When the $759 billion stimulus bill was passed earlier this year, promises were made by Congress and the president that this massive spending bill would keep us out of an economic abyss. Now, the unemployment rate is at 9.5% and rising as fast as summer temperatures in Vegas.

What happened?
According to Vice President Biden in a July 5 interview he gave to ABC's "This Week", "We misread how bad the economy was, but we are now only about 120 days into the recovery package."


The misreading part makes sense because the speedy passing of a stimulus bill with nearly as many pages as Tolstoy's "War and Peace" was debated on the Congressional floor for about as long as it would take to read Dr. Seuss' "Cat in the Hat."

He also makes a lot of sense on the 120 days because only 10% of the money has been spent. However, the rumor mill is abuzz with talk of a second stimulus bill.

Steps Towards Stimulus
Before any second stimulus bill is discussed, the following needs to happen in congress:

  1. Congress needs to be less stingy with the current package and distribute the money faster. If we are destined for an economic abyss, the government needs to ante up or rethink the investment and send part of the money to reduce the growing budget deficit – which is a strategy often used by corporations. In business school they teach that if you don't have a good use for the money, it's best to give the money back to your debtors.

  2. The non-partisan Congressional Budget Office (CBO) needs to be thought of as a trusted advisor. The CBO, which is staffed by financial analysts and policy advisors, crunched the numbers and said that in a report that the stimulus would hurt the economy in the long run because the massive debt would crush growth and actually shrink the economy – even if there is short-term economic rebound.

  3. Consider investment or tax breaks for private industry. According to the Small Business Administration, small businesses with under 500 employees represent 99.2% of all employers.

  4. Debate any spending bill – and multi-billion distribution of the current stimulus funds - for at least as long it would take to read a short novel.


There's no doubt that the economy is not in its best state, but a clear and focused plan has to be developed. And it seems the best Stimulus 2.0 that could happen would be to carefully mull over and distribute the funds from Stimulus 1.0 in a way that will create an economic boom not a deficit headache.


For further reading, checkout Free Market Maven: Milton Friedman, Do Tax Cuts Stimulate The Economy?, Is The U.S. Government Too Big To Fail, Fannie Mae, Freddie Mac And The Credit Crisis Of 2008, and Dialing In On The Credit Crisis.

Related Articles
  1. Economics

    The 2007-08 Financial Crisis In Review

    Subprime lenders began filing for bankruptcy in 2007 -- more than 25 during February and March, alone.
  2. Fundamental Analysis

    The Evolution of Obamacare Since Its Inception

    Find out whether the Patient Protection and Affordable Care Act, also known as Obamacare, has lived up to its lofty projections from 2010.
  3. Stock Analysis

    The Biggest Risks of Investing in Lockheed Martin Stock (LMT)

    Learn about defense contractor, Lockheed Martin, its leadership within its industry, and how the company can stay on top as the defense landscape changes.
  4. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  5. Economics

    Lehman Brothers: The Largest Bankruptcy Filing Ever

    Lehman Brothers survived several crises, but the collapse of the U.S. housing market brought the company to its knees.
  6. Stock Analysis

    China Mobile: Just How Big is It? (CHL, CHU, CHA)

    The story behind China Mobile, the biggest company you might never have heard of.
  7. Markets

    The (Expected) Market Impact of the 2016 Election

    With primary season upon us, investor attention is beginning to turn to the upcoming U.S. presidential election.
  8. Economics

    Trump vs. Bloomberg: How They Compare

    If Bloomberg enters the presidential race how will he compare to billionaire brethren Trump?
  9. Fundamental Analysis

    5 Economic Changes to Expect if a Republican Wins in 2016

    Discover the five most likely economic changes the United States can expect if a Republican wins the presidential election in 2016.
  10. Term

    What Is Section 1231 Property?

    Section 1231 property is depreciable business property that’s held for a year or longer.
RELATED FAQS
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. How much money does Florida make from unclaimed property each year?

    Each year, goods such as money, financial investments and physical property are either auctioned off or appraised before ... Read Full Answer >>
  3. How much money does New York make from unclaimed property each year?

    According to the Office of the New York State Comptroller, types of unclaimed property accounts include bank accounts, wages, ... Read Full Answer >>
  4. What is the Social Security administration responsible for?

    The main responsibility of the U.S. Social Security Administration, or SSA, is overseeing the country's Social Security program. ... Read Full Answer >>
  5. Where are the Social Security administration headquarters?

    The U.S. Social Security Administration, or SSA, is headquartered in Woodlawn, Maryland, a suburb just outside of Baltimore. ... Read Full Answer >>
  6. Is the Social Security administration a government corporation?

    The U.S. Social Security Administration (SSA) is a government agency, not a government corporation. President Franklin Roosevelt ... Read Full Answer >>
Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  3. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  4. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  5. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
Trading Center