Sunday, January 11, 2009

Your Loan Has Been Denied

Big Brother decided to explain, in person even, how he's about to throw away our future tax dollars stimulate the economy.

Hot Air discusses the price per job issue when looking at the numbers. At the initially mentioned 3 million jobs saved or created, the $775 billion "stimulus" equates to a cost per job of $258,333. At the newly plucked-from-thin-air total of 4 million jobs saved or created, the cost per job drops to $193,750.

The cost per job issue has been discussed on a few sites, and has been mentioned on Rush Limbaugh as well, but it's only really been taken at face value. The discussion has been that there is no way that the government can "create" 4 million new jobs that will pay $193,750 on the average. The general idea of the discussion is that the government can in no way expect to come out ahead of the game in this. This is indeed true, but it is even worse than has been pointed out, due to the fact that the government will only be realizing its payback in the cost-benefit analysis via taxes collected.

As a general rule of thumb, we are typically taxed at a rate of around 30% of our income. 15.3% is locked into the Ponzi Scheme that is Social Security & Medicare, and so can't really be counted in the payback projection. According to the University of New Mexico, the average per capita income in the United States in 2007 was $38,611. We'll be fair and round this up to about $40,000.

Now we can do some simple math to determine what the true effect of this stimulus package is. If we round off and say 15% of $40,000 goes to the government as income tax, we get $6,000 per person. Now, let's make the fictitious assumption that all four million of those jobs will always exist. The government is looking at receiving $24 billion per year back on the creation of those 4 million jobs. At that rate, the $775 billion will be paid back in a little over 32 years.

This analysis doesn't even take into consideration the laughable terminology that The One will "save or create" this many jobs. The analysis as a straight payback assumes all four million jobs are brand new. How many will be brand new? Who knows? How will he have claimed to have "saved" any of those jobs? The payback period could be double that 32 years on this statistic alone, to say nothing of how inflation and the time value of money (money always being worth more now than in the future) will affect that payback time in the first place.

Beyond that is the issue, covered extremely competently by Glenn Schleede for American Thinker that the basis of Obama's plan, his half million clean energy jobs, focusing on wind energy, is going to create a new stream of wealth out of the country.

32 years isn't even an acceptable payback term for a mortgage on a house. Why should we be subjected to assuredly more than this duration being an acceptable payback term for our tax dollars?

Campaign for Liberty tells you how to reach your Congressman.

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