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Seems to me GM and the banks need the same thing: people who have sufficient income to buy cars and make mortgage payments.

In general, direct public spending is for public goods: military, legal system, various infrastructure, etc.

To support private sector output the way to go is to support demand, and let consumers decide which products succeed and which don’t.

If government had declared a payroll tax holiday (treasury makes the fica payments for employees and for the business) three months ago, car sales would be up and mortgage delinquencies down.

And don’t forget to toss in something that reduces fuel consumption sustain our real terms of trade.


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52 Responses

  1. Warren,

    Do govt officials really believe their demagoguery about the deficit/govt spending or are they just talking to the “common” folks?

    I know when I try to explain my limited understanding of fed accounting and deficit spending to friends, I’m looked at as if I’m speaking in tongues.

    On the one hand, govt officials really have no problem running deficits as far as I can tell (even republicans) but when they go home they talk endlessly about our nation “borrowing” money from China, saddling our kids with debt, and on and on.

  2. all hard to say. some believe it, some don’t but don’t exactly know why, etc. some are intellectually dishonest. most are opportunistic

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