Don't Stimulate There—Stimulate Here!

Democrats Go For The Big "O"

In an effort to give great pleasure to potential voters in 2004, the DC politicians are attempting to "stimulate" the economy. As the Republicans and Democrats bicker about who has the best stimulation technique, they both are missing the point so badly that the economy is destined to get no satisfaction.

"I can't GET no-O . . . sa tis FACK shun"—Mick Jagger

Like Mick, the economy will get no "sa-tis-FACK-shun" as both parties continue to probe in the wrong spot. This economic slowdown was not a consumer slowdown, it was a capital spending withdrawal by businesses. No matter how much sweet-talking and money-chugging they want to throw the consumers' way over tax cuts, they are not stimulating the correct spot as this would only put a small prick into the slowdown.

They should be stroking and stimulating businesses.

Indeed, if the consumer had not continued to firmly hold up the economy throughout the last two years, we would now be deep into the first depression since the 1930s. Love-hut construction, both big and small, has been grinding forward as the housing sector shot straight up due to the low interest rates. Auto sales and retail sales were also firm and strong as consumers felt that tingling sensation, stimulated by low interest rates. As it is, we are just slowly pulling out of a mild economic slowdown.

We had a stiff, hard stock market decline, but the economy had a soft recession after the hot and steamy 90s.

Don't Stimulate That—Stimulate This!

Post Y2K, many companies had big, enlarged losses in the tens of billions of dollars. Capital spending in the telecommunications sector shriveled up, and the "hardware" turned to "software" as computer sales became impotent. There has been little erecting of big IT systems. Any "stimulating" by the Democrats and the Republicans should be directed toward businesses if the goal is to get the economy purring. Businesses create jobs when profits are thrusting forward.

The inability by the radical Democrats to focus on businesses is the result of their one way quest to go for the G-spot—gargantuan government.

Since the socialist Democrats mantra is anti-business, they refuse to acknowledge the true reasons why the economy went soft. If both parties want to turn on the economy, their stimulation attempts should be directed at inserting investment tax credits for businesses and reducing the regulatory insanity. Widespread ignorance in America keeps these politicians focusing their rhetoric on the "trampling of the average American" when in fact it has been businesses that have suffered the thrust of this downslide, not the consumer.

The economy does not need more consumer spending. Juice business spending and we will see the economy turn on. Reducing regulations and giving investment incentives to expand and grow business will give a rise to business activity, pump up profits, and shrink unemployment as job creation bulges.

Perhaps the reason why the Democrats stimulate the wrong spot is that half the population does not pay any taxes. Their constituent base is made up of those who drain the system dry, not those who pump money into the system. That is why the Democrats demand "tax rebates" to those who don't even pay taxes. That lunacy is nothing but Marxist redistribution of wealth.

Falling over each other to give tax breaks to the "right people" will not cause a throbbing employment rate—ignorant voters don't know that, and the politicians who care more about votes than dedicated service to their country don't care if the morons do or don't understand that.

If the DC politicos want job creation, they should stop the orgy of social spending and present a big package of investment tax credits to businesses, along with making many regulations go slip sliding away.

Politicians use votes as the driver and tool to manipulate their careers as they attempt to fit in with the voters. It is outrageous how these Democrats ogle and stare at those two big jugs of electoral votes—New York and California—as they desire to put the squeeze around them for 2004.

Unfortunately, the Republicans are in bed with the Democrats, making out plans to snatch votes and screw the economy, not to stimulate capital spending for industries with a dead battery. They clearly are trying to mount a ride on the voters headed into the 2004 election.

This chart clearly shows that consumer spending, as represented by the green line and retail sales, has had a stiff and firm rising trend since the downturn started. No shot of Viagra is needed here as the up trend has had some good staying power. What went limp was the business side of the economy, as shown by this red line and industrial production.

Can you possibly imagine the Democrats on the talk show circuits bemoaning the flaccid state of industrial production, capacity utilization, and corporate profits? Instead, they moan and groan for the "little guy" as they work up various stimulation techniques to give a rise to consumer spending.

Size does not matter to the Democrats. They gripe about "big" business, "big" oil, "big" drug companies, . . . If it is "big", they don't like it. Thus, you will never hear these radicals defend business or propose stimulating corporate spending.

If the radical Democrats continue to neglect "big" business, this massaging and stimulation of consumer spending may allow them to finally achieve their long hoped for—and very elusive—Big "O"—obliteration of the free market system.

Democrats never go both ways, as they only go down one way—the consumer way. "Big business" needs some love and attention also, but the radicals are hell-bent on sucking the free market dry.

Try Some Self-Stimulation

If politicians are needed to "stimulate the economy", at what point in an up and driving economy are politicians needed to "de-stimulate" the economy? How do you ever have a normal business cycle with this much butting in by the government? In Economic Ignorance Part I, I detailed how the press and the ignorant public incorrectly associate presidential moves with economic virility. In Part II here, we see that politicians are derelict in duty as they make a pass for votes in setting domestic policy instead of doing what is right for the nation.

After experimenting taking various positions in focus groups, Nancy "Facelift" Pelosi said Bush's plan "will blow a hole" in the deficit and that her plan will "pump billions into the economy." She derided Bush's tax dividend plan, saying hard working Americans will take her tax cuts and "will pump it back into the economy". For all of Pelosi's "blowing" and "pumping", she fails to understand that if she really wanted to lubricate the economy, she would direct her stimulation techniques to businesses.

If Bush fails to engage in this tit-for-tat with Pelosi Belecosi after her oral presentation, he needs his head examined. She is looking for a big package of socialism as Bush is looking down below to the sweet spot and center of attention—corporations who actually hire job seekers.

Pelosi also said that her plan will "cost $100 billion." Pelosi can suck up all she wants to her moronic constituents, but a "cost" on a tax cut is zero. Raising or lowering revenue through tax rate changes is not an expense (or cost), it is a change in revenue. On the other hand, Pelosi and her radical cohorts create a huge cost to our nation with their horrific spending on social waste programs.

Pelosi is simply toying and playing with Bush. Even Bush's package is too small as his tax cuts only rub the surface. Bush should be driving much deeper with bigger sized cuts cuts to give taxpayers that gratifying feeling of money in their hands. Unlike Dick Gephardt who took things slowly working with Bush, Pelosi shifted her position on Bush as she wants a quicker pace of results than Dick would get, even if she has to do it herself.

Our economy currently does not need any "stimulation", especially directed at consumers. The last three GDP reports confirm a bulging recovery. However, the Jan. 10 employment report showing a disappointing shriveling and loss of traction in employment does support my position that it is companies—not consumers—that need the relief-stroke if relief must be handed out. The economy will recover on its own. It does not need any consumer stimulation to get it up.

Tax cuts are needed because it is criminal that half the public pays no taxes while taxpayers are treated as slaves. We don't need tax cuts to be "stimulated". We need tax cuts to be free from tax slavery.

The DC beltway crowd needs to do some "self-stimulation"—on their brains.

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