Quote:
Originally Posted by sugarpop
ummm, giving money to those in need, for example, in the form of food stamps, gives the MOST bang for the buck, according to Moody's and other economists.
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Then I guess I disagree with Moody's and "other economists" whoever they might be.
You said yourself that job creation is the number one priority in the recovery action plan. Then you go on to provide a reasonable scenario which would lead to that result - an increase in consumption by the Federal Government. We are on the same page in that regard.
Increasing the amount given to the needy doesn't accomplish much of anything since their consumption levels are pretty much fixed to begin with. In theory, if you are needy then the social program you are already on fills the gap such that you are no longer needy. If that is NOT correct then the social program needs to be restructured. However, that has nothing to do with government intervention in the economy in order to stimulate it.
So basically we can compare the economic effect of one stimulus dollar given to needy Joe and one stimulus dollar spent on a crumbling bridge.
Needy Joe takes his extra dollar and goes to Walmart and buys something he either needs or wants. Chances are the product he buys is imported so $0.10 stays in the economy and the other $0.90 exits the economy.
Bridges-R-Us takes the dollar, hires Needy Joe and improves a bridge. So what does that do for us? First it takes Needy Joe off of food stamps which frees up dollars for other needy folk. It also creates taxable income which creates tax revenue for the state and fed - a return on investment if you will. It improves local infrastructure which makes everyone who uses the bridge more productive and maybe even makes nearby property values increase since the area is now more accesible and attractive. It also reduces maintenance costs for the bridge which allows the municipality to allocate more of its funds to more important things.
All that vs a dime for Walmart coupled with an increase in the trade imbalance with our foreign import/export partner countries.
I think you would have to look pretty hard to find an economist who can construct a scenario whereby a dollar given directly to Needy Joe does more for the economy than a dollar allocated to an increase in government consumption. I would be even more surprised to learn that Moody's hired one.