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Wednesday, November 30, 2011

Economic Stimulus Plan

This is just some ramblings... I may work toward getting numbers documented and sources quoted, and submit it to some major newspapers...

It is my feeling that the "Occupy" movements across America recently rightly focused attention on big banks, Wall Street, and corporate executives, not to mention many government policies which seem to favor the top 1% of rich people and totally ignore the little guys...

And the Democrats and Republicans can't seem to agree on stimulus plans, or debt reduction, or anything else these days.

And President Obama is rightly trying to promote job growth and revenue growth... But it's not enough.

Do you want to know what can be done to reduce corporate expenditures, offsetting increased taxes on the rich and assisting the 'common man' at the same time as corporate America, potentially creating new jobs, creating much more cash flow, with almost no government intervention, no extra money being spent by the government?

Consider this headline:
Chevron Announces $7.8 Billion in Q3 Profits, 2011 Profits for Big-Five Oil Companies Hit a Staggering $101 Billion


While driving across the country this past Thanksgiving, I observed a wide range of gas and diesel prices, and considering how much I spent, it got me to thinking...


If I average 25,000 miles driven per year, at an average of 25MPG, and an average cost of $3.50 per gallon of gasoline, then my annual fuel expense for the year is 1,000 gallons or $3,500 in gasoline.

A 10% cut in the cost of the gasoline (to $3.15 per gallon) would reduce my annual cost to $3,150.00 – a savings of $350 dollars, which could be invested in other things.

Small fries… the payroll tax has potentially saved me more this year.  But it’s something.

And on our recent jaunt from Pennsylvania to Arkansas, we spent several hundreds of dollars in one trip to go see family.  I saw gas prices vary as much as fifty cents per gallon in a 200-mile range – the lowest I saw was $2.89 per gallon near Roanoke VA, while at home it was $3.39 per gallon.

Saving a bit on gas (the $2.89 fillup was great, saving me about $8 on one fillup!!) would probably convince me to take more vacations, so my spending, albeit only saving $350 in a year, would potentially go up by my eating out… so the 10% savings in cost up front would change my $350 in savings into perhaps, say, $1000 spent (in more travel, eating, hotels, etc).

Still small fries.  So what?  I save $350 but I am convinced to spend $1000… sounds silly, but it works.  It’s what makes the economy grow.

According to http://quickfacts.census.gov there are approximately 309,000,000 people in the USA as of 2010.  There are approximately 113,000,000 households in the US.  If only 10% of those households avereaged a $250 a year savings on fuel and spent just that savings and no more on other things (more travel, etc), that would be an injection of $2,825,000,000 into the economy.  If they were like me, they’d spend more than the $250 they saved, so potentially the 2.8 BILLION dollars spent on things other than fuel could be doubled, or tripled in its returns.

It’s just an example, for sure. 

But what about all those trucks stops across America, that are averaging $3.80 to $4.10 per gallon of diesel.  True, I don’t use diesel.  But Wal Mart does.  So does Target.  And Costco, and Big Lots, and Hobby Lobby.  What would a 10% reduction in fuel expense do there?

If my 10% savings produced 3-fold return in economic stimulus, what would their savings produce?  Really, if a company spends a million dollars in gas in a year (most of the above probably spend billions), and could save 10% on that cost, then they’d have another $100,000 to invest in something else.  What if they spent that on more goods to sell, or on R&D to create better products for consumers, or more simply, what if they passed the savings on to the consumer (Yee-haw!!), or what if they hired a new employee or two?

It might just be that a few new jobs would be created.  It might just be that I’d go into the store and buy a few more things (more interesting products, lower prices, etc).

Forget tax breaks for corporations OR consumers… Convince (by mandate if necessary) the Big Oil guys to do some profit sharing – by returning our pump prices to more reasonable amounts.  A 10% cut at the pump is NOT enough, but it’s a start, when the only people in this economy making record profits is Big Oil.