Monday, January 21, 2008

How does more money to food banks stimulate the economy?

It doesn't.

But that certainly won't stop Ohio Senator Sherrod Brown from including such funding in the fast-tracked 'stimulus' bill under consideration in Washington.

"He said assisting those who have already suffered, such as with money for food banks, the home heating assistance program, and extended unemployment benefits, are the elements he wants in a "stimulus" package."

First of all, numerous articles in financial publications, and numerous economists, say that tax rebates won't stimulate the economy.

It was tried in 2001 and really didn't work, but the tax cuts passed in 2003 did. And if you don't believe that, just look at what the stock market did in response to the announcement of these rebates. It went down because Wall Street and everyday investors understand that any rebates have to come from somewhere, which means that Congress will have to borrow the money - putting increased debt on the shoulders of future generations.

But, even if you might somehow convince yourself that tax rebates are the way to go to head off what might be a recession, how does money to food banks stimulate the economy?

If you extend unemployment benefits, you encourage recipients to stay in the program longer rather than actually taking a job - even if it's a job paying less than what they were making previously. The same with home heating assistance - all these programs do is make people comfortable in their current economic status, encouraging them to continue in such circumstances.

Any money that the government gives out has to come from somewhere - and that means you and me - and everyone else who's already struggling with their own increasing costs, including taxes which will have to be imposed on future generations to cover the promises being made today.

This is a re-distribution of wealth - and it won't cause the economy to grow. In fact, it may have the opposite impact of causing those most capable of spending to decide to save instead.

Any way you look at it, taking from some to give to others does not stimulate the economy- even if it is for a 'good cause' like a food bank.

1 comment:

Hooda Thunkit said...

One thing we can all depend on when this bill is finally crafted, this will be the biggest piece of pork that has ever come down the pike.

Count on it...

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