Wednesday, February 4, 2009

The Jon Stewart Stimulus Plan

I don't have TV. I own one, it's just not connected to cable and I can't get local stations either. Some days this feels like we miss out on things, but most of the time our computers serve as our means of information and entertainment. I can watch things online that I would have watched on TV, and I can do it when I feel like it.

One show I did miss when we gave up cable was The Daily Show with Jon Stewart. He is quite simply the smartest guy out there and has no issues speaking truth to power. His is the only TV show I watch online with any frequency. On his show last week, he asked a question to a guest that basically amounted to: "why not give the stimulus money to the consumer?"

Indeed, the man may be on to something. If we have decided as a nation that we must spend what is now coming in at 1.5 TRILLION(!) dollars between the two TARP plans to buy the bad debt of banks (why?), why not take that same amount of money and give it to every man, woman and child in the country to spend or save or do whatever?

Here's the thing: We don't live in a country that makes things anymore. Sure, we still produce some things, but mostly we are a consumer driven economy. Over 70% of our economy is because we buy stuff. Think about how many factories and mills have closed near where you live. Now ask your self what has replaced them - malls. More and more communities turned to retail to save themselves from the downturn in manufacturing and as a result, malls and shopping centers have expanded at an exponential rate. Now what happens when the shoppers (us) who buy things have no money? Well, for years we borrowed thanks to easy and cheap credit. But now that has dried up and so we are beginning to not be able to pay off our debts. And make no mistake, whatever you have heard about all this, we are just at the start of a vicious cycle of default.

Back to the TARP plans - the banks have all this debt they can't value (because they can't find anyone to buy it for what they claim it's worth) and so our government and financial industry leaders (often some of the same people) have decided the BEST thing to do is to have the government (read - the US taxpayer) purchase these bad debts (at the bank's wished for cost) and get the banks re-capitalized so that they can lend again. But who will they lend to? I know I am not running out and getting another vehicle in this economy. So really, we are just giving the banks money for nothing and calling it a plan.

Now, if we really want to get money back into the economy (70% consumerism remember?) why not take that same amount of money and give it directly to the consumer? That means in a country of 300 million people, we would each get $5000.00. That's for each of us. How would most households spend anywhere from $15,000 to $25,000 dollars? Well, many would pay off debts - thus re-capitalizing banks and financial institutions like Capital One, American Express and the auto industry based finance companies like GMAC. Many would actually go out and purchase goods again like cars, white goods and other such things. Many more might utilize the money to save (again re-capitalizing banks and credit unions).

So what's the problem with this plan? Oh, that's right - the American consumer does not have lobbyists to argue for us. I mean, we should have representation, but really we don't. Our congressional delegations are too busy listening to the people who give them huge donations to help with re-election and that's not really us now is it?

But after two years of reading economists' blogs and plans, I'm not so sure that the Stewart Plan is not the best. I mean, it's hard to argue with a plan that works from the ground up to boost the economy. I never was a believer in the "trickle down" theories popularized by the conservatives of the past 40 years. It has clearly not worked out so well. So I say let's give it a try from the bottom this time. It's our money, right? Let's do something with it to help us - screw the banks.


  1. Amen, brother. It was ours to start with, and I'm a firm believer that I can better decide how to spend my money than any government.