AltSci Cell

by Javantea
Feb 21, 2009

I feel positively ill and I think I should share what made me think that perhaps the stimulus is over our heads. A trillion dollars is a lot of money. It's a number that is so large that most people can only think of it as a part of the GDP or the cost of a modern war. George W. Bush spent over a trillion dollars during his term on wars that should not have been fought in the first place. So why should we really worry about a trillion dollars spent right here in USA on stuff we should be concerned about: jobs and infrastructure improvement? A trillion dollars is more than we bargained for when we looked at the economy. When we saw banks failing and the auto industry in turmoil, the IT industry downsizing like crazy, and mortgages going belly up, we saw numbers in the hundreds of billions being tossed around. Each time it was a blow to our confidence because we saw how incredibly badly the math was being done. People have described the failure of the economy much better than I possibly could, but the obvious explanation is that we have lost jobs, lost wealth, devalued everything, and put everyone on the brink of collapse. If we had a number of how bad our economy is right now, it'd be huge but I don't have the exact numbers for it.

So the stimulus is the answer that congress and the president that we elected chose. That number we know quite well. Along with interest, the stimulus will cost $1 trillion dollars. How much is that? Well, let's try to calculate it in terms of things we do know about: wage and salary. If the stimulus was going directly to minimum wage jobs at $8 per hour (more or less depending on the state), it would generate 60 million jobs for a year. Since the US population is 300 million, that means it would employ 20% of the US population. But that includes children, people who weren't employed before the economic 'collapse'. The number of employed people in the US in 2007 was 153 million. That means that the stimulus would employ 40% of the working population. The unemployment rate is only 7.6 percent, so let's calculate how many years it will alleviate unemployment entirely: 40% / 7.6% = 5.2 years. In the president's address he said the stimulus would employ 3 million Americans, so let's take a look at what percent of unemployment he's talking about alleviating: 3/153 = 2%. So unemployment will go down to 5.6%, which is slightly more than it was last January. Not bad really. But that means that the stimulus is not going towards hiring people, it's going towards funding infrastructure (roads, levies, schools, police, fire, and alternative energy loans). Who profits from buying material and loans to alternative energy companies? I don't think I do. Do you?

So why again are we spending a trillion dollars that we don't have? To alleviate unemployment and restart the economy from it's obvious slump. But so many people are saying that the stimulus is too much. It's easy to see why -- $1 trillion will pay for more than we can imagine, but at the cost of all taxpayers. Taxpayer's aren't getting totally robbed of course, if they have a business that relies on people to spend money (that's true for every business really), the boost in the economy will help their business as well. If that occurs. We're really rolling on the theory that for each dollar of stimulus, more than one person handles that money as income. How much will recirculate? We'll know if economists track it. If only a few people handle that money, the likelihood of the people who are paying for it getting it back is pretty low. Imagine the government buys road material from Standard Gravel and not from their competitor. Standard Gravel profits and puts money into various other businesses. But the various other businesses aren't buying from Standard Gravel's competitor. The stimulus doesn't really account for this and it can't really. Capitalism is a doggy dog world and competition doesn't work when Standard Gravel is getting a handout. I guess this problem is as old as roads themselves, but I'd very much like to hear a well reasoned argument on this topic.

The president says that the average household will get $65 back per month in tax breaks. I'm glad to hear that our fiscally conservative president has listened to Republicans, but I really must wonder who is paying for these tax breaks. It seems like a bait and switch to me: people won't go for a tax and spend solution, so why not give tax break and spend? Well... Maybe I'm not an economist, but it doesn't really seem fiscally responsible to do it. Spending more than we earn has been a thorn in my side for over a decade. May I suggest decreasing military spending? In fact, may I suggest disbanding the standing military?

Back to the point, the question I aim to ask is: why a trillion dollars? Why not 10 billion dollars? Why not 100 billion dollars? Why does a trillion dollars make sense when 10 billion dollars does not? I cannot support the stimulus when it isn't explained properly why it needs to be spent. The media has rightfully scared us into a panic about housing markets plummeting, IT layoffs causing horrible job prospects for job seekers, and auto loans practically nil. I agree that I happen to be in the best spot to criticize the stimulus having a job and plenty of money to spend, but that doesn't nullify my argument. Without proper explanation of the stimulus and arguing every dollar, I fear that the money will be lost to corruption. Even though our president may be spotless and blameless, I know congress quite well to misspend money -- they do it every year. Most of the arguments have come in the form of news shows like The Daily Show and congress critters dissenting in part to the specifics of the stimulus. The arguments are being pushed aside because of the urgency and the ease at which this stimulus is being passed.

How will we deal with pork and corruption when we find it stealing this money? We may never know. Large sums of money often go missing and the only trace is the project that was left undone due to the theft of the funds. Journalists, do your job to track this money and maybe ask President Obama what he plans to do when the funds go astray.

Alas, I can't criticize this stimulus too much, I knew it was coming when I voted for Obama and I knew that democrats spend more than they should when I voted for congress in 2006. Though my vote didn't really count, my acceptance of the system by which this occurs certainly justifies the end result. And yet the first amendment guarantees me a few options by which I can criticize from this blog the policies of this nation so that perhaps they may be heard and that maybe in the future we can correct the problems we have caused.

Javantea Out