Economic Stimulus: The Question of Who

A sound argument can be made that without stimulus the economic morass which exists on September 1, 2010 would have been much worse. This discussion is literally the "glass half full, glass half empty" classic. A lot of jobs were created by government spending. A lot of jobs were saved by government spending. GDP was larger because of the additive impact of government spending.

However, the situation is still pretty grim. There is uncertainty and the government, the Federal Reserve, the Congress and the Executive branch, all have little left to do. They are hamstrung politically and economically. There just isn't much left to give. Interest rates are low. Shouldn't that stimulate risk taking and entrepreneurship? Taxes are low. Doesn't that encourage private spending?

The answers are no and no.

Why? Because it was the government that chose how to spend the money and how to make future tax policy totally uncertain. The "cash" in America is in the hands of small businesses and those businesses just don't want to bet the farm. The administration in Washington has said that if you are successful - earning in the higher brackets, we are going to tax you. Well, at least, maybe we are going to tax you. The uncertainty is palpable. How does the government "allow" small businesses, the backbone of the country, the source of job growth, to just get on with it?

Easy, it would seem. Just allow the small businesses to make those decisions without fear of some new government program or tax policy sweeping away their freedom of choice. Sphere: Related Content