I'm a little confused by this "economic stimulus plan" and how it is going to help the US. Maybe somebody could help me. Let's say that the average person gets this handout from the government of around $500-$600 dollars. How is he going to spend it? Let's assume he is in debt to his eyeballs like the average American and uses the money to pay down his debt. How does that help our economy? It's not new spending so it doesn't help at all.
Now I know, it's a little far fetched to assume that the average American would use a government handout to pay down his bills. That's not the American mindset. So let's assume this average person that gets the handout runs out to his nearest Wally World and spends his money on shit he doesn't need, but wants to keep up with his neighbors. Now we all know that Wally World gets like 90% of it's stuff from overseas, that is their business model.
So, if this money is used to buy some TV, computer, microwave oven, clothes or anything else that today is manufactured overseas, which is most stuff consumers buy, HOW IN THE BILLY HELL IS THIS SUPPOSED TO HELP AMERICANS AND THE AMERICAN ECONOMY. IF THIS GOVERNMENT HANDOUT IS BUYING STUFF THAT IS MANUFACTURED IN CHINA AND ELSEWHERE, AREN'T WE HELPING THE CHINESE MORE THAN AMERICANS WITH THIS PLAN?
It sure seems to me like this
Increased government spending can provide a temporary stimulus to demand and output but in the longer run higher levels of government spending crowd out private investment or require higher taxes that weaken growth by reducing incentives to save, invest, innovate, and work. Martin Feldstein