( – promoted by Jack McCullough)
cross posted at http://mulishbehavior.blogspot…
Congress and the Bush Administration (with the blessing of Sec. Paulson) have struck a tentative deal to send between $300 and $600 each to working Americans (so up to $1,200 for married couples, plus an extra $300 for each kid). Hallelujah, and glory be…
This is a cheap trick that should insults the intelligence of our citizenry. The rationale is simple enough: Give working Americans a little cash in their pockets and they will go out and spend, spend, spend(!) thus giving the American economy a shot in the arm and avoiding recession.
The message is to simply continue conspicuous consumption… ie, we can simply spend our way out of this mess. The problem is that it doesn’t work.
Back in 2001 they tried this rebate trick, too. It didn’t work then, and it won’t work now. Studies show that only about 20% of respondents to polling on the issue said they actually spent the money on durable goods. The Tax Foundation notes one survey that showed: “the spending rate was quite low compared to what many economists had expected.” Another study showed the figure slightly higher (between 20%-40% spent) and argued that it did have a significant effect on the economy. Even if you believe that study, it’s not the picture that our friends in Washington, D.C. paint of folks running into the street waving hundred dollar bills.
I remember getting my check for $300. I used it to pay off some credit card bills. And, trust me, I would rather have done without it and known it would help pay off the national debt, build new schools, or pave roads. The specious argument that many conservatives use is to say: go for it! Send your check back to the government if that’s the way you feel… or send it to a non-profit organization. While the latter is certainly an attractive and plausible option, the former doesn’t make any sense. A singular contribution to the federal government does nothing. The purpose of taxation is so that many small contributions from millions of citizens adds up to a substantial pool of money that may be used for the public weal.
Now, what else did we get for that $300/person back in 2001? Hmmm. How about federal deficits as far as the eye can see? How about cuts to federal aid to states, reductions in essential human services, and more unfunded federal mandates. Such a deal!
Honestly, if you think about it how much is $300, or even $600 per worker going to get you? A month’s rent (if your rent is cheap)… While it is a not-insignificant amount of money for low-income workers, the reality is that it’s just not enough to get anyone through six months or a year of hard times that lay ahead. In short, the proposed stimulus package sends the wrong message for the wrong time.
Instead of using a transparent (if popular) election year trick to put a small amount of cash into the hands of Americans, why not focus on a real, long-term stimulus plan?
Such a plan might include:
1) Rolling back the Bush tax cuts for the wealthiest Americans (over $200,000);
2) Repealing (or at least recalibrating) the Alternative Minimum Tax (AMT) so that middle-income Americans are no longer caught in its clutches;
3) Using the new tax revenue from the wealthiest Americans to pay for unemployment insurance compensation extensions, increases in food stamp benefits, and workforce training (this was considered by the House, but they stripped it from the bill in order to move it; the Senate may put it back in, but there’s no telling if a conference committee will pass it, or if Bush will sign it with these provision included).
4) Corporate welfare reform – specifically stripping oil and coal research and development from the already hugely profitable private companies we subsidize and putting it into real renewable energy R&D and implementation. How about replacing every oil derrick in Texas with a wind turbine?
5) Balancing the federal budget.
If we have learned anything since the Bush Administration took over in 2001 it is that its economic policies are pure bunk. It took the largest budget surplus in American history and turned it into the largest deficit. This stimulus package will only make it worse.
How come nobody is talking about this?!
Actually some people are. Michael Bloomberg has just come out panning the entire package. The guy has some smarts, and some cojones. According to news reports of his comments on the package at a speech before the U.S. Conference of Mayors he said: “We can’t borrow our way out of this. The jig is up.” And, “It’s not going to make much of a difference because we’ve already been running huge deficits. If we spend all the money right now, and there is no recovery because of it, then we don’t have a second hand to play.”
His solution? According to Newsday: “Bloomberg argued that the government’s first goal should be to stop the bleeding in the housing sector. “What good is a rebate going to do for a family who’s about to lose the place that they sleep in?” he said. Instead, the mayor argued, the government should:
Adopt a capital budget to oversee long-term infrastructure spending, instead of the current year-to-year spending.
Offer financial counseling, modified loans and, in some cases, subsidized loans to homeowners who find themselves unable to afford their mortgages.
Overhaul immigration laws to bring more workers in, not keep workers out.”
Wow… how refreshing. Instead of demonizing immigrants and demagoguing the immigration issue, there is a politician out there who actually says “let them in…” the words on the Statue of Liberty actually still mean something:
Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tossed, to me:
I lift my lamp beside the golden door.
If anyone should know the meaning of that old Emma Lazarus poem (“The New Colossus”), it would be the Mayor of New York. Is this guy actually going to run for President? An independent truth-teller (and former Democrat) who is self-funded and not as crazy as Ross Perot could sure make the race very interesting.