Saturday, September 8, 2012

The Election and the Economy (Without the Jargon)

First of all, Perfectnumber is in way over her head here. Politics are confusing- who can possibly understand them? But then she realized that the average American has to at least somewhat understand them, if they want to vote.

Pictured: The average American's take on politics. Image source.
I am going to do my best to articulate what each side believes, and the assumptions about the nature of the world that lead to those beliefs, and what questions one would have to answer in order to determine which side has beliefs closest to one's own.

(If I miss any important facts, or get something wrong, tell me.)

Here we go! Today's election-related topic is: the economy.

Image source.
Obama's position:

Obama's plan focuses on tax cuts for the average American. He passed the American Recovery and Reinvestment Act, with tax cuts specifically targeted towards working families and small businesses. He believes the economy will benefit most when more money is going directly into the hands of American people, not a wealthy minority or enormous corporations.

Source:, and a lot of being puzzled and suspicious of any statistic related to politics.

Romney's position:

Romney believes that in order to improve the economy, businesses must be given the means to create more jobs. There are way too many government regulations on business- this is a huge burden- it is smothering the economy. Therefore, Romney plans to get rid of a lot of the regulations and bureaucracy, and cut taxes on businesses.

Source:, and a lot of sifting through biases and jargon until I finally figured out where he's coming from.

So all those ads I see, telling me to vote for Obama because Romney would have middle class families paying $2000 more or whatever- that's because Romney's plan does not directly target "middle class families" for tax cuts- it targets businesses. It all makes sense now.

Questions to consider:

So, Romney wants to remove a lot of regulations on business. What are "regulations"?

According to this page, there are 5 areas in which government regulates business:
  1. Advertising (truth-in-advertising laws)
  2. Employment and labor (for example, minimum wage)
  3. Environmental (limits on pollution, etc)
  4. Privacy (don't spread around customers' credit card numbers)
  5. Safety and health (providing a safe, clean work environment for employees)
All of that seems very important to me. However, it may be the case that regulations have gone way too far, and there are so many small and relatively unimportant requirements that it holds back progress. This is Romney's position. Is it true? I don't know.

Which regulations does Romney want to get rid of? What practical effect would it have on employees, customers, and the environment? 

What are the current tax rates for different income levels?

Everyone is talking in terms of an increase or decrease and "tax cuts for the rich". What are the absolute numbers we're dealing with here?

According to wikipedia, a married couple filing jointly (I picked this case because everyone's been all about families in this election) pays an income tax of 10% on the first $17400, then 15% on the next bunch of income up to $70700, then 25% on the next bunch of income up to $142700, then 28% up to $217450, then 33% up to $388350, then 35% on any more.

OKAY that was a bunch of numbers in paragraph form. Not so useful. Take a look at this graph of household income in 2010, and then we'll try to make sense of the tax rates.

I recommend clicking here to see it bigger: Image source.
(I know this is "household income" and a household sometimes just has 1 adult rather than 2 filing jointly. I'm just trying to get some estimates. Calm down.)

15% of households earn $17400 or less, which puts them in the 10% tax bracket.

54% of households earn $17400 to $70700, which puts them in the 15% tax bracket.

15% of households earn $70700 to $142700, which puts them in the 25% tax bracket.

12% of households earn $142700 to $217450, which puts them in the 28% tax bracket.

4% of households earn more than that, which puts them in the 33% or 35% tax bracket.

(Used data from this table, which is from 2003 but is probably the pretty much the same as that graph. And I did the math quick and dirty.)

So as a voter, ask yourself if these tax rates seem fair. Should higher incomes be taxed at higher levels? If so, how much higher?

Who are these "middle-class" "working families"?

I once saw a study that said almost everybody considers themselves to be middle-class, even though a lot of them totally aren't. Both Obama and Romney are talking about all the wonderful things they plan to do to benefit "the middle class."

To me it seems like a sneaky political attempt to show they totally identify with you. Like when you take one of those personality tests, and at the end it tells you a bunch of incredibly vague statements, but they're worded so you don't realize they're vague- you think that personality test TOTALLY GETS you.

"Though at times you enjoy being the life of the party, you feel you also have a quiet, introspective side that your friends do not know." Image source.
So it's unclear to me who the supposed benefits to "the middle class" are really for.

Huge corporations are being portrayed as faceless, callous, uncaring, evil- let's take a look at this criticism.

I made this chart using this data from 2008, to show how many Americans are employed by small businesses and large businesses:

Blue: employees. Red: payroll.

So don't demonize the huge companies- they're employing 25%-50% of the workforce (depending on your definition of "large" vs "small" business). They're generating a huge chunk of the money floating around in the economy. We NEED them.

(Disclaimer: I know everything about math and nothing about politics or the economy. If I'm using the wrong numbers or interpreting them wrong, tell me.)

One more note- as a feminist, I have to mention how it's a bit suspicious that Romney wants to strengthen those who already have power (big businesses), with the idea that of course then they'll use their power to help out everyone else (by creating jobs). Because we all know that's how power and oppression work.

What is our goal for the economy?

What exactly are Obama and Romney aiming for here? What is the ideal picture of the American economy? A few ideas I have:
  1. Everyone who is skilled and willing to work should be able to find a job that suits them.
  2. Income levels, after tax, should be high enough to support people, so they never have to worry about basic needs like food, housing, health care, etc.
(Agree/disagree? What other things should be true of the economy? Decreasing the gap between rich and poor? Not allowing anyone with bad work ethic to get a "free ride"?)

This raises more questions about what "high enough" income means- does it mean supporting kids too? Minimum wage isn't enough to support a whole family- is that a bad thing? In setting wages, is the goal to give workers the amount they need to live on, or to give them an amount corresponding to the difficulty and skill required for that particular job?

How do jobs get "created"?

It seems like both Obama and Romney are relying on the assumption that if a company has more money, it will expand and "create jobs" (though Romney's plan is definitely way more dependent on this assumption). I suppose this is true... Does it have the same effect for both small and large businesses?

Also, there is fear of jobs "moving overseas"- particularly in the case of a large company expanding. (Why so much fear? It looks a lot like racism to me. Why are Americans more deserving of jobs? Okay, whatever, right now I'm just talking about what will benefit Americans economically.)

What causes the whole "move overseas" thing? Is it more likely that American jobs will be lost in this way under Obama or Romney? I don't know. This question is left as an exercise to the reader.

The main difference (as far as I can tell):

In Obama's worldview, many Americans are being oppressed by larger forces at work in the economy. There is inequality built into the system, and he wants to change that by directly giving American taxpayers more money, and therefore more control. If people just had more opportunities, they would work hard and be more successful- he intends to provide them with those opportunities.

In Romney's worldview, economic standing is earned through talent and hard work. People who have more money are the ones who are the most responsible and hard-working. Therefore, to improve the economy, successful companies should be given more tax breaks. They have shown they are the most deserving, the most likely to put that money to good use.

And now the voters can decide which they agree with. I've made my decision.


  1. OK, this is a common misconception about tax brackets. Only the part of your income that puts you into a higher bracket is taxed at that rate, not your entire income. Once again, Hank Green explains it better than I could. Most people think of it as "the more money you make, the more you get taxed" but you could also think of it the other way: the less money you make, the more likely you need that money to go toward basic needs rather than disposable income, thus the more you get to keep. Also, as Hank explains, many very wealthy people are making their money from investments and not from earned income, so they're being taxed at a lower rate anyway.

    The two basic philosophies about taxes, as I understand them, are this:
    -Give tax breaks to businesses, so they will get to keep more money and thus hire more people. ("Trickle down")
    -Give tax breaks to middle and lower class families and they will be more likely to spend money, thus creating profits for businesses, which in turn will hire more people. ("Trickle up")

    The first idea has been tried in the past, and it doesn't have a great track record; businesses may decide to just pay their top executives more money rather than hiring more people -- but this is the model that Republicans still tend to favor. On the other hand, there is evidence that as people make more money, they spend more money -- so my money (so to speak) is on the latter philosophy.

    1. Yeah when I was reading the wikipedia article on income tax rates, I discovered that thing about how only the part that puts you OVER the previous tax bracket gets taxed at that rate. I was DELIGHTED to find that, because it makes SO MUCH SENSE- before, I was worried that someone might be in one tax bracket, then earn $1 more and move up to the next one, and the difference in tax rate means their net income is actually LOWER when they earn more money. But fortunately it doesn't work that way. Net income is a monotonically increasing function of gross income. These are the things math nerds worry about.

      I think it's good to think in terms of "two basic philosophies about taxes" and I hate how that's not what's being talked about in this election- all we get is biased statistics and mocking the other side and quotes taken out of context. Each side believes what they believe for a reason, and I would like to know what those reasons are. That's why I wrote this blog post. ^_^

    2. Please show me where all corporations pay their executives more and dont expand? And, please provide specific examples where capitalism has not worked? There is more to the economy than just spending money. When people dont feel confident about the economy, they dont spend money. When the government tells business how to do their business, disaster happens : ie, the community reinvestment act. When the government picks winners and losers in business, the tax payer loses, ie: GM and Solyndra. Again, the government is not in the "fairness" business.

    3. Here is a CNN article that shows it is the market, not the government or excessive regulation, that is causing the hoarding of cash by corporations.

      As I state below, when there is not enough demand for their goods and services (caused by high unemployment and low spending power), corporations do not expand or hire. They sit on their cash reserves. But it's not Obama's fault. It's caused by capitalism running its usual course. Supply and demand. Sometimes the "invisible hand" stops functioning well and needs assistance. Pure, unbridled capitalism is not the answer.

    4. Corporations are also sitting on cash and not hiring because of the uncertain economic climate that is created by government.

      Here is the summary:
      Executive Summary
      The 10 most severe problems for small-business owners of the 75
      business problems assessed are in order: “Cost of Health Insurance,”
      “Uncertainty over Economic Conditions,” “Cost of Natural Gas, Propane,
      Gasoline, Diesel, Fuel Oil,”3 “Uncertainty over Government
      Actions,” “Unreasonable Government Regulations,” “Federal Taxes
      on Business Income,” “Tax Complexity,” “Frequent Changes in Federal
      Tax Laws and Rules,” “Property Taxes (real, inventory or personal
      property)” and “State Taxes on Business Income.” The cost of
      health insurance remains the most severe problem for small-business
      owners and is “critical” for 52 percent of respondents, a decline from
      56 percent in 2008, but still far higher than the second-ranked problem,
      “Uncertainty over Economic Conditions” where 38 percent find
      it a critical problem. Energy Costs, except Electricity is critical for 35
      percent of small-business owners."

      When government interferes in the market instead of allowing it to correct itself. This is what happens. It is Obama's fault. He wants to be FDR, but The New Deal did not work either and prolonged the depression for far longer than it should have.


    5. And while the market is "correcting itself," a lot of people suffer for a very long time. There must come a point at which we say, "there has to be a safety net."

      That's the problem with this economic stuff. You can always find a group or a study that will state something the exact opposite of what some other study will say. How is anyone to know the truth?

    6. I am forced to disagree with the anonymous poster on several points, although a number of his lemmas are valid. As his articles astutely pointed out, uncertainty about what the government will do is harmful for business growth. Also, uncertainty about what the government will do arises primarily from the hyper-partisan congress. This is what we agree on.

      Where we disagree is in the conclusions he draws from these premises: he concludes that, because change in regulation is bad, there should be no (or few, or less) regulations. Further, he lays the blame for the hyper-partisan congress at Obama's feet. The second of these conclusions is blatantly flawed; first, as the head of the executive Obama has little and less control of the primarily republican house and evenly split senate; consequently, economic damage resulting from dysfunction in the legislature is largely beyond his control (he does occasionally respect the Constitution). This hyperpartisan polarization is discussed in [1], but I would suggest (based on Obama's relatively centrist behavior as POTUS, which I compare to Mitt's identically centrist behavior as governor of MA) that, in terms of economic importance, this election season's presidential race is largely irrelevant compared to the impact of the various house races. Unfortunately, this level of analysis makes for poor reporting because it does not have the celebrity element of the POTUS race, so corporate media will largely ignore it, and so the median voter will remain largely uninformed in this area.

      The first of is conclusions is more valid, insofar as it is one of several conclusions which is consistent with his premises. Given that economic damage may be caused by [unnecessary] change in the regulatory environment, maintaining a consistent regulatory environment is important. No regulation is one consistent regulatory environment; however, so is total regulation, and so is everything in between. The key is to find the appropriate level of regulation (i.e. regulations which alter the world in a way that makes it match more closely the stringent assumptions of economic theory, such as total information and perfect competition), implement it efficiently, and then maintain it in response to changes in technology and methodology. The position that regulation is harmful qua regulation is not one shared by the majority of economists – based on some polls, the majority of economists (51%) and economic historians (74%) [3] reject the premise of Cole and Ohanian unconditionally.



      [3] Robert Whaples, "Where Is There Consensus Among American Economic Historians? The Results of a Survey on Forty Propositions",Journal of Economic History, Vol. 55, No. 1 (Mar., 1995), pp. 139–154.

  2. I forget where I read it, but someone's definition of a JUST economy (which is what I'd like to think we're attempting to achieve in America) is one where you wouldn't mind being born into a family that is anywhere along the spectrum from low to high SES. Right now, I'd have a major problem being born into a low-SES family. Choosing between food, gas, or heat/air conditioning is not something I would enjoy doing. However, I wouldn't mind being born into a high-SES family in our current economy. Wouldn't mind at all. If things were to swing in the opposite direction (say, a 75% tax rate on income over $200k), I wouldn't want to be born into a high SES-family. So I think that's actually a pretty good ideal to strive for: an economy where, no matter how much money you're born with, you still have a chance in life.

    1. I like this definition! Ideally, no matter what economic status you're born at, you should have opportunity to be successful. Ideally.

  3. Hey, I think the point about the 2 basic philosophies on taxes is EXCELLENT and really puts it into perspective. I think the problem we've had with the "trickle down" paradigm is that when you talk about giving tax breaks to businesses so they can expand, you're really only talking about large businesses (this is assuming that the large businesses do use the money to hire more people and expand). Small businesses--local, family owned, etc.--do not typically expand. When the big businesses expand, they put the small businesses, and the families of the people who run them, in a really bad financial place. Then you could say, the small business owners could just all go get jobs at the large businesses, but the pay cut would be insane and like you said, you can't support a family on minimum wage. The money that would have been in small businesses and then put back into the local economy ends up going to corporate leaders overseas. Overseas isn't inherently a bad thing, but the chain reaction means that poor and lower middle class areas get poorer. It is definitely true that when people have more money, they spend more money, but it also matters where that money is being spent and who is spending it--that's what causes the problems.

    1. There are a lot of factors that go into all this... politics and the economy are so complicated...

  4. I pose a few question to poor people create jobs? Does over regulation stifle entrepreneuers? If you knew that it takes more than six months to open a business in NYC, and 1000s of pages of applications just to get a license to open the business, but you could get a business permit in Hong Kong in Taiwan in one week or less, where would you do business? Do entitlements perpetuate poverty? And, is it fair that 50% of the people in the US pay no taxe, and 48% of the people in this country receive some form of government assistance. To see the real impact of economic decisions, go to the Bureau of Labor Statistics and look at the trends and the fact that over 350,000 have given up looking for work. The percentage of people in the work force is the lowest since the 1950s. Lastly, the IRS website give the most accurate information as to who is paying the highest amount in taxes. It is a grand idea to think that everything should be fair, but in reality the person that has the most success is the that doesn't wait for someone else to level the playing field for them. The constitution clesrly defines what the federal government should do for its citizens, and it is not cradle to grave care.

    1. Curious where you got the "50% of Americans pay no taxes" and "48% of Americans receive government assistance"- who is being counted in the paying-no-taxes statistic? Just people who are over 18 and employed? And what kind/amount of government assistance?

      What do you think should be done about the fact that the economy is not "fair"?

    2. What does "no taxes" mean? No Federal Income Tax? No Social Security or Medicaire Tax? No State or Local Income Tax? No Sales Tax?

      Is the high percentage of people not paying Federal Income Tax an observation about an unfair tax structure, or a consequence of a problematic economic structure?

    3. The anonymous poster raises a number of interesting, complex, and important questions, which I am presently in the mood to address. I will be approaching these questions in a neo-Kensyan theoretical economic framework, based on previously established notions of fairness which I have written about earlier [1] and which are largely in parallel with the notion of economic justice established by a different anonymous poster earlier in this forum.

      1. “ … do poor people create jobs?”
      This is a dangerous and interesting question; I suspect the anonymous poster will be dissatisfied with all possible answers. Jobs are created by smart, entrepreneurial people. In a properly functioning capitalist system, these smart, entrepreneurial people subsequently become wealthy, and so it is true that people who create jobs eventually are not poor. However, to assume that poor people do not create jobs is to assume that poor people are neither smart nor entrepreneurial. If this is the case, and poor people do not create jobs, then there are fundamental issues of economic inequality of opportunity which run counter to American ideals of liberty and justice for all. If this is not the case, and poor people do create jobs, then there is no theoretical justification for supply-side economics. By the law of the excluded middle, these are your options.

      2. “ Does over regulation stifle entrepreneurs?”
      To a certain extant, possibly, in the same manner that ISO 9000 certification stifles efficiency in manufacturing. The primary purpose of regulation, however, is to define the difference between valid economic activity and criminal activity. The original author refers to five different core regulatory categories, regulating advertising, labour, environmental impact, information, and safety. Profit-maximising behaviour in the absence of truth-in-advertising laws is tantamount to fraud. Profit-maximising behaviour in the absence of labour laws is tantamount to slavery (see: wage slavery and the living wage. Yes, I am aware of the economic costs and effects of minimum-wage laws. No-one said this was easy). Profit-maximising behaviour in the absence of environment regulations is tantamount to vandalism, profit-maximising behaviour in the absence of privacy laws is tantamount to slander, and profit-maximising behaviour in the absence of safety regulations is tantamount to assault.

      Regulating these areas, in my opinion, is necessary for the provision of the general welfare, which is in the very first explicitly enumerated power of congress. The economic damage, to the extant that it is not outweighed the economic benefits of maintaining good social order, imposed by such regulation can be reasonably interpreted as a tax, duty, impost, or excise, and therefore still falls solidly within the explicitly enumerated powers of congress. Mind you, while I support the government's power to regulate, it is obviously better for these regulations to be implemented efficiently, which sometimes gives rise to such constructs as public-private partnerships and watchdog organisations. A full discussion on how to implement efficient regulations is significantly beyond the scope of this post.


    4. 3. “ If you knew … where would you do business?”
      If I could make a greater profit in New York, in real currency, over the projected lifespan of the business, which I suspect would be the case, I would still choose to conduct my business in New York. As I discuss above, it is precisely because of these regulations that life in New York has developed from the standard of living of the gilded age, which I need not remind you was unpleasant for the median individual. Additionally, the example concerning NYC is not necessarily representative of the entire country, or of every sector of industry [2]. Some industries by their very nature require more regulation, as they have a greater impact on their community. 1000 pages, for instance, would constitute a relatively small body of work for a pharmaceutical corporation to submit to the government in the process of approving a new drug. This perspective does not even consider the menu costs to the entrepreneur of establishing a business overseas, as opposed to domestically.

      4. “Do entitlements perpetuate poverty?”
      This question is related to the first, in so far as socioeconomic demographics are an inappropriate tool for understanding outcomes here. Also, definitions are important, so I will use “poverty” in what I feel is the anonymous poster's intent to mean low-income, and I will introduce the term “destitution” to refer to low-spending-capacity. Among the sorts of individuals who are likely to create jobs and contribute positively to the economy, the receipt of welfare can be a means to the resources necessary for these individuals to break the cycle of poverty (remember, we already discussed the relationship, or lack thereof, between job creation and poverty). Among the sorts of individuals who are not likely to create jobs or contribute to the economy (a category in which I include corporate raiders and much of the middle management of many corporate hierarchies and bureaucracies), the presence or absence of entitlements only alters how the burden of the non-contributing individual's expenditures are distributed.
      There is a third sort of individual, on a spectrum between these two extremes, for which the premise that welfare perpetuates welfare dependency may have some predictive power. There are, however, two approaches to recapturing the economic potential of these individuals, both of which rely on incentivising said economic activity at the margin. In the absence of welfare, private charity and wage controls, and presence of demand for unskilled labour , the marginal incentive is obvious – work or starve. In the absence of demand for unskilled labour, as is presently the case in much of the US, these options are reduced to steal or starve, and the social cost of an absence of welfare becomes apparent. In the presence of either welfare or private charity sufficient to avoid sustenance-level destitution, and in the absence of wage laws appropriate to the sustenance level in real local currency, the proposed welfare trap is, in fact, observed. This points to one of the fundamental theoretical flaws of capitalist economic models at the level of sustenance goods; if it is profitable to make goods at the sustenance level, then there is a flow of wealth from the market for these goods to the producers; however, by definition the individuals at the sustenance level have no wealth to feed this flow. Therefore, it is not profitable to make goods at the sustenance level and there is no capitalist incentive to do so. See also [3].

    5. 5. “Is it fair that 50% of the people in the US pay no taxes, and 48% of the people in this country receive some form of government assistance?”
      As a previous poster pointed out, these statistics are misleading. A more complete analysis, such as [4], would tabulate the impact of all taxes, not just federal income tax (which is one among many, and for many individuals not even the largest tax paid). Analyses such as [5] also find that the share of income paid as tax in the US, compared to other developed nations, is much less than it could be. Furthermore, the figure of 48% which is quoted includes payments such as social security and Medicare, which are financially distinct from the bulk of the US debt and operate more as insurance programs where you get out, on average, what you pay in (as opposed to means-tested welfare, which is received by something like 1 in 3 Americans due to the recession, a denominator which we will agree is entirely too small).

      Discarding these objections, however, let us consider fairness. Even if the tax burden and welfare were exactly linearly correlated on either income or wealth (which do not have the same units), would it be fair (based on our previously established definition of fairness) for there to exist discrepancies in either income or wealth? If not, then the only “fair” system is a strictly communist system, and all of the inefficiencies inherent in that failed economic model. If so, then psychological variables such as the increase in happiness you get by taking a day off to spend time with your aging mother, or newborn son, or college buddies can be rationalised into a shared economic unit system as a stock, like other forms of wealth. Even if this latter, dehumanising hypothesis is correct, it is likely that there still persists some level of unfairness caused by the actions of other people. So, even in the exaggerated caricature of the welfare state presented, there is unfairness – in the direction opposite that implied by the anonymous poster.

    6. Whoops, forgot a reference!


    7. I can see that you are versed in using a lot of verbage and filibuster to prove that you believe in income distribution as the current president does. We can dual all day long with links and references and we will be no farther along than the crowd in Wasington. I will strongly disagree with you that Obama is a centrist. He is not. He is a far left secular progressive. If he was a centrist, he would have done what Bill Clinton did in the 90s and moderate and work with the Republicans in the house. Obama had complete control of the senate and house for two years, and the democrats held both the house and the senate from 2006 to 2010.

      I am struck at how everyone that has commented complain that nothing is fair, and you have these grand ideas of fairness. Sorry, it just doesn't work that way. As far as I can see capitalism has worked far better than marxism, socialism, or any other "ism" that claims to make everything fair. I suppose when all of you leave college and get out into the real world, you really won't care if things are fair for everyone because you will be worried about yourself and your own family. And then suddenly you will realize that if you really do want to succeed, and you really do want the symbols of success. Or, will you be the people that make successful people villians?

      I like being successful because I did it myself. I didn't wait for someone to give me a handout that they took from someone else. And, do you know what is really cool about being successful?? I'm in a better place to be charitable! I help organizations that help people and the community; I support our military and the organization that help them; and I tithe generously to my church. I could not do that if I were receiving a government entitlement.

  5. Actually, I have heard some interesting information to the effect that it isn't big corporations that create jobs. They won't create more jobs unless more people start buying their goods or using their services. So it's money in the hands of ordinary consumers that actually drives our economy. When people don't have jobs, or when their actual buying power is falling (right now costs of goods keeps rising, especially gas and food, which everyone needs, but many people's wages have been frozen-- no raises-- for years, so ), they don't buy more goods or use more services, so demand falls, so then less jobs are created. It's a vicious circle.

    The problem with jobs getting sent overseas is that ordinary workers here then lose their jobs, while the company that fired them keeps making more money by hiring people at cheaper wages in other countries. Our country then loses the income tax revenues that would have been paid by the now-unemployed workers. So the public sector also becomes less able to hire workers. More unemployment equals less demand for goods and services, equals less job creation.

    Too much regulation can be a problem for businesses, but too much deregulation can be a problem for ordinary citizens. For instance, deregulation on Wall Street enabled wealthy corporations, particular banks, to take risks with money that they had not been allowed to before, resulting in the housing crisis, the Fanny Mae bailout, and all that. But because of decreased demand for goods and services, many corporations are now sitting on huge income reserves and not expanding or hiring. One way to fix this would be if the people gave the government the power to spend money on infrastructure-- hiring people to fix roads, bridges, etc. That would create more jobs, then people with the new jobs would start demanding more goods and services, and as demand went up, other companies would begin expanding and creating jobs again. Republicans are against almost all government spending. They don't want this plan at all-- but it could end up being the best thing we could do to jolt the economy back to life. Many of our country's roads and bridges are old and near failure anyway. This will be a real problem in 20 years if we don't do something about it.

    1. I guess it's complicated because in a lot of cases you can get a vicious cycle- there are a lot of forces that interact. I don't know enough about economics to predict the results- I'll let other people do that.