Balanced budget, or economic stimulus?

Over the past several, seven actually, years the federal budget has been lead down the path of excessive spending. There has been nothing stasis about the effect that seven years of budget deficits have had upon our economy. In order to assess what is happening with our economy, and the best way to solve our countries economic woe's we must look back analytically to assist our proper course for the future.

Let's begin our analysis in December 2000, when Mr. Bush was undergoing the usual transitional preparations for assuming the presidency, he responded to concerns about the economy in negative rhetoric. He did this to aid his tax cut rebate economic stimulus package of 2001. Anybody can realize that within the fickleness of the economy, which is driven by consumer confidence, negativism does induce instability.

At the time, in 2001, our federal budget had one of the highest surplus' ever recorded. This surplus, albeit a 'paper surplus' to many, was in large part the result of the Clinton Administration's two-pronged assault on the federal deficit, that is, by tightening spending and increasing taxes.

When Mr. Bush took office in 2001 he inherited an enormous budget surplus, and a static economy. His team of economic advisor's asserted the need to give away all of this surplus and orchestrate one of the largest tax cuts in our nations history in order to get the economy rolling again.

We now find our economy in the exact opposite position that we were in in 2001. We no longer have that budgetary surplus, instead, we have another huge budget deficit. Therefore, I fail to recognize why anyone may perceive that doing the same thing as in 2001 is what the economy needs.

Simple economics 101, as if economics is simple, will tell you that what ails our economy currently is the fact that once again the federal government has pumped too much money into it via deficit spending. We should have noticed, if any were watching, that each time the fed increased the interest rates they did so to reduce inflationary pressure.

What causes inflationary pressure? Think of it this way, if a local shop owner knows that you have and extra hundred bucks at the end of each week, then, said shop owner will seek to maximize his/her profits knowing of your ability to meet his price demands. However, if said shop owner knows that you a dollar short at the end of each week, then, he/she must retract away from maximizing their profit in order to sell their goods.

Now let us look at how this analogy plays out with our federal budget. When the federal government over taxes, thus removes too much money from the economy the economy recoils and is sluggish. However, when the federal government pumps too much money into the economy, like what the Bush Administration has done the past seven years, they ignite inflationary pressure and the Federal Reserve must respond using the appropriate tools available.

Now let us examine this present "Economic Stimulus Package". Today's economy is sluggish for the same reason that the economy was sluggish in 1990. The federal government continued deficit spending, albeit flooding the economy with money, had caused the obligatory need for the Federal Reserve to tighten interest rates to control the natural inflationary pressure of the governments mismanagement. The only difference between today's economic woes, and the 'no-new taxes' deal of 1990 is we've had an all Republican-controlled government for six of the eight years of this Mr. Bush's term of office.

In conclusion, the only way to truly fix this economic mess is not by throwing more money back into the economy, thus increasing the inflationary pressure for the Federal Reserve to respond to by increasing interest rates to soak up the additional cash and stave off inflation. No! The way out of this mess is to repair the tax structure to eliminate, once again, the budget deficit, and control our federal spending as if each member of the Congress was spending their own personal money. I think Franklin Roosevelt said it best when he said, "We have nothing to fear, but fear itself." He, of course, was referent of the days of the economic depression of the 1930's, and this popular phrase helped people get back into the market and reignite growth.