Home > Creativity, management, Markets, Planning, Uncertainty > Stimulus plan?! How about reward your friends plan?

Stimulus plan?! How about reward your friends plan?

with 5% of the 800+B going towards actual infrastructure, the truth is revealed about promises made.  The ones that matter are the long standing ones made to supporters early in the process, years ago, behind closed doors.  Private promises made by public faces.

If you wanted a real stimulous for the economy you would remember that small businesses are the engines of job creation and that you have to try a lot of things in a low risk way. My sense of what is needed is a combination of:

(1) microloans made by community banks and credit unions to members of their opwn community who are willing to to risk their own efforts, time and equity on small businesses, as validated by the local community. That’s where real oversight comes from.

(2) fully funded, expert venture capitalists who would use their proven skills in finding excellent opportunities to fund slightly larger-in-scope ventures.

Now, like in all things, a lot of these would fail, BUT you would be rewarded entreprenurial behavior and actually risk making successes out of independent small businessmen. Therefore I conclude this will not become policy because clearly the current administration is all about wealth redistribution after government takes its cut first.  We have vacuumed up all the loose cash for the next 20 years which might have actually fueled good startup business ideas and shipped it to people who’s ideas couldn’t attract enough money to get funded when private capital evaluated them.  We have set the economy back at least 20 years with these actions.

  1. Matt Blankenship
    February 2, 2009 at 2:41 pm

    A plan with steps like this makes way too much sense. A governmental bureaucracy would never implement such a plan as it makes too much sense and is political suicide. How do you reward your political backers when you give up control to people making rational, profit-based decisions. Bottom line and profit have never been a part of the government’s lexicon. That has been demonstrated time and again with the government’s suicidal budgets and accounting sleights of hand.

    Putting billions of dollars into infrastructure doesn’t provide any stimulus to the overall economy. I might go so far as to call it deferred maintenance. (Which just like a house, you do it before you sell it and we have been selling off the country now for a while.)

    I believe I recall Obama talking about new jobs creation and he stated that some number of jobs were going to be created and something like 80% of them were going to be in the private sector. What we don’t need is anymore bureaucrats and government spending. Nearly every other sector is laying off workers, but the government is hiring? What’s wrong with this picture?

    We must be insane if we keep expecting government to do something different when they continue to do the same things and expect different results.

  2. Matt Blankenship
    February 3, 2009 at 9:35 am

    Okay, deferred maintenance on our infrastructure may have filter down stimulus in some parts of the economy, but have you seen the other projects our governemnt is trying to pack into this porker?

    From the Wall Street Journal:

    There’s $1 billion for Amtrak, the federal railroad that hasn’t turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There’s even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

    In selling the plan, President Obama has said this bill will make “dramatic investments to revive our flagging economy.” Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There’s another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.

    Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus. And even many of these projects aren’t likely to help the economy immediately. As Peter Orszag, the President’s new budget director, told Congress a year ago, “even those that are ‘on the shelf’ generally cannot be undertaken quickly enough to provide timely stimulus to the economy.”

    Most of the rest of this project spending will go to such things as renewable energy funding ($8 billion) or mass transit ($6 billion) that have a low or negative return on investment. Most urban transit systems are so badly managed that their fares cover less than half of their costs. However, the people who operate these systems belong to public-employee unions that are campaign contributors to . . . guess which party?

    Here’s another lu-lu: Congress wants to spend $600 million more for the federal government to buy new cars. Uncle Sam already spends $3 billion a year on its fleet of 600,000 vehicles. Congress also wants to spend $7 billion for modernizing federal buildings and facilities. The Smithsonian is targeted to receive $150 million; we love the Smithsonian, too, but this is a job creator?

    Another “stimulus” secret is that some $252 billion is for income-transfer payments — that is, not investments that arguably help everyone, but cash or benefits to individuals for doing nothing at all. There’s $81 billion for Medicaid, $36 billion for expanded unemployment benefits, $20 billion for food stamps, and $83 billion for the earned income credit for people who don’t pay income tax. While some of that may be justified to help poorer Americans ride out the recession, they aren’t job creators.

    As for the promise of accountability, some $54 billion will go to federal programs that the Office of Management and Budget or the Government Accountability Office have already criticized as “ineffective” or unable to pass basic financial audits. These include the Economic Development Administration, the Small Business Administration, the 10 federal job training programs, and many more.

    Oh, and don’t forget education, which would get $66 billion more. That’s more than the entire Education Department spent a mere 10 years ago and is on top of the doubling under President Bush. Some $6 billion of this will subsidize university building projects. If you think the intention here is to help kids learn, the House declares on page 257 that “No recipient . . . shall use such funds to provide financial assistance to students to attend private elementary or secondary schools.” Horrors: Some money might go to nonunion teachers.

    End of Journal quote. Now me again.

    I remembered the jobs creation numbers now. 800,000 new jobs and 80% in the private sector. Yup, 160,000 new government jobs. Just what the doctor ordered for an efficient economic stimulus. Those will pay dividends way into the future. Once created, they never go away. They only multiply. It’s impossible to get people off the government nipple once they attach themselves.

    I’m just saying….Just one man’s opinion.

  3. Terry Lesniak
    February 3, 2009 at 10:55 am

    This isn’t about stimulus…it’s about creating a power base with the clear assumption that dismantlement is remote if not impossible.


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