Sunday, October 18, 2009

The Second Stimulus - Another Waste of Money

The facts about the first Obama Stimulus Package are in. In one report, it now appears that our Government spent close to 1/2 million dollars for each new job that was created (Click to See Full Story: Stimulus Math: $533,000 Per Job Saved or Created?). However, according to the President's group of Economic Advisers, the cost to create a single job was much, much lower at only $92,136. Of course, it took almost $150,000 in taxes being collected to spend that $92,136 in order to create a single job.

What's worse, each of these new jobs that were created were for time-limited projects and, therefore, can only be considered, at best, to be temporary work. Once the park is built, the job is over and the employee goes back on unemployment. Once the bridge is fixed, the same is true. Once the pothole is filled, that job, too, is over. And so on. Also, every one of these jobs, because of Federal work rules, is a union job.

The problem with all this is that the average worker in America is not a union worker and not a single non-union job was directly created by the Obama Stimulus Package. Union workers only represent about 8% of the overall workforce in this country. So, now, the Democrats, in order to help the non-union workers, have conjured up a better idea.

If there is going to be a second stimulus, the Democrats want to create a $2000 annual tax credit over the next two years for any employer that hires a new employee. This is just stupid. Employers are not going to spend $16,000 a year or more, plus the cost of benefits, to hire a brand new, but totally unneeded, employee because they will get a couple of thousand dollars back from the U.S. government by doing so. Apparently, the Democrats think they can create a new version of Cash for Clunkers; but, this time, for hiring people.

The simple fact is that, in business, employees are "overhead" and each unnecessary employee seriously impacts the bottom line of that business. No business is ever going to hire an employee if they don't need one. So, in essence, the only employers that will take advantage of this "tax rebate" are those employers who were going to hire an additional employee anyway.

The absurdity in this kind of tax rebate scheme is the assumption that the economy is simply driven by employers hiring employees. If ever there was putting the cart before the proverbial horse, this is it. Business activity drives hiring; not the other way around. So, the $2000 a year per person that the Democrats want to spend on hiring would be better targeted at stimulating business activity to create jobs. That's why tax credits to the consumer would be much more powerful than this planned boondoggle of a tax rebate. Once again, the debt will just pile up and, then --- months later -- we will find out that this plan, too, was another big waste of money. We should rename this Congress: "The Gang That Couldn't Shoot Straight!" They all appear to be as stupid as the characters in that dumb 1971 movie of the same name.

1 comment:

Cheryl Pass said...

Seriously, have these people ever taken one economics course??? Insanity reigns! Unfortunately we are being run over by a truck driven by power-mad maniacs and a fraud at the top of the heap. Supply and demand are not part of their vocabulary. Forced economic rape is all they know how to do. It works for them...
The question remains; how to we stop them when it is working so well for them?? They have no incentive to stop this insanity.

Venting...can you tell??