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Here's one hundred billion dollars. It's in that steamer trunk right over there. Open it up! Take a good look. It's pretty, isn't it? Oh, never mind George over there, the man with the Uzi standing next to it. We must have him. Regulations, you know.
As the agent of Your Government responsible for disbursing that $100 billion, I can do two things with it. I can give it to The Rich in the form of tax cuts. Or I can spend it.
For the purposes of this exercise, we will define The Rich as anyone who had more than $1 million in assets less primary residence in 2005. According to MarketWatch, there were 8.9 million Americans who fell into this category. Dividing the money equally, each of those people will receive about $11.235. That's not enough to really do anything with--remember, the rich are different from you and I--so most of those people will invest their money, and most of them will invest it in stocks.
Everyone who tells me what a wonderful idea this is, allowing The Rich to invest, tells me all about how companies take this invested money and use it to hire workers. That's wrong. First, jobs are a trailing indicator in almost all cases--if you're not a store gearing up for a prime selling season, you add workers after revenue increases. And more important, very little of the invested money ever makes it back to the company whose name is on the certificate. Once the firm has unloaded the stock in the IPO, or sold the bonds, those things can flip back and forth between investors and brokerages and the company won't see a dime of any of it. It's like buying a Volkswagen Super Beetle: dollars will change hands, but none of those dollars will go to Volkswagen. Anyway, since the whole investment thing revolves around rich people buying fancy sheets of paper from other rich people, why should we base our entire economic recovery on it?
I have a much better idea. I am going to spend this money. I am going to give $5 billion to each of the armed services for new single enlisted personnel housing, give $5 billion to each of the other Cabinet departments to help accomplish their missions, and divide the rest equally among the states so they can build sewage plants.
For instance, I am going to give the Department of Health and Human Services $5 billion so everyone in America can have a tetanus shot. They will have to buy the vaccine from a pharmaceutical company, which will create jobs and growth in the Research Triangle area of North Carolina. They will have to buy syringes, needles and alcohol swabs. They will have to hire nurses to administer the shots. The nurses will spend their money on food, clothing, car repairs and all the other things nurses spend their money on--and the grocers, dress shops and mechanics will spend their cut accordingly. The pharmaceutical company will have to add a new warehouse to hold all the vaccine, which means a construction company will have to be hired, some company will have to make another refrigeration unit and Dow will have to make another batch of insulating foam for it. By the time everyone in America has a sore arm, that $5 billion will have been spent between three and four times over.
The Department of Education is going to spend their $5 billion reroofing schools. The asphalt company, fiberglass company, propane company and mop company will all get some. The people we hire to install the roofs will spend some of their take on buying new boots, meaning the boot maker will see some of it and so will his supplier. Once again, America is going to smell like boiling tar and the national economy will be enriched to the tune of about $15 billion.
This is a tough choice here...either put the $100 billion into the economy and let the American people churn it into $300 to $400 billion, or give it to rich people who will share it among themselves. Decisions, decisions...
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