As featured in The Wall Street Journal, Money Magazine, and more!
     

Barack Obama’s 2009 Economic Stimulus Plan

This article was written by in Economy. 39 comments.


Updated March 20, 2009: The stimulus plan has become a law, and we’ve rounded up the many ways you can benefit.

President-Elect Barack Obama pitched his economic stimulus proposal to Congress earlier this week. Here are the main points.

  • The total cost is $775 billion over two years.
  • Tax cuts and breaks will account for $300 billion of that total, including a $500 payroll tax credit, tax breaks for businesses. Companies would be able to write off losses in 2008 and 2009 and other expenses up to $250,000 in 2009 and 2010.
  • The proposal would create 3 million new jobs, 2.5 million of which will be private sector jobs.
  • Obama is calling for no earmarks to be added to the stimulus bill.
  • Stimulus funds will be used to invest in infrastructure around the country, including transportation, roads, healthcare, and education.

What do you think of Obama’s plans? Is this level of spending necessary to pull the United States out of a recession? Are there long-term consequences to running such a high budget deficit?

Updated March 20, 2009 and originally published January 7, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

Email Email Print Print
avatar
Points: ♦127,495
Rank: Platinum
About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 39 comments… read them below or add one }

avatar tom

Even being a Republican I like this proposal.

I’m unsure of the tax cut and write-off portion, but I agree with the spending package. Our infrastructure is old, crumbling and in dire need of an upgrade.

My only concern is, while this will create 3 million jobs, our Government is bloated with direct and indirect employees; job cuts within the Government will be inevitable. Will this package cover those job losses? The government employs roughly 14 million people through contracts, grants, civil servants, military and federal employees.

Reply to this comment

avatar Craig

You always hear how to make money you have to spend money, I guess you can say this is to the extreme of that. I am for creating jobs especially with public projects. A lot of buzz around though has been about how those projects don’t usually work out. Do you think it’s too desperate of a measure? Something needs to change.

Reply to this comment

avatar Chris

The government is not the economy. The private sector is the economy. The public sector is either a competitor of the private sector or a client of the private sector. Or it can be a monopolist. If the economy is to regain a measure of prosperity for many, the economic stimulus should be driven towards the private sector. Infrastructure doesn’t do that. Infrastructure is, by definition, a monopolistic practice, and therefore, will be of very little aid to the private sector, except to enrich the government. I’m extremely skeptical of this plan. Now, if he talks about strategic ideas that make a big difference, like taxes, red tape, and the like, then I’m interested. But this sounds like business (politics) as usual. It seems the only way to profit is to become it…

Reply to this comment

avatar CJ

I hesitantly like this proposal. I haven’t been an Obama fan during the campaign but this overall seems reasonable. I like that the money is going towards infrastructure and tax cuts. Obama almost seems like a Republican with this package. It’s sort of weird.

That being said, I don’t think such an expensive package is NEEDED to turn the economy around. I think the economy as a whole is slowly starting to turn it’s wheels towards recovery. This might speed up that process but the amount of debt we will get into because of this bill is just as scary as Bush’s economic plans.

So my final thoughts are is that I don’t love it but Obama did a decent job given the circumstances. Looks like my initial fears of Obama were a bit premature.

Reply to this comment

avatar Miss M

@Chris – Infrastructure directly benefits both the people and private business. Walmart uses public roads to drive their trucks to the store and their customers use those same roads to get there. Also, most road, bridge and highway construction is financed by the government but built by private contractors. I work for a private company currently designing a light rail line in Los Angeles. Almost all of our projects and clients are the government. If the government tried to hire all the engineers, contractors and construction workers themselves it would be very bloated indeed.

Reply to this comment

avatar Rick

Regardless of political standing, this is a bad plan.
Economists like myself can debate what “needs to be done” to “stimulate” the economy. Fact is, very little needs to be done EXCEPT to get people to improve their attitudes and understanding of what is occurring.

One stimulus package is more than enough, and we already had it. The fact it didn’t do EVERYTHING that was hoped for is evidence enough that packages like this are thoroughly flawed. Another won’t do anything, either. Most previous stimulus packages had the good fortune to be timed well, so their passage won praise. They, too, did little or nothing.

For a REAL stimulus package, the main goal will be one thing – the redesignation of tax alignments. Taxes should be applied in areas where they can reduce bad behaviors and reduced in areas that would promote productivity and efficiency. There are limited opportunities to apply either, but in applying them intelligently the government would benefit 2 fold: 1. no decrease in revenue at worst 2. increased revenues through enhanced productivity gains.

Infrastructure, as applied by Obama, is already a failure for a variety of reasons. First, it will take TOO LONG for these gains to hit the market to act as a stimulus (review Japan’s experience with this). Second, most of these spending plans are already in place…they are only being expanded, which means basically more fraud and corruption will take place, rather than real gains in infrastructure improvement. Third, it is a short term improvement. Improved roads and rails will NOT increase productivity dramatically, and it’s essentially a jobs program – one that could be designed far more efficiently and beneficially in areas that CAN create dramatic productivity gains.

The one part I do like is the tax cuts – but do we NEED more tax cuts? As a middle class (upper) citizen, I’m always looking for improvements for the middle class, so sure. But in reality – NO. The time has come to focus on the deficit. It is a flaw to believe that reducing the deficit will hurt US growth. Had the deficit grown from Zero to X during a downturn, you would have gains in growth. But given that we’ve had many years of deficits, simply adding on to it will NOT do that much, and certainly NOT at the level Obama is requesting. To have an effect, he would essentially have to request a deficit that represents close to 10-15% of GDP. This, of course, would drive up interest rates and inflation and kill the free market. So that’s just stupid.

No, the best thing to do now is to clear out the corrupt and fraudulent spending in Congress, make it more efficient, and reduce the deficit. This will keep interest rates low and manageable, allowing free enterprise to flourish.
And tell the people one thing – you are living better lives now than you were 8 years ago. This much is true, despite the recent downturn. As long as your life is better, you have to accept a recession from time to time and work through it. It’s not fun, it’s not easy, but it MUST be done. Buck up, partner, and manage your life!

Reply to this comment

avatar Rick

It’s also worth noting that, in economic terms, government is always and everywhere noted as a “deadweight loss”. That is, money in is equal to money out – it produces NOTHING. Thus, government adds NO VALUE.

Stimulus packages like this are frequently referred to as “tax investments”. Nothing is further from the truth. Were the government to simply avoid keeping up the roads, businesses would find a way to do it on their own. This has happened before. In fact, a great example is the railroads. Railroads today are primarily run by the government because it’s seen as a utility not unlike a road. But for many years, it was a private industry and grew and made massive profits (even while some companies failed, overall there was net improvements). In managing things like this on their own, businesses create value.

Government doesn’t do anything like this. So the adage that “you have to spend money to make money” is a lost cause in this particular case. Show me an instance of the government actually producing something of value and adding value? You cannot.

The bailout of Chrysler is frequently held up as an example of “doing it the right way”. Is it? Does anyone realize that Chrysler survived because by giving them the money, the government then agreed to buy all its fleet cars from Chrysler? As a result, Chrysler paid the government back with taxpayer money ANYWAY!! Were Chrysler’s K Cars better and cheaper than Ford and GM? As it turns out, no, they were equivalent or worse. But it was a way of rigging the system.

Bad ideas that “work” don’t make them good ideas.

Reply to this comment

avatar thomas

Giving money to people who do not pay taxes is not a tax cut or break, it’s welfare. I will be completely shocked if it comes in under 750 billion and that no earmarks are attached.

Reply to this comment

avatar CJ

I just recently heard a great comment on the Dave Ramsey podcast. It went something like this and was by a politician:

“Why do we think that the answer to an economic crisis which was caused by too much debt will be solved by getting into more debt?”

Can’t argue too much with that.

While I understand the arguments behind a stimulus package, you have to wonder if we need to just take the hit and move on. How are we going to learn from our mistakes if we don’t face the consequences for them? It’s like a child who gets a candy immediately after getting scolded for running into the street. It makes no sense. So while I understand the reasoning behind this stimulus package and on the outside it looks good, I just don’t think I can support it.

Reply to this comment

avatar Mike

I can’t believe the people are supporting this “stimulus package”. Don’t worry, politicians and citizens in Canada are calling/demanding this too. Spending money on infrastructure is great, ONLY if you have the money saved up in the first place. Going further into debt is just going to drag this out longer, and no one is going to learn anything.

/facepalm

Enlighten yourselves at mises.org and read REAL solutions.

Reply to this comment

avatar Matt

How do you cut taxes when 40% of the population plays no taxes to begin with??

Reply to this comment

avatar Andy

Overall, I think the Obama administration is right in its efforts to focus on job creation and stimulating the economy over the long term. I also agree that issuing stimulus or rebate checks (even if there were near $5000 as initially rumoured) would have done little in the medium to long term to revive economic growth. It would have been a populist, short term impact, move which I am glad the Obama administration has decided not to pursue. Tax cuts are a better solution, and will also help win support from congressional Republicans to ensure the ultra-large stimulus package is passed sooner rather than later

Reply to this comment

avatar Tony Corsaut

It alarms me that, just because, Obama calls something a 300 Billion dollar tax cut that well educated people accept is as a tax cut. If a person is not paying taxes, you cannot cut something that does not exist. We accept verbage and because we want good we accept it as good. This stimulus package in large part is welfare, and will only enable those who accept it to continue their entitlement mentality. The package calls for a $1000 tax credit to 95%, only 50 -60% actually pay taxes, equalling that 35-45% will receive the equivalent of a welfare check. The 5% who will not benefit from this stimulus pay 54% of the income tax burden and are the investors and employer who are fundemental in job creation. Infrastructure stimulus and rebuilding was tried in Japan in the mid-90s. Look it up – complete failure. Sounds good, but no dice. Final thought, who is going to pay for this. Print more money, thereby depleting the value of an already weak dollar. Oh yea, we can raise taxes on the 5% that create the private sector jobs. Those same people that maintain savings that allows our banking system to create money through loan creation.

Reply to this comment

avatar Diana

This stimulus package the the next administration is presenting wil not create the level of jobs this country needs. I terribly disapointed that the deficit will be run up more. This will effect the USA and jobs. I can’t understand why the president and congress does not look at ways to stimulate the economy that does not cost the large sums of taxpayer money. Why not lower business taxes and capital gains. This would create jobs and investment. Lowering business taxes does not mean that business will make a bigger profit. The consumer pays this. We are the second highest business taxes in the world so that is why so many companies move overseas. I am sick of congress spending the taxpayer money so recklessly. No business would be successful doing this. I think the stimulus is reckless because there is no guarantee it will work. As far as the automobile industry, they need to build affordable cars. The new electric car by GM is going to be s$40,000. That is not affordable by the middleclass. I do think we need taxcuts but not for people who do not pay taxes now. That is welfare not taxcuts.

Reply to this comment

avatar Larry

Obama’s economic stimulus plan is nothing more than a very expensive welfare plan. Sorry, but I am not one of those dumbed down voters who bought the “Yes We Can” and “Change You Can Believe In” rhetoric. How is extending and increasing unemployment benefits, providing medical coverage for the unemployed, and increasing the amount of food stamp money going to stimulate job growth? Wake up America, the liberal media has brainwashed you into believing that Obama is the new “Messiah”. The only change that will happen in Washington is the person residing in the White House.

Reply to this comment

avatar Debbie

In order to fund these dollar amounts, the Feds will have to float bonds, which are likely to be foreign investors. Essentially, we are selling our country to foreign nationals. Eventually, these entities will have such a percentage of our businesses & government that they WILL have a say in what we do & how we govern. ….What am I saying?! It’s already happening now.

Floating bonds (creating more Debt) has just worked oh-so well in California that we are on the verge of complete collapse. The state runs out of cash by the end of this month…. oh yeah, in 5 days. and the only thing they are talking about is getting more loans to close the short term cash flow problem.

Broken down to the smallest component, it never works for a family budget to get out of debt by obtaining more credit cards. Carry that scenario out to the logical conclusion and you have utter financial collapse. Hello, the state of California on a grander scale and now the federal government.

Stop the insanity now! No bailouts!!!

Reply to this comment

avatar Joe

I voted for Obama.. am a Democrate… and believe in the overall vision of our countries new leader.. but this stimulous package is a joke. The money in tax credits will do NOTHING to get America spending again. The other ways this 800 Billion Dollar package is going to be spent.. sod for the national mall.. other GOVNERMENT PORK projects instead of Private Pork projects is NOT what we need.

WE need this money to buy up distressed mortgage assests.
We need this money to STOP foreclosures.
WE need this money to REALLY go to Green Energy Research and Developement
WE neet his money to go to BANKS and have IRON CLAD Strings attached to ENSURE it is LENT to the AMERICAN BUSINESS WORLD>

We DO NOT NEED THIS MONEY to go to Tax rebates that will DO nothing due to their limited size.

We DO NOT NEED THIS MONEY to go to plant new grass in Washington or fix the Mall or patch roads… or fix bridges… or lord know what else this money is ACTUALLY going to be spent on and hopefully RECOVERY.GOV actually tells us in easy terms where is it spent.. on what it is spent so we can see the PORK that this will have.

I am disappointed in the new leader of the free world and the mis guided use of 800 billion I see about to happen and the 3 trillion dollar deficit he will have when he runs for re election and with an economy then that is no better than it is today.

This is a SAD SAD SAD day for the Leader of the free world and the Free world he leads.

Reply to this comment

avatar Amanda

Hey Tom… if you like this bill you ARE NOT a Republican. Change your party, we DO NOT want you to parade around as a Republican. Claiming you are a republican implies that you are in favor of limited government and against wasteful governmental spending. Therefore, if would be an oxymoron to also say you are in favor of this bill. You are what is wrong with the republican party. Grow a pair and revisit what it means to be a republican, or get the hell out of our party. We don’t need confused semi-republican like you clouding the water right now.

Reply to this comment

avatar Larry

Bravo Amanda. Tom is obviously a RINO (Republican in name Only). This bill has more pork than Smithfield Foods. Welcome to the Slaughterhouse of the 111th Congress. Bring us your pork and we’ll give it away.

Reply to this comment

avatar SD

I’d like to read more about the plan and get into the details of how it is actually going to work, does anyone know if there is a site at which the entire plan is laid out?

Reply to this comment

avatar Larry

SD. This link has the pdf copy of the stimulus plan. http://appropriations.house.gov/pdf/RecoveryBill01-15-09.pdf

Reply to this comment

avatar SD

Thank you!!

Reply to this comment

avatar Mark

Ok, so what people do not understand here is that only $18 billion (of this now 900+ billion dollar) plan is actually going to infrastructure. While billions are going to welfare programs such as WIC.

Most of this money is going to big spending that will either create NO jobs or create very little jobs that will only last for a year max.

This bill does not support long term jobs that will help people pay for things.

Obama is just pumping money into nonsense such as 400 Million to AIDS prevention, and 450 Million to safe sex practices in Africa. Please tell me how this will stimulate our economy and boost job growth.
IT WONT.

This new preseident either wants to just spend money on nonsense or isnt following up on what he said he would do during the election.

This man in a hypocrit that got everyone to vote for him on some word he said called CHANGE. he is bringing change to this country, but this change he is bringing is destroying traditional american values and will destroy our economy and coutnry.

hope everyone likes our new socialist government giving money to companys.

PS: its against the constitution. the democrats just make up BS trying to find loop holes that say it isnt unconstitutional because this is the perfect chance for them to do the big spending they have always wanted to do, at the expense of the tax payers dollars

Reply to this comment

avatar SD

Define “traditional American values”…last I checked, the actual values of America, as in the right to life, liberty and the pursuit of happiness along with a separation between church and state, have long since been destroyed. I’ve noticed though that often republicans will throw around catch phrases like “they’re destroying traditional american values” and “they will corrupt the values of traditional American life” in order to scare people into thinking that something is “not American,” and therefore worthy of our scorn. As if there’s anything that’s not American, the very essence of ‘American’ is that it has no definition beyond freedom. Your comments about the stimulus plan may very well be factual, but let’s not pretend that this ‘new socialist goverment’ is going to be the first to corrupt any kind of “American value” that this country might have left.

Reply to this comment

avatar R VOYLES

I can’t find the proposed stimulus plan to be able to read it for myself. No offense but I do my research on my own. How can I support or reject this if I can’t see it? My answer right now would be vote NO because I feel the government is hiding things from us. I have to date seen the government haphazardly hand money to the very people who got us in this mess in the first place. Their assets should have been frozen until they provided the solution. I think the fox is in charge of the henhouse!

Reply to this comment

avatar R VOYLES

My mistake. After my first post, I saw the post with the link to the stimulus plan. Thank you. After reading page 193, I will vote no. After all, religious people are taxpayers too!

Reply to this comment

avatar SMF

Comment #24 by SD states, “the very essence of ‘American’ is that it has no definition beyond freedom” is a good reason not to support the stimulus package. It will bind Americans to a much higher burden of debt for generations. We are not truly free when in bondage to debt, by our own choice, or by the politians who make that choice for us.

Reply to this comment

avatar Long Islander

So where is ALL THE MONEY GOING??? All we hear is its going to cities and states that need it, roads bridges and malls. I personally would like a total break down on the monies. There is enough funding for aids . There are plenty of people on welfare and food stamps that do not belong on them and medicaide also. Now I hear if you never worked you can get so of this money. WOW! what a country. The working people are getting screwed as usual. We are not idiots. So please tell me where the money is going.

Reply to this comment

avatar jen_15

WOW, I’m so glad to hear other people who do NOT agree with this Obama spending plan. Did you listen to his press conference last night? He said that there was NO PORK in this plan. Really??? What do you call $75 million to fund programs to help people quit smoking. How does that stimulate our economy? Most of the money people spend buying cigarettes is TAXES. I am not a smoker but, I still wonder where the government thinks it’s their job to help people quit. I am very irritated over the “tax cuts”. Yes, I am a middle class citizen so they would help but, I wonder how come if you paid NO TAXES you can still get SOMETHING as a tax refund??!!! That is welfare. This whole plan is BIG spending and Big Government. No Thank You, I’d rather US, the american people, deal with the economy head on, and in a few years everything will be ok.

Reply to this comment

avatar Luke Landes ♦127,495 (Platinum)

jen_15: Is that your opinion as an economist that if we dealt with the economy head on (by letting the market run its course) that “in a few years everything will be ok?” Personally, I’d rather side with the economists — both left-leaning and right-leaning — who agree that the government needs to step in, in certain circumstances, to help break a cycle of a downward economy.

If we take your advice and let the market fully correct itself, we could be in store for a prolonged recession, worse than Japan in the 1990s (where they did not attempt to stimulate the economy *and* rescue financial institutions) and worse than the Great Depression. Think about unemployment at 15% or 20%, mass poverty, and businesses at a standstill. Maybe that is exactly what we need. In the long run — many decades or a few generations, perhaps — it might be better for the economy, but modern society doesn’t want to wait generations for a correction. “A few years” would be far too optimistic.

Reply to this comment

avatar jennica

$75 million to fund smoking cessation programs is a fantastic use of money. Taxpayers like you and I pay for roughly $96 billion a year on healthcare for people for smoking related injuries. If you could take out even a percent of that with the program, it lowers our taxes considerably. It is perhaps one of the best uses of stimulus money that was proposed

Reply to this comment

avatar Larry

This is for Flexo. Americans are long overdue for a good dose of financial responsibility. Americans are in so much debt and now that the country is wanting to bail out businesses they want a piece of the pie too. Well that is just too bad. At least if we let the economy run its course with some investment incentives we could come out of this crisis with less debt than what is on the table now. And they want to spend trillions of dollars with no idea of what to do or if it will work. And Geithner stated he has only been on the job for two weeks. Does anyone know what he did prior to this job? If you do not know look it up because I will not tell you. I will only say that this is not new to Mr. Geithner. What really is upsetting to me is that now they are considering selling all of these bad assets of the banks to investors. Does this sound familiar to anyone? I certainly hope so because it is what got us to where we are now with our economy, not George Bush’s eight years as President. At this point I believe that someone in Washington with real cajones needs to entertain a motion that Barack Obama is mentally unfit to perform his job and get his butt out of Washington. The people of Illinois can have him back.

Reply to this comment

avatar Shauna

Wow, way to give him a chance Larry.

Reply to this comment

avatar Larry

Charles Schumer thinks that Americans don’t care about the Pork in the Stimulus plan. If you disagree let’s all let him know. Use the following link to send him an email.
http://schumer.senate.gov/new_website/contact.cfm

Reply to this comment

avatar frustrated

I was so excited to hear about the $15,000 tax credit for home buyers as it seems nothing the gov’t ever does benefits us middle class people that don’t rely on medicare, medicaid, SS, or disability, etc. We are taxed taxed taxed and may be able to afford health insurance but can’t afford the medical bills after health insurance. Seldom does anything ever come through to help us better our lives. I told my husband that this tax credit would never fly and he told me I was just being negative. It’s true though, nothing ever benefits anyone that’s not a first time homebuyer. What about the rest of us??? I wasn’t surprised to see this part of the bill got dropped. I was going to put the money away for my kids college cause we don’t have any other way to save it. The gov’t depends on the rest of us that don’t depend on their programs to support everything when sometimes it takes all we’ve got to stay afloat. Isn’t it about time we got some stability too so we can go on supporting everything else???

Reply to this comment

avatar Larry

Some of you are missing the point. This non stimulus plan was Obama’s way to achieve some of the welfare programs he supports. He has used the economic situation and this so called stimulus plan to open the door to his social programs. Why do you think he has used the scare tactics about how we need to act immediately or there will be a catastrophe.This is a brilliant political move because he knows that he would have a hard road to travel to get some of these bills passed on their own so they have been incorporated in this bill. And hard working Americans will have to pay for this at some point down the road and what is worse is we already know they are talking trillions of dollars for this financial stability plan that they don’t have all the details on. He wants this bill passed during the doom and gloom that exists. As many know there is very little spending in this bill that will actually stimulate the economy and it will be a year or two before we see any results from the stimulus that does exist in this bill. Also you should take note to the wording he is now using when talking about jobs being created. Instead of saying that this will create 3.5 million jobs he now says it will create or preserve 3.5 million jobs. It will be difficult to determine how many jobs will be preserved than it would to determine how many jobs are created. So if the plan only created 500,000 jobs he can still say he preserved 3 million jobs. Some of you had questions about where the infrastructure spending comes from and that is located in the Main Street Economic Recovery Report created by I believe it was 300 Mayors across the country. It is my understanding that much of this money will be going to the out of control State of California. But then why wouldn’t it be when Nancy Pelosi was one of the key planners of the no stimulus plan.

Reply to this comment

avatar benjamin

The republican party chose politics over whats good for the nation. But when you really think about it, so did the democrats! How else do you explain the fact that almost no republicans backed this thing while almost no democrats DIDN’T back this thing. That means that most people just voted with their party. There is no other way to have such a balanced split in opinions! I bet you can’t even get all of either party to give you the same answer on abortion or gun control if you asked each one privately and got an honest answer. There will always be some Dems love their guns and there will also be some republicans that would abort. So how is it that you get such partisan reviews of the stimulus plan. BECAUSE the Dems just wanted to say yes to back their party and the republicans just said no to back their party as well. Conclusion, there are very few of either that really give a legitimate crap! As in, very few of them that sat down and open mindedly weighed the issues and thought about whats best for the American people. If it was all about whats best for the American people, then you would have seen some mixed/bipartisan results. It’s just not possible for all of one party to agree when all of the other disagrees… especially when it comes do doing whats good for the country. So here’s some news to all of us, Washington has been and is STILL broken! It’s just politics as usual ON BOTH SIDES!

I think this is what Obama is trying to fix, but he’s got a lot of work to do and I hope he’s really sincere in his efforts.

Reply to this comment

avatar llin

One reason our enonomy is so bad, is that our jobs are overseas, and people are buying foreign cars. We are cutting our own throats. We need to get our jobs back here in America and buy american made cars and products. Let China fend for themselves. Every thing you pick up is made in China! Too much greed!!!

Reply to this comment

avatar Larry

Ilin, I agree with you on the issue of Americans choosing to buy foreign products has hurt our economy and your last statement, “Too much greed” is the very crux of the problem. If you stop and think about it every major industry that lost jobs are those tied heavily to unions. The steel industry, the auto industry, the textile industry. Our government wants to blame NAFTA for losing companies in this country but this was happening long before NAFTA was put in place. Most Americans today do not shop for value, they shop for price. Why would someone buy something that sells in one store for $7.97 when you can get it for $6.89 at Walmart. Some people who live comfortably and are loyal to a brand or company will pay the higher price but the sheer size of Walmart’s sales tells us that price is more important. People buy a Honda or Toyota because they will get a higher quality car with higher resell value than American cars. American car manufacturers, to cut their costs must opt to use parts of lesser quality to keep their prices down.And why, because of their high labor costs. The steel industry almost became extinct in this country because the price of U.S steel was so high that companies could import it at a cheaper price than they could get it right here. So what was the government’s solution. They took the easy way out by raising tariffs on these imported products to bring the prices in line with American goods. Thus NAFTA was created because the various countries complained about the high tariffs on their imported goods. As long as the government continues to favor unions and allow them to return to the power they had years ago in the steel and textile industries we will not see people buying American made products. If you think it is bad now just envision the day when Americans are ordering merchandise online from Chinese retailers because they can get it cheaper than they can at Walmart.

Reply to this comment

Leave a Comment

Connect with Facebook

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.

Notify me of followup comments via e-mail. You can also subscribe without commenting.

Previous post:

Next post: