Why the Stimulus package will not work.

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The stimulus package does nothing to grow the economy or create wealth. What the government is doing is increasing spending and taxes (this will follow) and trying to get the economy growing. It sounds good to put people to work so they have money to spend and there by stimulating the economy. What happens is that people will have money to spend but business will not be able to expand to meet their needs. This is because the government is borrowing money to pay for the projects and wages. It is estimated that the interest on the proposed stimulus package over 10 years will be $480,000,000,000 (480 Billion). This is money that will have to come from the tax payers and will not be available to Business and industry to expand and hire people. With tax cuts you put money in people’s pockets within a month to spend, save or invest. Business will see a reduction in expenses so they can keep more employees and reduce the cost of their product and have more money to expand. Here is an example of two families who are facing economic hard times due to layoffs. Family Government decides to borrow $10,000 to cover living expenses and to pay the children their allowance. Family Business also borrows $10,000 and tells the children that they will not be receiving an allowance (they’re laid off). With the $10,000 Family Business buys lawn and gardening equipment and offers their services to take care of the neighbors’ yards. Family Government sees this service available and decides that with their extra money they can now afford to have someone take care of their yard. This will put more people to work and this will get the economy going and he will be recalled to his former job. One year later both men get called back to work because the economy has improved. Family Government has a $10,000 loan to pay back with interest, while family Business has paid their $10,000 loan back and has $5,000 in the bank and has hired two more people to work for them in their yard care business. One family spent money they did not have while the other family invested the money and created wealth.