Tags: frazier | obama | spending

Frivolous Spending Won't Work, Mr. Obama

Wednesday, 21 Jan 2009 02:42 PM

Last week, Congressional Democrats submitted an $825 billion government spending plan that they claim will help to lead the U.S. out of its recession.

The Democrat’s plan proposes using $90 billion of federal funds to increase the federal government’s share of Medicaid payments, $79 billion to help states avoid cutbacks in public education and other educational services, $39 billion to provide health insurance to unemployed persons, $49 billion to extend state unemployment benefits, $20 billion to increase state food stamp programs, and $6 billion to weatherize the homes of persons earning “modest” incomes.

In other words, the Democrat’s so-called fiscal “stimulus” plan includes at least $283 billion in new social assistance (welfare) programs.

In contrast, the Democrat’s propose using only $181 billion in federal funds to build new roads, bridges, and railroads; make energy-saving improvements to federal buildings; construct new public water facilities; and to build “smart” electricity grids.

Although I’ve been very supportive of a major fiscal stimulus plan to jumpstart the U.S. economy, my research indicates that the type of government transfer payments proposed by House Democrats will fail to stimulate the economy and will serve only to prolong the current recession.

My research also indicates that many of the tax cuts proposed by congressional Republicans will fail to stimulate the economy. That’s because most consumers would like use the majority of any tax rebates (or tax reductions) to pay down debt, and because most businesses would likely fail to increase their capital investments in any meaningful way as a result of the ongoing economic contraction.

If President Obama and his economic advisory team are smart enough to realize the non-stimulative consequences of the types of government giveaways and tax cuts that are currently being proposed by our so-called government representatives, they’ll persuade Congress to substantially increase the amount of money that the government spends on new infrastructure projects. Under such a scenario, my research indicates that the current recession will come to an end within the next six months and that stock prices will soon begin to trend higher.

On the other hand, if the Democrat liberals (socialist thieves, in my view) convince Obama to focus on increasing the size of the welfare state by passing the type of plan that they submitted last week, my research indicates that the current recession may last for another year.

Click here to learn how to profit from changing priorities in Washington by signing up for a free trial to my monthly investment newsletter, The ETF Strategist.

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DavidFrazier
Last week, Congressional Democrats submitted an $825 billion government spending plan that they claim will help to lead the U.S. out of its recession. The Democrat’s plan proposes using $90 billion of federal funds to increase the federal government’s share of Medicaid...
frazier,obama,spending
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2009-42-21
 

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