Maybe it’s time for something different?

So, the Federal Government has decided that it needs yet another stimulus package because the economy’s lagging.  So far, I have to say that the last three packages have done little to nothing to really create a sustainable recovery.  Perhaps it’s time for some different thinking on the matter?

It bothers me to see the actions of the government over the last six weeks.  A political deadlock over the fact we need to cut spending, then vote to spend *more*?!  Logic took a long walk off a short pier up in DC the last few years…

To date, over the last four years, the government has spent almost $1.8 trillion in defined “stimulus” packages.  Where’s the payoff?   Unemployment is still at an all-time high. Jobs growth is nil.  The remaining economic numbers don’t look all that hot either.

So here’s my wild-ass idea.  Might not work, but hey – people who make a hell of a lot more money than me and have tons of alphabet soup on their business cards haven’t been doing any better.  The simple thought – take that $1.8 trillion and split it amongst US households, and DON’T require them to pay it back over a series of years.  It’s a gift, not a loan.  Even better, how about just paying down the total US Consumer Debt number of $2.4 trillion?

Hear me out on this… As of May, the average household credit card debt stood at just shy of $16k.  In interest payments only, that’s $2,100 per year.  How many are actively paying more than that and trying to pay it down?  (Consumer debt, by the way, includes things like personal loans, car loans, etc.  I don’t believe student loans are included.)  So, in essence, you free up at least $200 per month per household, perhaps more.

That’s money that was being spent to pay down debts that could be used elsewhere.  Perhaps an extra dinner and movie out per month?  Maybe vacation money?  Perhaps a new TV, or maybe even a new car.  Home improvements, such as a new washer & dryer for the one that’s been there for fifteen years?  What happens then?  Producers have to raise production to meet demand (or prices inflate).  IF they have to raise production – doesn’t that mean more jobs?

Or perhaps they save it at the bank (yes, yes, horrid rates and all).  If that happens, that would give banks much higher reserve ratios, which would allow them to lend more (with proper risk controls) at reasonable rates.  That in and of itself would be beneficial to not only consumers, but businesses as well.

The point I’m trying to make is this – these “stimulus” packages are short-term at best.  The roots of a true economic recovery have always been at the consumer-spending level.  All these packages serve to do is provide a sense of false hope and keep the politicians in office for another term.  What’s the President going to be touting for the next twelve months as he stumps?  “I brought in a stimulus package for jobs.”  Big whoop – it’s not addressing the core problem.  And realistically, how is this packages supposed to help “now” anyways?

Sure, we can go on and on about how this might be a short-term fix as well, all the pitfalls, etc.  But really, the first $1.5 trillion hasn’t broken us out of our slump.  Consumer sentiment and confidence are low.  The simple reason is that people know they have a lot of bills that are still due if they’re out of a job.  Remove some of those bills and see what happens then.

I find it folly to believe that a corporation can create jobs when there is no demand for the goods and services they produce.  So what exactly are we stimulating them to do?  Did you hear the story about one of the stimulus programs that spent a few hundred thousand and created exactly 1.2 jobs?

I’m obviously not part of the “brain trust” in DC.  (No, I don’t mean the one where they share a brain between all of them, though it seems that way sometimes.)  I don’t have an advanced degree in economics.  What I do have is real world experience.  I know that if I had another couple hundred bucks in my pocket each month, I’d eat out or go on vacation.  I might buy something that I really don’t need, but would love to have.  Perhaps it’s time the “trust” in DC actually thinks what they would do with their money if it was in their pockets rather than their lobbyists’ pockets?