Tornado Alley (PROG)

[wbmw]

Re: I think the stimulus bill was well intended but won't really solve a problem, only delay it. Like the cash for clunkers, or the 8k tax credit for first time home buyers it's spending a future tax receipt (in theory) while creating more debt.

You have a point, but you can either address the problem during a time when the country has a 10% unemployment rate, or address it at a time when the unemployment is back down to 5%. You are correct that it pushes the problem out, but I'd rather address it at the 5% level.

Re: I expect another Stimulus Bill sometime in the 1st qtr. 2010 to further fund state budget shortfalls.

I think there are a few states that might need such a bill - Michigan, Ohio, California, et al - but the majority seem to have lesser (or even zero) budget problems. Personally, I think the 1-year mulligan ought to have gotten California to reexamine it's revenues and expenditures in closer detail, with action plans ready for 2010. For Michigan and Ohio, unemployment is a bitch, so it will be harder for them.

I guess what I'm trying to say is that for the majority of states, I don't think a federal bailout is necessary. For a few, it might be, but it may be small enough that they can fund it without a stimulus bill, but rather by re-appropriating funds from another source. ARRA still has a lot of unassigned dollars....

Re: Perhaps we will "bankrupt" the country instead? Or at the very least set up a scenario where rising interest rates will increase our debt service cost to the point where it is a significant portion of the federal budget?

The interesting thing is that years ago, during the years of recovery following the Great Depression, the wealthy class was paying taxes on the order of 90%. What's interesting about this is that these people were no less wealthy because of it, and were in fact living the good life.

I don't expect that we need to go all the way back to 90%, but we should admit that there are huge, untapped wealth in this country that can go towards paying down the debt. The more important things to worry about is having a stable middle class who can return the velocity of money back into the economy. If the middle class is unemployed and unable to buy goods, or they are too busy paying off debts, or paying for health care, then our economy is really cooked, because the wealthy 1% of the country will not be able to account for a sustainable GDP.