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Unwilling to Reason with Why All Previous Attempts to Stimulate the Economy Have Failed, Obama Outlines Additional Stimulus

By: Steve Johnson

9/7/2010 - 100 Comments

In total, Obama has proposed a $350 billion dollar stimulus package, just before the Nov. election as the Democrats are likely to see the largest turnover of Congressional seats in the history of the country.  

The new stimulus measures include an estimated $200 billion in tax breaks for businesses that invest in new plants and equipment, a $100 billion extension of the business tax credit for research and development and $50 billion over the next decade to improve infrastructure.

As I’ve said before, the Obama economic team will continue to try to stimulate the economy until their last breath. They cannot bring themselves to understand the devastating failure of their previous attempts to stimulate the economy.

I don’t even think Obama will be able to concede to his economy strategy as the wrong direction years from now.  He is sincerely convinced that we can print our way to prosperity and he is sincerely wrong.

Labor Costs

I give credit to Obama for finally realizing that small-business is the answer and they are the primary source of job creation.  But he is still waging a war against savings and profits, two critical elements of the small-business sector.  

Obama does not understand that businesses don’t need new equipment until they can afford to hire workers at wages that allow them to make a profit with the new equipment.   And with low interest rates, almost even business that needed to purchase new equipment has already done so.

Labor costs remain a problem, in which Obama continues to support with higher union wages, additional health care costs and pension programs.

Labor needs to be freed from these restrains so that businesses can once again compete with global competitors.  Then after we rebuild our business infrastructure and regain our competitive advantage and market share, wages and benefits can increase.

True Stimulus

To truly stimulate the economy, we need to increase savings and business investments.  To do that we need to face the recession by letting consumer spending drop, so that saving can increase. 

Then we need Congress to repeal the massive increase in taxes and spending programs they have created.  And finally we need to create motivation for entrepreneurs to go after new ideas and attract business investment dollars to hire workers and create something useful. 

This is the only path to stimulate the economy, but it is not a path that the Obama economic team is willing to take.

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