The View From 1776

The Stimulus Plan’s High Cost / Benefit Ratio

Read Alan Reynolds’s $646,214 Per Government Job: Spending where unemployment is already low.

Posted by .(JavaScript must be enabled to view this email address) on 01/28 at 11:13 PM
  1. As much as education and health care jobs are needed, we have to remember that they require tax revenues.

    If you keep increasing the jobs requiring tax revenues without maintaining the proper ration of private sector jobs and wages high enough to pay the taxes, you just keep digging a hole deeper you can't get out of.

    I believe we will move to a national health care plan this year due to the millions that will lose coverage as they lose their jobs. This is going to really stress the government if they go ahead with a payroll tax holiday.

    We borrow all surplus paid into the trust funds. If we have a payroll tax holiday, it means the government will have to borrow a lot more from foreign lenders since there is no money in the trust funds and the payout would have to be borrowed each month too.

    A payroll tax holiday might sound good but, not for a nation that has to borrow to replace the lost revenue.
    Posted by JanPBurr  on  01/29  at  10:44 AM
  2. The $624K per job is a misleading figure because it divides multi-year spending by a single year job number.
    Posted by .(JavaScript must be enabled to view this email address)  on  01/29  at  02:26 PM
  3. I think the article said a two year job number as many jobs from the spending won't be created this year but, I agree it is probably misleading and could be up or down.

    For example, the 600,000 government jobs will drain tax revenues for as long as the jobs exist and we will have to borrow the money for those jobs from now on as even a recovery will not restore tax revenues to the level we needed before those jobs were created.

    We have passed a point now, where no matter how much we borrow, we can no longer grow GDP fast enough to return to even close to a balanced budget. We have to first, either default on our debt or hyperinflate out of it. There are no other choices. I believe it appears they intend on hyperinflation but, that is based on how fast they are ramping up money supply.

    The velocity of money is the only thing holding prices back but, for how long?

    We owe $49-50 trillion and with unfunded liabilities, $111 trillion or so. We don't have nearly enough workers even if they were all fully employed, to keep that debt system going. It would take such an export surplus to support that debt load that we would have to do most of the manufacturing in the world and they, very little.

    Yet, we are going to actually reduce the private sector employment, due to this unwinding of debt in the personal, city and state levels, at the same time we add hundreds of thousands of government employees that have to be paid from the reduced number of private sector workers.

    The numbers don't add up whether the $624 is over or under. The system is unsustainable just as the Gov. Accounting Office reported to Congress in 2005, 2006 and 2007.
    Posted by JanPBurr  on  01/29  at  03:17 PM
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