With an additional $355 billion 'stimulus' package being proposed by the new administration as a means to get the economy going again, one has to wonder how long this kind of thing will be perpetuated, all in the name of “saving the economy”. But as it is structured now, it will do little this year, providing only $26 billion under the House bill. How is this supposed to stimulate the economy?
Could it be the Democrats in Congress have other ideas for the balance of the money? Could it be this will give the liberals a chance to fund all the programs they haven't been able to ramrod through Congress in the past?
If they were really interested in stimulating the economy, there are better and less expensive ways to do it. One of the best ways is to cut taxes, now.
But the problem is that Mr. Obama wants [his tax cuts] to be temporary, which means taxpayers realize they will see no permanent increase in their after-tax incomes. Not being fools, Americans may either save or spend the money but they aren't likely to change their behavior in ways that will spur growth. For Exhibit A, consider the failure of last February's tax rebate stimulus, which was a bipartisan production of George W. Bush and Mr. Summers, who is now advising Mr. Obama.As the article linked also states, if they aren't willing to cut income taxes permanently, then they should slash corporate taxes, which are already some of the highest in the world.
To be genuinely stimulating, tax cuts need to be immediate, permanent and on the "margin," meaning that they apply to the next dollar of income that an individual or business earns. This was the principle behind the Kennedy tax cuts of 1964, as well as the Reagan tax cuts of 1981, which finally took full effect on January 1, 1983.
Either way, the stimulus plan is a con game. It won't work any better than the last one. It will only cost us more, fuel hidden pork barrel spending, and do next to nothing to actually restart the economy.
The new stimulus package is a bad idea and should die a much deserved death.