1. Give the people and businesses tax cuts and cut the government budget.
2. Raise taxes and cut government expenses to get the deficit down.
3. Raise taxes and use some more government spending, such as a stimulus package, to get people employed.
Yesterday I was listening to Rush sub professor of econ Walter E Williams and he mentioned that the federal government up until 1920 consumed around 10% of the GDP. After that it has been 20% or more. Prof Williams argues it is because the federal government is doing things it was not mandated to do in the Constitution.
Read Paul Krugman in the New York Times--he is insisting that the country needs a stimulus package to get people back to work, and continued benefits to unemployed to make sure they have money to spend.
As we have gone through this economic hard time, we are relating back to the 1920s, 1930s and 1940s. Everyone has an opinion about what got this country up and out of that hard time: FDR's programs or World War II. Some now believe we have more in common with Japan in the 1990s with the tight money supply and unwillingness to spend.
I do not believe that we can go back to the kind of economic system this country had in the 1800s--which often appears to be what conservatives want. One thing is very different about our country now--there is no expanding geographic frontier. Actually, as I consider this, barring a huge technological revolutionary find, there is no frontier--period. There is no area of expansion.
There will be no recovery or slow recovery if we cannot get people back to work. Those working do not spend much money. Those underemployed are not spending. Those unemployed are certainly not spending.
Businesses do not want to hire because they are not sure of the future. They are not sure about the impact of the terrible health care bill. They are not sure they can pay any new hires and still be able to stay in business.
Nobody wants to spend or lend money.
Many do not want the government to start spending a lot of money, to either support people, or to try and stimulate the economy. Others swear that this is the only way we will get out of the recession cycle.
I am not educated enough in economics to have a strong opinion. I get conflicted. Part of me knows that if you keep taxes low, and leave more money in the pockets of business and individuals, that money will be invested and used. Part of me knows that there are some people out there who are going to need assistance--sometimes I think we just make unemployment contingent on doing some work that needs to be done to maintain the community. We give you a bit of money, you help with road work, or upgrade the computers at DMV or something.
In the end, I think we are going to end up in a different place. Our economy is going to be different from the economy that was based on consumption that we've had for the past 40 years. Also, that transition is going to hurt, regardless of whether in the end, we look more free market or more socialist/government oriented.
Yeah a really encouraging rah rah kind of post...I know.