Striking a Stimulus Balance
In recent weeks there has been much debate going on about exactly how long the economic recession is going to last and just how to kick start the economy. Many people are concerned with just stopping the bleeding, or in effect, slowing down the job loss rate and helping people to better prepare themselves next time for a weak credit market. Those on the right often argue for tax cuts, reflecting the idea that trickle-down economics can have a positive effect at the bottom of the economic food chain if it is applied at the top. Those on the left often argue for increased spending on things like education, green energy, and infrastructure. While both sides have their pros and cons, the best approach may be to strike a balance between these two viewpoints and to create a system where by which government spending would compliment the tax cuts and vice versa.
While there has been no hard economic proof that tax cuts and the trickle-down effect actually work, many conservatives have their mind made up about this idea. For many Americans, keeping more of the money that they earned is a good thing, whether or not they agree or disagree with what their tax dollars would have been spent on had the government used them. One thing that everyone can agree on though is tax cuts tend not to boost inflation, and due to that fact are often an attractive alternative in an economy where hundreds of billions of dollars are being printed at this very minute to cover spending that has occurred over the past six months.
The other side of the isle argues for spending, and while it has been shown that increased spending can have a very definite positive effect on government growth, if it occurs in an unbalanced way, it can lead to inflationary cycles and a downward trend in the value of the US dollar. After the Great Depression, the Roosevelt Administration increased spending and accomplished great things with the Civil Conservation Corps and other government-funded programs. While some argue that this increase of government spending helped to turn the tide of the depression, it was really World War Two that got America out of the economic turmoil. There’s nothing better for an economy than a war. However, needless and unsupervised spending, like much of the spending that occurred for the Iraq War during G.W. Bush’s years tends to really negatively effect the economy and the public perception of trust and accountability.
No matter where you stand on the issue of government stimulus, it could be argued that any solution could be economically poisonous if it occurs on the wrong scale, whether too large or too small. It is hard to say exactly what it will take to pull the economy out of its recent nose dive, or when this will happen, but careful consideration of the stimulus options, and the ability to see the pros and cons of both sides of the argument will certainly help us all more clearly understand what needs to be done. Whether it’s accomplished by the government or the individuals themselves, the real stimulus will take into consideration all perspectives and perspective outcomes.
