HuffPo: The Fiscal Stimulus Will Pay For Itself

[FrenchieCat]

What the Corporate naysayers and their tools don't want you to know or to remember......

...back to history. The fiscal stimulus of the 1930's was positive -- both in the US and the UK. It dramatically lowered unemployment after 1933.



Second, it is simply wrong to suggest that the fiscal stimulus 'will cripple us long-term.' It will not. The fiscal stimulus will pay for itself.

snip....

It works like this.
Government invests in labor-intensive programs e.g. $40 billion in energy efficiency and renewable energy programs, including $2.9 billion to weatherize modest-income homes. $27 billion for highway and bridge construction and repair and $11.5 billion for mass transit and rail projects; $4.6 billion for the Army Corps of Engineers; $5 billion for public housing improvements; $6.4 billion for clean and drinking water projects.

The energy efficiency/transportation/public housing programs hire American workers - some highly skilled, some not so skilled. These programs also purchase materials - from factories. Some foreign, but mostly American.

Next, something called 'the multiplier' kicks in. It's the ABC of economic science and works like this.

The workers get pay checks. They use the income to pay taxes - direct to the US government. So immediately the government can use these tax revenues to fix the budget. Then workers purchase goods and services - boosting the economy. Companies hire more workers to deal with demand for materials from stimulus-sponsored programs. More employed workers equals more taxpayers.

Ever-rising tax revenues drop into the Treasury's coffers.

Because government spending is financed by bank money or credit, income increases. Eventually savings are generated to match the original stimulus expenditure - so there is no 'crowding out' by government. But savings too can find a way back to the US Treasury, because savers could end up investing in US Treasury bonds.
http://www.huffingtonpost.com/ann-pettifor/the-fiscal-stimulus-will_b_167119.html

[FrenchieCat]

1. More....

Republicans.....have been whipping voters into a frenzy with talk of 'generational theft.' Future generations, they argue, will be paying for this fiscal stimulus for decades to come. That is simply not true, as I will show below.

Meantime, these points are truly rich coming from the Republicans. Readers no doubt know that during the Bush-Cheney years the US national debt doubled from $5,700bn in 2001 to $10,700bn today. Others may recollect that Mr. Cheney said in 2001: "Reagan proved that deficits don't matter."

So let's not hear any more from Republicans about deficits mattering or about 'generational theft.'

[denverbill]

6. It's amazing how a one-time $780 billion expense is a big deal, but structural $500 billion deficits

are not.

They added $5 trillion to the debt in 8 years, and continually ignored people who to pay off the debt and warned them that the debt was unsustainable.

I'd like to say it's laughable but we are so fucking screwed now that it's hard to laugh.

[FrenchieCat]

10. Yes, quite difficult to muster up a smilie face!

:(

[wroberts189]

2. Great post thx knr

[Wickerman]

3. Excellent. Tax cuts, on the other hand, simply rob the treasury

A small amount of tax money comes back in, but often the cut is saved, no immediate return to the govt, no repayment of the coffers. Tax cuts = bad juju, = Republicans greedy, selfish and stoppid = of course.

[FrenchieCat]

4. Depends on who are the targets. For those who pay no income taxes

It will help them and the economy.

[Clio the Leo]

5. One of the best explanations I"ve seen yet....

.... thank you.

[demo dutch]

7. Note thought that it took more than 10 yrs unfortunately

[FrenchieCat]

8. The needle just needs to start moving......

that is all.

[AtomicKitten]

9. Great find, FC. Thanks for posting this bit of good news! n/t

[sampsonblk]

11. We'll see (nt)