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June 22, 2009

Liberals and Economics- Failing to Think Beyond Stage One

Economics is often seen by liberals as a simple action and reaction game. They create a certain set of rules to solicit a reaction favorable to their policies. However, liberals fail to recognize the repercussions of some of their economic policies.

A light example is the $25 unemployment increase that President Obama pushed into his stimulus plan. This was intended to provide Americans with more money, thus keeping the economy from contracting further from increased unemployment. However, what the President and Congressional liberals failed to understand is that $25 increase would push many households over the threshold for qualification of food stamps. So, while many families are receiving a $25 increase in unemployment checks, they are also losing hundreds of dollars in food stamps.

Story: http://news.yahoo.com/s/ap/20090615/ap_on_go_ot/us_stimulus_food_stamps

Now, the liberals have struck again by passing the cash for clunkers bill. (http://www.usatoday.com/money/autos/2009-06-18-cash-for-clunkers_N.htm?csp=usat.me)

The law would allow Americans to receive up to $4,500 if they trade in a gas guzzler for a new car. Analysts have projected that this could boost the car market by 10%. However, it presents the possibility of a new problem. What if Americans choose to turn in their older American made vehicles for new foreign made vehicles?

Let's face it. Toyota is leaps beyond the mpg realm in fuel efficiency (Prius 70+mpg), and the Honda Civic is ahead of American made compact cars. Why would someone trade in their car for an American made vehicle when they might be able to get a better mpg deal from a foreign auto manufacturer.

So the American government is going to spend an additional $1 billion or so that will likely end up in another country. That's liberal economics for you!

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