First - I write terrible diaries. Never been a great writer, but I tend to like to share ideas so....
Here's my take on 'ecomonic stimulus' and the difference between the R plan and the Progressive/D plan:
We'll look at it from the view of small businesses - which I've been reading employ 60% of the U.S. workforce:
The businesses: A coffee shop, machine shop, and contracting company.
R: plan......
Under this plan the three businesses get a tax break/incentive which puts thousands of dollars into the pockets of the businesses, and therefore into the pockets of the business owners. The owners look at the money, and decide how best to use that cash. In R terms, they will reinvest in their business, and help grow the economy. In my view, here's what we'll see:
- each business is hurting and has laid off workers.
- There is little business coming in the door, and they are staffed adequately to support this.
- The economy is not good, and no increase in business is foreseen.
This means that there is NO incentive for them to do anything to expand their business, or hire more workers. What do they do with the money? No idea, but doubt it expands their business or puts anyone else to work.
The Progressive plan: (remember - simplified example)
Give money to the town/state to support an infrastructure project. In this example, repair of a bridge to ensure it's safety now and for decades into the future, maybe even add a lane to support a higher load of traffic.
The result:
- The town/state hires the contracting company to do the bridge expansion and repair. The company hires back all laid off employees, and hires an additional employee to support the project. They expect to take 2-3 years to complete the project.
- The contractor realizes they need specialty items like specific fasteners (rivets, bolts, etc) to create the bridge. These aren't off the shelf items, at least not to the necessary standards, so they contact a local machine shop and negotiate a contract. X fasteners of X type/quality per month for 2-3 years until completion.
- Machine shop takes contract, promising they can begin delivery in 1 month, after ramping up production. They hire back laid off employees, and possibly 1-2 more to support the project. Idle machines are brought back on line, and they look at a new milling machine that would be a great addition once they get a little of that money in their pockets.
- Several people in the area are now restored to work - and they have money to pay bills etc. They also have money for coffee, and the business in the coffee shop starts to increase. They owner sees more business, has more money in his pocket, and hires more staff to support the business increase. He also looks at repainting the shop, and replacing some of the tables. (more local businesses see cash)
- Every penny is returned to the economy. Nobody buys 'bonds' with it, nobody invests in a new Villa overseas. Nobody looks for a new tax loophole to hang onto their cash, each is required to immediately invest this money back into their business, and through that and their workers back into the local economy.
(And we get the bridge fixed.)
The difference?
The R plan declares that all this tax break money will be reinvested, but with a poor economy nobody sees the incentive to do so. Throwing good money after bad - I mean why hire more staff when business sucks? Might as well buy a bond or look at a new vacation home that's being sold cheap.
The Progressive plan guarantees work for people, and money invested into the local economies. It feeds people.
----------------------------------
OK So obviously no economist, and I've really simplified. (I'll have to run this buy an economics prof friend of mine and see what she thinks) If she (friend of mine) thinks I'm totally out to lunch, or if you guys think I'm doing progressives a disservice I'll delete...