Economic Bailout Question

[manlymatt83]

Recently, I was reading someone's suggestion for helping with the economic crisis:

- Give married couples $10,000 plus $2000 per kid.
- Give single men and women over 18 years old $5000

This would help with three things:

- People would spend it to pay their mortgages, invest it, or buy a new car.
- Stimulate the economy and free-up the credit freeze
- Cost less then 819 billion dollars

I actually like this idea, because instead of bailing out specific "large name" companies and picking which companies get funding and which don't, it allows the taxpayer to spend their "bailout" where they want to: on their mortgage, on a new car, on their credit card bill, etc. Seems it would stimulate the economy a bit, but also would stimulate companies that provided increased value to their product.

Can someone help me out with the flukes/negatives of this idea? I'm sure there are many. Also, I'm curious to know: would this solution (bailing out via the people instead of directly to companies) more likely be proposed by liberals or conservatives?

 

[masteryoda34]

Why don't we just cut taxes and let people keep the money they earn instead of making everyone reliant on the government for "stimulus" checks that are financed by Foreign Debt and/or the Fed printing (devaluing) imaginary money?

 

[Slew Foot]

Why dont we just pull $8347028754275243758378432 out of our magic hat and give it to everyone?


GWB did something similar last year and everyone thought it was a stupid idea.

 

[Andrew1990]

I actually like the OPs idea a bit. If I got $5000, I would put that towards either a nice truck like a Ford F-150 or a Chevy S10. Or maybe college, depending on Govn.t Aid.

 

[MovingTarget]

Originally posted by: masteryoda34
Why don't we just cut taxes and let people keep the money they earn instead of making everyone reliant on the government for "stimulus" checks that are financed by Foreign Debt and/or the Fed printing (devaluing) imaginary money?

That works alright for the rich/investor classes, but for a lot of working stiffs it doesn't amount to anything because they are paid bottom-barrel anyway. Wages have been stagnant overall for quite some time. What people really "earn" and what they "get" are two different things in this country, even before taxes.

You do have a good point in that just printing/devaluing money isn't the overall answer. It can work for certain types of situations as described by Keynes, but we have just been doing that year after year after year, even during economic boom times. If I had to pick my poison, I'd say we should go back to our protectionist policies wrt industry. Some tarriffs and other protection barriers could help get US factories up and running once more, but that doesn't necessarily mean the re-enactment of the Embargo Act of old as some would have you believe by the way they denounce protectionism...

 

[imported_K3N]

Originally posted by: masteryoda34
Why don't we just cut taxes and let people keep the money they earn instead of making everyone reliant on the government for "stimulus" checks that are financed by Foreign Debt and/or the Fed printing (devaluing) imaginary money?

Herbert Hoover tried the "free" market myth of do nothing, and see where that go him. Cutting taxes isnt how you cure a depression.

 

[Schadenfroh]

That would sure buy a lot of digital -> analog TV converter boxes...

 

[Cattlegod]

if I got 5k i would just stick it in the bank

 

[masteryoda34]

Originally posted by: K3N

Herbert Hoover tried the "free" market myth of do nothing, and see where that go him. Cutting taxes isnt how you cure a depression.

Actually in 1932 Hoover enacted one of the largest tax increases in American History. He also enacted the Protectionist Smoot-Hawley Tariff, which dramatically hampered trade with other countries.

There are several other examples of Hoover promoting government involvement in the markets in order to save the economy. Link (See Policies, Great Depression, and Economy sections).

If Hoover really was such a laissez-faire "do nothing" guy, then why in the world would John Garner (FDR's running mate) have accused him of "leading the country down the path of socialism." FDR also accused him of thinking "that we ought to center control of everything in Washington as rapidly as possible" Source.

Truth of the matter is that Hoover did not take a "no nothing" approach to the economy. He was actively involved in creating polices and programs in an attempt to cure the market. Many of these decisions proved to be harmful.

FDR's approach was really only a continuation and expansion of Hoover's ideas and policies. Unfortunately these policies prolonged the depression until the late 1930's when demand for military goods came in from Europe.

 

[Jiggz]

This bail out BS has to stop! We will never get our assess out of this recession if the stupid gov't keeps on bailing out everybody. The most recent industry asking for a bail out after the Porn industry was denied is the car parts industry. Industries don't even want to try working something else, instead they just put out their hands to pander from the gov't. Pathetic!

 

[StageLeft]

Terrible idea, where is the money coming from? It will become nigh worthless if it's printed off to this kind of degree.

Have you even done the math on how much it would cost the government?

The stimulus money I got at least half went into the bank. If I got more now it would, too. I am not some crack addicted idiot who will smoke whatever he's given or like a fat child who by his very nature cannot help but spend any money given to him on junk food at the local store.

 

[imported_K3N]

Originally posted by: masteryoda34
FDR's approach was really only a continuation and expansion of Hoover's ideas and policies. Unfortunately these policies prolonged the depression until the late 1930's when demand for military goods came in from Europe.

Big fat farce. the new deal paved way for the rise of the middle class (gi bill of rights, MINIMUM WAGE) . if it didnt work why did FDR get voted in 3 more times?

these graphs tell a million words.
http://en.wikipedia.org/wiki/New_deal

Hoover chose not give money directly to the common people or create government projects for the common people. He tried only giving it to the bank in his last year and that didnt turn out well.


The idea WWII is the main reason we got out of the depression is a farce. We have 2 wars and depression right now and see how things are lol.

 

[masteryoda34]

Originally posted by: K3N
Hoover chose not give money directly to the common people or create government projects for the common people.

"The final attempt of the Hoover Administration to rescue the economy was the passage of the Emergency Relief and Construction Act which included funds for public works programs and the creation of the Reconstruction Finance Corporation (RFC) in 1932. The RFC's initial goal was to provide government-secured loans to financial institutions, railroads and farmers. The RFC had minimal impact at the time, but was adopted by Franklin Delano Roosevelt and greatly expanded as part of his New Deal." Link
Ever heard of the Hoover Dam?

Originally posted by: K3N
The idea WWII is the main reason we got out of the depression is a farce. We have 2 wars and depression right now and see how things are lol.

Woah. Are you really comparing WWII to Iraq and Afghanistan? Are you really suggesting the current economic situation is a depression? (Not rhetorical questions.)


FDR's New Deal was in full swing throughout the years listed below. The lowest the unemployment rate ever got during the 1930's was 14.3% in 1937 and it rose to 19% the following year. Notice the dramatic decrease in unemployment from 1940 -> 1941 and 1941 -> 1942. This happens to be (*surprise, surprise*) right at the start of WWII. K3N, you are suggesting that this is nearly a coincidence? That somehow the New Deal failed to produce any demonstrable results before 1940 and just suddenly began working in 1941, 42, 43? Also note the unemployment rates in 1943, 1944, and 1945. They are less than 2%!! A stark contrast to the times before AND after the war.

Year Unemployment Rate (%) Source
1933 24.9
1934 21.7
1935 20.1
1936 16.9
1937 14.3
1938 19.0
1939 17.2
1940 14.6
1941 9.9
1942 4.7
1943 1.9
1944 1.2
1945 1.9

Now you'll probably argue that the unemployment rate was so low during the war because so many people were enlisted and therefore did not need jobs. However, the unemployment rate is defined as a percentage of the labor force, of which military-personnel are not members.

Originally posted by: K3N
if it didnt work why did FDR get voted in 3 more times?

Well, you probably won't accept my explanation, but I'll offer it anyways. FDR greatly expanded the portion of society that relied on the government. This portion of society was not going to vote out the person who they were dependent on. (Don't bite the hand that feeds you principle.) Also note, the availability of information during this period of time was nothing compared to today. A person couldn't just hop on the internet or turn on the TV to find additional information on which to make an objective decision. They had to rely much more on what a politician said, and I certainly wouldn't disagree that the ideas FDR spoke of "sounded" good upon superficial inspection.