Reply #74: Tax cuts to the working class aren't stimulative either

[jmowreader]

Let's play: Take $10 billion and spread it among 100 million taxpayers. Each one will receive $100.

Those people will do one of two things with it: they will send it to their credit card companies, which removes it from the money that could have been used to provide stimulus because it's replacing money that already had its stimulative effect, or they'll spend it at one of the millions of stores in the United States. This we'll look at closer: If a shopkeeper gets $500 more in the till because of this tax cut, he won't hire or expand. Depending on how large the store is, it'll either be a nice day if it's a small store. or something they won't even notice if it's a big one.

We can prove it pretty easily: Think of Shrub's stimulus checks--$600 to every American citizen who was in a taxpaying family. This was supposed to be just the thing to make the economy boom. In fact, it was a $155 billion boondoggle because the spending was too spread out to do any stimulative good.

Oh, don't get me wrong: the working class can certainly use the money brought by a tax cut. After all, every dollar helps. But if you're trying to create jobs, you do NOT do it with a tax cut.

The ONLY thing the government can do to stimulate the economy is to spend money. Government spending is stimulative where your and my spending is not for one simple reason: when the government spends, it walks into a business and puts a couple million dollars on the table, then asks for more work to be done faster than the current staff can accomplish.