100 Percent of Stimulus Spending Will Go To Top One Percent of U.S. Firms

So far, all of the billions, or should I say trillions of dollars the federal government has spent to stimulate our nation's failing economy has gone to the top 1 percent of firms in the U.S.

The nation's largest financial institutions have received the overwhelming majority of the so-called bailout funds. By now, I am sure everyone has heard that financial institutions that received over $350 billion in taxpayer dollars did not use the money to free up credit as they were supposed to do. In reality, the money was used to buy other failing financial institutions, purchase private jets, throw lavish parties and give billions of dollars in bonuses to executives that should have been fired for incompetence.

If the purpose of the stimulus bill is to create jobs, President Obama and Congress have made a significant mistake because the firms that comprise the top 1 percent of firms in America have not created one net new job since 1977.

According to the most recent statistics from the U.S. Census Bureau, firms with fewer than 20 employees comprise over 90 percent of all U.S. firms and are responsible for more than 97 percent of the new jobs created in America. These 26 million firms employ over 50 percent of the private sector work force.

If President Obama and Congress seriously want to create jobs and stimulate the national economy, small businesses should be the focus of the stimulus bill, not banks and Fortune 500 firms.

Some of the nation's top economic experts, such as Dr. Laura Tyson and former Hewlett-Packard President Carly Fiorina, have acknowledged the most efficient manner for the government to stimulate the economy is to direct federal infrastructure funds to the small businesses where most Americans work.

So what's the hold up here? It seems painfully obvious that directing federal infrastructure dollars to small business, is a cost effective and efficient way to stimulate the economy. Why won't President Obama and Congress simply create policies that accomplish that? It doesn't seem reasonable or logical to try and create jobs by directing federal funds to firms that essentially have not created one net new job in over 20 years.

Comments

[jsarets]

Capitalism is government intervention on behalf of big investors. Socialism is government intervention on behalf of big producers. Keynesian political economy is government intervention on behalf of anything big.

It's about centralizing the allocation of capital to suppress competition. This also plagued the New Deal, which led to a pervasive cartelization of industrial production and touched off vicious cycles of wage and price inflation.

We should have substantially more collective investment in public goods, but we should rarely if ever use the federal government to allocate capital. Funds should be passed down to state and local government or ideally to private credit unions on the basis of population or membership.

Progressive government can only succeed if it is radically decentralized, ideally with self-selecting constituencies. We need to establish a competitive market for allocating public investment, where at least state governments compete to provide superior public goods.

Centralized government produces a centralized economy. We have to stop looking to the federal government for the solutions to all our problems. But the alternative isn't nihilism, it's federalism.

[truthtimeisnow]

What's the hold up here? What a question... It seems so simple, yet we all know what the hold up is. Small businesses lack a unified voice and the $$$$ to really force change in Washington. On the other hand, the big businesses who are benefiting from the stimulus and other pork loaded Washington bills are paying big bucks to make sure their voices are loud and clear. It sounds like President Obama and the rest of Congress need to reassess their priorities.

[BarryS]

Fiorina is a GOP appologist. If her buddies sat down with the Democrats for the Best of the country, maybe these ideas could be discussed. However. The only stuff out of GOP mouths were tax cuts. Of course if these companies aren't paying taxes, they wouldn't be assisted. She knows that. But she was silent -- sitting there scared that the wingnuts would object to common sense and ruin her political ambitions. At least Obama tries.

[Overtone]

SMALL BUSINESS IS THE KEY TO JOBS!

Up to 6 million jobs and 4 million small businesses can be created by A Human Investment Tax Credit Program.

This was missing from the stimulus package.

One component, a jobs tax credit, became law for one year and generated more jobs in less time than any legislation in our history.

Two versions of the 2009 Report can be downloaded free at: aesopinstitute.org

The full Report contains a post Keynesian economic analysis.

The short version includes only what can be done, as well as an outline for Congress. The House Ways and Means Committee would do well to launch this urgently needed Program without delay.

[jhNY]

Perhaps it will also come as no surprise that ,after a kill, the largest lions, males, who seldom take part in the hard work of tracking and bringing down prey, will take for themselves the best portions of meat, leaving but the leavings for the smaller members of the pride. I call it survival of the fattest.

[jsarets]

I was just thinking along these lines the other day, and the phrase I came up with was survival of the privileged. But I think I like your version better.