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Originally Posted by Snake Doctor
That's just it woj, it does seem to make sense, which is why it makes for great 30 second ads and bumper stickers, until you scratch below the surface.
Then you ask questions like "how is government spending the money less stimulative than consumers spending the money"?
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one word
pork.
A government bill will allocate money not on what is best for the country but what is best for the districts represented by the congress. It results in stupid projects which have no investment value other than the jobs in a region. Once the money is gone those jobs disappear as well. When the money i is directed to investment, those that make money, and can be sell sustaining are rewarded, those that can't are not.
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I'm not saying government should take all of our money and spend it, I'm just pointing out that calling government spending "waste" and calling tax cuts "stimulative" is ridiculous. At least if government spends the money with the intention of stimulating the economy, they can target the funds towards that and be more effective than a consumer who may just pay down credit card debt or buy goods at Wal-mart that were made in China.
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governments have to worry about appeasing the unions in a way that business do not, because quite simply unions can cost an official an election. The workers have to much power so yes government spending ends up being wasteful. Market driven investment is not so influenced so it becomes far more productive even with the act of buying stuff from china.
Protectionist thinking results in retalitory tarrifs so if the government were to "direct" the income to home grown business that would result in foreign countries doing the same. which would cost even more jobs in america.
Paying down a credit card debt, give the banks more money, which loosens lending restrictions, to businesses, this is exactly what is currently need now.
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As for investments, you pay the tax when you sell the investment, not when you buy it, so a low rate today doesn't make buying a stock or bond or business more attractive, it makes selling one of those things more attractive.
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you can't sell an investment unless someone else buys it, the transaction is balanced. So if person A sells the stock to pay down his debt person b must buy the stock.
The end result is the company keeps the money, in the investement coffers, while the banks get more lendable capital (the desired result). IF they spend it instead, that some business gets the money, and with lower taxes can give bigger dividends which again put money into the economy to pay down debt and free up lendable capital (the desired result).
The two examples you gave while rolling your eyes are examples of the types of business that would be help specifically by the loosening of the banks lendable capital.
And all the jobs that are created by those business is where the job growth is comming from.