I’ve decided to ad some local news to the mix for my Mainers. Here’s the headlines.
Nightly News Roundup – Blagojevich, Wall Street, California State Workers, Loan Help, Maine Low On Cash, Snow
You need proof that no one is immune from the recession? Well here it is. Even the Postal Service is feeling the effects of the economic downturn. Last year they operated $2.8 billion in the red. Estimates for this year are approaching $6 billion in losses. Dropping a day of service, possibly Tuesday or Saturday, has been suggested as a solution. Time to privatize?
Check out more at MSNBC.
Starbucks released a statement yesterday that it will cut 6,700 jobs and close 300 stores. This comes on the heels of the 600 store closings announced last July. Starbucks may not stop at 900 stores either.
“I’m hoping 300 stores is enough, and that they’ve done what they need to do,” said Patty Edwards, a retail analyst with Storehouse Partners in Seattle. “Slow drip, even in coffee, isn’t necessarily the best thing. Sometimes you just need to get the pain over with.”
I guess $5 bucks for an ok latte is too much.
I’ve attacked others for their critiques and supposed fixes to President Obama’s proposed stimulus package. It’s time for me to stick my neck out their and propose my own. Then you all can tare it up.
Here’s what Obama wants: $825 billion in spending programs and tax breaks; two thirds in spending with the rest in cuts. First the spending. $600 million for the federal government to buy new cars. $650 million for digital television coupons and $50 million for the National Endowment for the Arts. Weatherization of homes and government buildings is included. This could save citizens $350 a year in utility bills and almost $2 billion on government buildings. I can’t argue about anything that saves money and it will create jobs in weatherization as well. Private sector businesses will be given $100 billion in loans and special assistance that invest in clean energy projects. Also in the plan is an expansion of medicaid, modernizing of 10,000 schools, increased port security, increased Pell grants to students, and an increase in food stamp and social security benefits to the elderly.
Now the tax cuts: Income taxes would be cut for those making less than $200,000 a year. $500 for individuals and $1,00 would be given to families through payroll tax cuts. People would receive with money in their paychecks. The plan achieves this in a reduction of Social Security withholdings. The hope is that consumers will spend this money.
I would drop the $600 million for new fed cars, $50 mill for the NEA. I would like to see less spending overall. History shows us that massive amounts of economic stimulus just don’t work. Also jobs created from stimulus that are short term can be damaging in the long run. When those jobs disappear people will be back on unemployment. Those jobs also divert money from projects and stimulus that could create lasting jobs.
I don’t have enough details to have a good opinion on the matter. I would say that weatherization stimulation needs to be thoroughly examined. Weatherization would certainly save homeowners and the government money, but how long will the jobs it creates be around. If they aren’t going to last at least until home construction and remodeling gets going again, I would be cautious about how much money is spent here.
Infrastructure upgrades should not be cut out completely. On the contrary, they should be boosted. Our infrastructure is vital to our economy and security. If products cannot get from California to Maine then forget about giving anyone anymore pocket money. And do we really need any more bridges collapsing or levies busting. The cost to maintain and upgrade these structures is much cheaper than the cost to completely rebuild them and the homes and business that can be destroyed when they fail. Not to mention the cost in lives.
Now to the tax cuts. I don’t know a great deal about tax policy here, so I may very well make an ass of myself. The rebates wont help. We tried that already and clearly it didn’t work. To get a rebate there’s no need to work, save, or invest. No increases in productivity or creation of new wealth happens. Only existing money, gained through taxes, is shifted around. We need actual tax cuts. Middle class tax cuts are important of course. The middle class is more likely to put their money into savings accounts and other investments, which banks then lend out and give the savers interest on. New wealth is created and loans are available for those seeking to purchase homes, cars, and start businesses.
Businesses also need a tax cut. Tax cuts to businesses increase investments in production, innovation, and jobs. “That’s Trickle-Down Economics!” I can hear my hard left readings shouting at their screens. Well, so what if it is. Would you rather your employer need to save money by letting you go or have that be unnecessary because their taxes were cut? Doesn’t look so back now does it? Small and medium sized businesses are probably in greater danger of having to lay-off workers, though the news seems to say otherwise, so perhaps their tax cut should be smaller. If anyone has numbers to prove or disprove that point I’d appreciate if you posted them in a comment.
So in short, cut some of the stimulus spending and shift to more tax cuts to the middle class and businesses large and small. That’s how I say we do it. I’m not economist. In fact I’ve had one semester of economics in high school, so I’m far from an expert. You can check out some opinions on the matter at Balloon Juice, Reason, Donklephant, and The Moderate Voice.
I’d also be happy to have you comment. Am I way off base? Did I say what I bashed Rush for suggesting? You have a better idea? Let’s hear it. The more debate the better.