projects – some not most of the ones they were complaining about- that are not related to stimulus and should have been voted on separately). If people are working then they are more willing to spend. That makes economy better and that seems more logical to me. Want evidence? Lets just look at the GDP.
When did Roosevelt implement the New Deal? 1933-1938. Looking at this graph, when would you say that the economy started to turn around? Shall we zoom in?
The new deal was an implementation of Keyensian ideas. Funnily enough, Keynes blasted Roosevelt for not going far enough in his spending!
The funny part is that you will hear many conservatives say it was not the New deal, it was WWII that did it. Guess what? The deficit spending increased to make the extra weapons, food and so forth to be able to be a strong force in the war. The war actually allowed the US to implement Keynesian economics in a more true fashion.
So it completely cracks me up when I hear a fiscal conservative asking for evidence that this will work. I’m not saying that it is guaranteed, I’m saying that there is evidence that it works. Where is the evidence that conservative, greed based ideals work? Because all I see is debt increase during republican rule.
Now its true that I could be getting into a causation-correlation fallacy here. But I have never heard of any other forces that are theorized to have improved the economy at that time, but perhaps they are there.
Circling Back to Mitch McConnells quote I started with, its coming quickly obvious to me that listening to them is like listening to evolution or holocaust deniers. No matter how much evidence is available they will continue to blather on about there being no evidence at all. Transitional fossils anyone?
Note: I am well aware that I am not an economist and this is not an overly complex analysis. What I was getting at is about evidence. There IS good historical evidence that this approach will work and get us into a positive feedback loop rather than the negative one we are in now. The key is to get people working so they feel more comfortable spending, the opposite is happening now.
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