President Obama was right to start work on the stimulus package with a bipartisan approach. When possible, it’s good to get a broad bipartisan consensus when bringing legislation through Congress. Obama has bent over backwards to give the Republicans a chance to contribute the stimulus package, and he’s accomodated them in that he’s removed some funding for family-planning from the bill and added $275 billion in tax cuts.
That’s a lot more generous than I would have been.
Because while I dislike paying taxes as much as anyone else who works for a living, the fact is that tax cuts are a horribly inefficient way of stimulating the economy. You get far more bang for the buck doing things like building infrastructure - building roads, bridges, schools, hospitals, etc. than you get from tax cuts. Don’t believe me? Believe the economists - they’ve done the research and crunched the numbers. Here you go.
There it is. The Republicans would have us make the Bush tax cuts permanent (29 cents of economic stimulus for every buck spent), give a bunch more tax breaks to big business (30 cents for every buck) and add hundreds of billions more in tax cuts. Note that those ideas are all at the bottom of the chart, because they don’t stimulate the economy much. Want that money to actually succeed in jump-starting this economy? Look at the top, which are all investments in people and infrastructure, rather than big business. Food stamps is number one ($1.73 for every buck spent), along with extending unemployment benefits ($1.64). Also up there is building infrastructure($1.59), and providing aid to states with budget shortfalls isn’t too bad either ($1.36).
President Obama, while I admire his work at bipartisanship, needs to recognize that the Republicans are not asking for productive changes to the stimulus package. They’re feeding us the same old discredited crap they’ve been ruining this country with for the last thirty years. Supply-side economics is dead. The trickle-down theory didn’t trickle. I’m laughing at the Laffer curve. Reaganomics has been shown to be as brain-damaged as its namesake for the last years of his life.
If this stimulus package is to have the desired effect of rebuilding the economy, they need to be looking at the top half of the chart. President Obama has done a good thing in that much of tax cuts he’s pushing for in the plan is in the form of a payroll tax holiday, which at $1.29, provides much more stimulus for the buck than Bush-style corporate tax cuts. But we need to be spending far more on investing in people and infrastructure. Like I mentioned earlier, infrastructure, along with things like unemployment & food stamps, and pushing to save homeowners from foreclosure - that will stimulate the economy. I noticed that health-care related things weren’t on the chart. I’ll bet that spending money on health care, especially preventative care and early-intervention care, would show up on the high end of that chart.
Also, the total value of the stimulus needs to be far bigger. We shouldn’t be talking $850 billion. We should be talking well north of $1 trillion if this stimulus is to be enough of a shot in the arm to really get this economy going again. I know. We’ll have a huge deficit, and paying down the debt won’t be fun. We’ll have to choose between pulling an Argentina and defaulting on debts, which would cause a serious meltdown, or between conjuring money out of thin air, using it to pay the debt, and causing bad inflation for a few years, or raising taxes and paying down the debt the direct way. It won’t be fun. But what is certain is that if this stimulus doesn’t do enough, we’ll be looking at years of economic bedlam rivaling the Great Depression.
(This diary originally posted on http://meldroc.com.)