Saturday, January 31, 2009

Tiahrt Flunks Macroeconomics

Wichita Congressman and Senate candidate had an op-ed in the Eagle this week rationalizing his opposition to President Obama's economic recovery program.

Tiahrt wrote

Studies have shown and history has proved that when consumers get extra money in their pockets, they do one of three things: They save it, spend it or invest it. All three options would help to quickly increase growth in our economy.
Sorry, Todd, but increased saving --in the midst of a depression--will not increase growth in the economy. It will do exactly the opposite.

Here's a quick explanation from Wikpedia
If a population saves more money (that is the marginal propensity to save increases across all income levels), then total revenues for companies will decline. This decrease in economic growth means fewer salary increases and perhaps downsizing. Eventually the population's total savings will have remained the same or even declined because of lower incomes and a weaker economy.
Sadly, the stimulus debeate shows that for Todd Tiahrt and the modern Republican Party, the operative program is Party First! The Rich First!

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