“Feedback Friday” Letter to White House generated form letter response (on spending and national debt) May 9, 2012 (part 6)

I have been writing President Obama letters and have not received a personal response yet.  (He reads 10 letters a day personally and responds to each of them.) However, I did receive a form letter in the form of an email on May 9, 2012. I don’t know which letter of mine generated this response so I have linked several of the letters I sent to him below with the email that I received. However, this letter below may have been the one that did it:

President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

The government can not spend themselves out of a recession. It doesn’t work. Japan did 8 stimulus packages in the last 20 years but it has never worked. The best approach to get out of a recession was done by Ronald Reagan in the early 1980’s when he cut taxes then we experienced 7% economic growth. However, somehow Max Brantley of the Arkansas Times claims today that the stimulus did work and that we should have done more!!!

Steve Chapman  rightly noted in his article “Stimulus to Nowhere” noted:

Mired in excruciating negotiations over the budget and the debt ceiling, President Barack Obama might reflect that things didn’t have to turn out this way. The impasse grows mainly out of one major decision he made early on: pushing through a giant stimulus.

When he took office in January 2009, this was his first priority. The following month, Obama signed the American Recovery and Reinvestment Act, with a price tag eventually put at $862 billion.

It was, he said at the time, the most sweeping economic recovery package in our history,” and would “create or save three and a half million jobs over the next two years.”

The president was right about the first claim. As a share of gross domestic output, it was the largest fiscal stimulus program ever tried in this country. But the second claim doesn’t stand up so well. Today, total nonfarm employment is down by more than a million jobs.

What Obama didn’t foresee is that his program would spark a populist backlash and give rise to the tea party. Where would Michele Bachmann be if the stimulus had never been enacted — or if it had been a brilliant success?

To say it has not been is to understate the obvious. The administration says the results look meager because the economy was weaker than anyone realized. Maybe so, but fiscal policy is a clumsy and uncertain tool for stimulating growth, which the past two years have not vindicated.

The package had three main components: tax cuts, aid to state governments and spending on infrastructure projects. Tax cuts would induce consumers to buy stuff. State aid would prop up spending by keeping government workers employed. Infrastructure outlay would generate hiring to build roads, bridges and other public works.

That was the alluring theory, which vaporized on contact with reality. The evidence amassed so far by economists indicates that the stimulus has come up empty in every possible way.

Consider the tax cuts. Wage-earners saw their take-home pay rise as the IRS reduced withholding. But as with past rebates and one-time tax cuts, consumers proved reluctant to perform their assigned role.

Claudia Sahm of the Federal Reserve Board and Joel Slemrod and Matthew Shapiro of the University of Michigan found that only 13 percent of households indicated they would spend most of the windfall. The rest said they preferred to put it in the bank or pay off debts — neither of which boosts the sale of goods and services.

This puny yield was even worse than that of the 2008 tax rebate devised by President George W. Bush. Neither attempt, the study reported, “was very effective in stimulating spending in the near term.”

The idea behind channeling money to state governments is that it would reduce the paring of government payrolls, thus preserving the spending power of public employees. But the plan went awry, according to a paper by Dartmouth College economists James Feyrer and Bruce Sacerdote published by the National Bureau of Economic Research.

“Transfers to the states to support education and law enforcement appear to have little effect,” they concluded. Most likely, they said, states used the money to avoid raising taxes or borrowing money.

That’s right: The federal government took out loans that it will have to cover with future tax increases … so states don’t have to. It’s like paying your Visa bill with your MasterCard.

The public works component could have been called public non-works. It sounds easy for Washington to pay contractors to embark on “shovel-ready projects” that needed only money to get started. The administration somehow forgot that even when the need is urgent, the government moves at the speed of a glacier.

John Cogan and John Taylor, affiliated with Stanford University and the Hoover Institution, reported earlier this year that out of that $862 billion, a microscopic $4 billion has been used to finance infrastructure. Even Obama has been chagrined.

“There’s no such thing as shovel-ready projects,” he complained last year.

Even if jobs were somehow created or saved by this ambitious effort, they came at a prohibitive price. Feyrer and Sacerdote say the costs may have been as high as $400,000 perjob.

Based on all this evidence, we don’t really know whether the federal government can use fiscal policy to engineer a recovery. We do know it can go broke trying.

__________________________

Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com

 
 
The White House, Washington
 

 

May 9, 2012

Dear Everette:

Thank you for writing.  I have heard from many Americans about Government spending and our national debt.  I appreciate your perspective.

I am committed to working in a bipartisan way to solve the financial challenges before us and to construct an economy where every hard-working American gets a fair shot, does their fair share, and plays by the same rules.  By focusing on job creation, security for working families, and fiscal responsibility, we can get people the help they need, prepare for the future, and reduce the Federal deficit.

This is a make-or-break moment for the middle class and those trying to reach it.  After decades of eroding middle-class security and after a recession that plunged our economy into a crisis from which we are still fighting to recover, it is time to construct an economy built to last.  To put our Nation back on a path of living within our means, we must cut wasteful spending, ask all Americans to shoulder their fair share, and make tough choices on some things we cannot afford.  The Federal Government, like families across America, is going to have to cut spending while protecting investments that are vital to growing our economy and creating jobs.  My proposed budget for Fiscal Year 2013 targets scarce Federal resources to the areas critical to growing our economy and restoring middle-class security:  education and skills for American workers, innovation and manufacturing, clean energy, and infrastructure.  This proposal will reduce our deficit by $4 trillion by 2022 and will help put our country back on a more sustainable fiscal path.    

An economy built to last also demands we renew the American values of fair play and shared responsibility—principles that must guide our approach to solving our Nation’s deficit problem.  As we extend middle-class tax cuts to help working families, I am pursuing the end of costly tax breaks and special deductions for the wealthiest Americans and biggest corporations.  I have repeatedly called on Congress to stop giving away $4 billion a year in oil subsidies to an industry that has never been more profitable, and instead, to pass clean energy tax credits to cultivate a market for innovation in clean energy technology.  I also proposed a fee on big banks and other major financial institutions to recoup taxpayer assistance that was crucial to saving the economy.

To prevent Congress from worsening our deficit outlook, I pushed for and signed into law pay-as-you-go rules for Congress—rules critical to creating the surpluses of the 1990s.  Additionally, I established the Campaign to Cut Waste, which is aggressively rooting out misspent tax dollars, and sent Congress the Consolidating and Reforming Government Act to reinstate the authority past presidents have had to streamline the Executive Branch and create a leaner, more efficient Federal Government.  Through these and other efforts, we can reduce the deficit and ensure a more stable future for our children. 

To learn more about our budget, please visit www.Budget.gov.  Thank you, again, for writing.

Sincerely,

Barack Obama

Visit WhiteHouse.gov

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