This stimulus ain't very stimulative

Heh heh. This is a great word for a punch line. Boy, how we love those. No matter how serious a problem, no matter how complex an issue, all of them can be reduced to a one-liner. The downward spiral of the international economy may be one of the best examples ever. This is an incredibly complicated set of circumstances that have created equally complicated government policy choices for our politicians. Fortunately, the mass of voters can reduce the whole thing down to a "stimulus" comment that hints at boners and orgasms.

Strictly speaking, this current bill is necessary but it is not very stimulative in the economic sense. The US economy is GDP or Gross Domestic Product, a measure of total spending. Stimulative policies are those that add to GDP or spending.

Conservatives like to say ('think' is not the right word here) that tax cuts are stimulative because they stimulate consumers to invest and spend. This is bullshit, especially in a deflationary spiral like we find ourselves in right now. In economic conditions such as we face now, most rational consumers (Conservatives are the opposite of rational) either put any extra cash in reserve or they use it to pay down debt. Very little of it is spent, creating very little stimulation to the economy. Also, precious little is invested in anything that might create spending or jobs.

In the real world, the best way to create spending (add to GDP) is to SPEND!!!! This would seem obvious to anyone who is thinking, but conservatives do not habitate the thinking side of the universe. Political reality being what it is, the moderate Democrats and Republicans who negotiated the 'stimulus' package had to dedicate a fair portion of the total dollar figure to tax breaks. Regardless of how good or bad the tax breaks are, they are not stimulative.

The spending that was included in the package is mostly dedicated to aid to unemployed (and other people directly impacted by the downward spiral) and cash paid out to the states to help make up their revenue losses. This spending is good, but not particularly stimulative. The purpose and result of this is mostly to prevent further erosion of spending rather than increase it. It should help stop the bleeding, but is unlikely to bring about healing.

I think the bill signed into law by Obama this week is good, but I think more will be needed. We have strengthened the floor so that the economy will (hopefully) not fall much further. To really get us up off the floor will require another infusion of government debt to be spent on job creation. I hope the Democratic leaders will forget this 'bi-partisan' nonsense and do what is wise. Republicans are wrong, their opinions should be completely ignored.