akuma587 said:
Extremely valid point. This is why something like a payroll tax cut wouldn't be as effective as an increase in government spending. When the government spends money on something, at least 80-90% of that initial spending will go directly to domestic spending (assuming its not being used for something like waging a war abroad). Now some of that money they spend may turn around and be sent overseas when the people who receive that money the goverment spends (i.e. employees of a construction firm or teachers working for a school) go to Wal-Mart, but that dollar has already been spent once in the economy and has had more of an effect than if you had given that money directly to that person who went to Wal-Mart. If you just cut payroll taxes, people would go to Wal-Mart and spend that money which would get shipped overseas without as much of a domestic boost. That dollar would ripple through the domestic economy less than in the previous example and have a smaller multiplier effect. This was why any economic stimulus plan that revolved solely around tax cuts was foolish and less helpful to the economy than a plan that used predominantly spending and tax cuts as a secondary stimulus measure.
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Extremely valad if you know nothing about economics. Economics 101 anytime government spends money it must take it from the private sector. It takes money away from those who would choose how to spend it and would for the most part be fairly thrifty. It takes that money and wasts it through burocratic process and getting overcharged for any program it uses. No new money is created, and there is a lot of waste. To add to this, those getting taxed will eventially have enough and stop working, or move overseas where taxes are not as high. Jobs will then be lost and revenues will go down. When government spends money it is a ZERO SUM GAME. Now if you lower taxes more people will be enticed to start businesses creating more jobs giving the government more revenue. This was proven with the Bush tax cuts, our national GDP rose over 1 billion dollars. Also, China has the power to dump our dollar, it may hurt them, but it will hurt us more and they know that, they will recover quicker because they have a more global market, all we have is a ton of debt.
