Mitch McConnell, Republican leader in the Senate, has said GOP senators want to alter the president’s stimulus bill, not block it. (J. Scott Applewhite/AP)
Which stimulus is better: tax cuts or spending?
By Peter Grier | Staff writer of The Christian Science Monitor/ February 3, 2009 edition
Reporter Peter Grier compares tax cuts and federal spending to afternoon snacks.
Reporter Peter Grier
Washington
Yes, President Obama’s economic recovery bill would shower billions in government spending on everything from rural Internet service to inner-city schools. But as the Senate debates the stimulus bill, lawmakers increasingly are focused on another section of the plan: its tax cuts.
Republicans are pushing to reorient the legislation as much as possible to tax reduction. They’ve already convinced the Democratic leadership to add a $71 billion provision that would soften the blow of the alternative minimum tax, a levy that was originally intended to affect the wealthy, but now hits many middle-class families.
It’s true that tax cuts might boost the economy more quickly than spending, say many economists. But there is debate as to whether their effect is as lasting or effective per dollar as direct government outlays.
The irony is that the biggest cuts in Mr. Obama’s plan, which put money directly into taxpayer pockets, may not be particularly efficient at jolting the economy back to life. That’s because people may choose to save a portion of the cash.
“I think we ought to be considering a range of tax cuts that are directly linked to spending, or household investment,” says William Galston, a senior fellow in governance studies at the Brookings Institution in Washington.
Obama to turn up heat
President Obama on Tuesday turned up his efforts to push the stimulus bill through the Senate. He planned a series of broadcast media appearances to argue for the necessity of quick passage – and he told Democratic Senate leaders to take out some of the controversial spending provisions in the bill and to increase some of its tax credits.
Among the changes Democrats might accept is a GOP proposal to double a tax credit already in the bill for the purchase of a new home, from $7,500 to $15,000.
Mid-February is deadline
Obama has set a deadline of mid-February for the legislation’s passage. He hopes to pick up enough Republican support so that he can argue that he has fulfilled his pledge to work on important issues in a bipartisan manner.
“What we can’t do is let modest differences get in the way” of the bill, said Obama on Monday.
GOP senators, for their part, say their goal is to change the bill, not block it.
“Nobody that I know of is trying to keep a package from passing,” said Sen. Mitch McConnell (R) of Kentucky, the Senate Republican leader.
As the recovery legislation now stands, tax cuts account for about $252 billion of its $885 billion total cost, according to an analysis of the Senate bill released by the Congressional Budget Office on Monday.
A tax cut for all workers
Of this, $142 billion would go for Obama’s “Making Work Pay” tax credit for individuals. This credit – up to $500 a year for individuals and $1,000 for two-income couples – would fulfill Obama’s campaign pledge of tax relief for low- and middle-income workers. The full amount would be limited to individuals who make $75,000 or less and couples making $150,000 or less.
As a stimulus effort, this tax credit suffers from the fact that recipients could choose to save it, rather than spend it. That is a classic aspect of tax cuts in general, CBO director Douglas Elmendorf said recently.
“Most economists judge that a dollar of government outlay has a larger effect on [gross domestic product] than a dollar of tax cuts for the simple reason that the dollar of extra government spending goes directly to demand for goods and services,” said Mr. Elmendorf on Jan. 27.
On the other hand, the Making Work Pay credit is small, about $10 a week for the average taxpayer, and thus might be more likely to be spent, according to an analysis of the stimulus plan tax cuts by the Urban Institute-Brookings Tax Policy Center.
As to the credit’s stimulative effect, the Tax Policy Center analysis gives it a B-plus.
“The proposal gets high marks for timeliness,” says the analysis.
Other individual income-tax provisions contained in the Senate version of the stimulus package include an increase in the earned income-tax credit, estimated to cost $4.7 billion; a $13 billion education tax credit; the first-time home buyer credit, which would cost at least $2.6 billion; and the $70 billion AMT adjustment.
The Tax Policy Center rates the change in the AMT a D-minus in terms of its stimulus effect.
“Neither timely nor targeted; makes no sense as economic stimulus,” says the analysis.
Breaks for businesses, too
The stimulus package also includes general business tax breaks that would total more than $35 billion.
Small businesses would be able to increase the dollar amount of expenses they could write off from $125,000 to $250,000 for 2009 and 2010, for instance. Businesses would have an increased ability to apply recent losses against past and future tax bills.
The Senate bill also includes an $11 billion provision that would make it easier for businesses to claim tax credits for investing in renewable-energy equipment. The version of the legislation passed by the House doesn’t have this change.
– Associated Press material was used in this report.
( More stories )
Comments
2. Kevin C. Moore | 02.03.09
“Nobody that I know of is trying to keep a package from passing,” said Sen. Mitch McConnell (R) of Kentucky, the Senate Republican leader.
Does Senator McConnell not know Senators Shelby and Sessions?
3. Phil | 02.03.09
I don’t understand the worry that people might choose to save their tax cut, invest it, or pay off debt rather than spend it. Isn’t this the behavior we WANT peoople to exhibit? If someone uses a tax cut to help pay their mortgage, isn’t that better than going into foreclosure? A mentality of spend and debt at all levels got us into this mess. I don’t see how encouraging more bad behavior will get us out.
I’m a firm believer in letting people make their own decisions about how they will spend their money that government has chosen to return to them.
4. Jennifer | 02.03.09
Why is it that none of the articles discussing the tax credit for homebuyers mention the fact that the proposed $15,000 credit is non-refundable, while the original credit was refundable? In other words, unless you can only get a credit equal to the amount of money you paid in taxes… I think for most first-time homebuyers this probably isn’t anywhere near $7500, let alone $15,000. I don’t see how the new non-refundable credit helps much.
5. JP | 02.03.09
Tax cuts would give folks a few $$’s to use temporarily. Tax breaks for businesses won’t help the common folk at all - we can see what the Banks are doing with the TARP funds - they aren’t lending, they aren’t helping keep small businesses going or helping businesses pay salaries. Tax breaks for businesses will help the guys at the top and not the rest of us. And what about those of us who are out of work and are possibly not even paying taxes - how will a tax break for tax payers help us? We need jobs - we need the government to get into the mindset of the WPA and CCC and FDR days. More permanent solutions, like jobs, will help more than bandaids like tax breaks.
7. Gail Conger | 02.03.09
All of my life I have had great faith in what I determined to be ordinary Americans. These were the guy who was the shoestore man and the butcher and the garage man. They were the waitress at the drugstore, and the pharmacist who worked behind his drugstore counter, the insurance person,the farmer, and all of the other small business men and women who create the jobs that hold small-town America together. I feel misrepresented by a government who seems to present a singular picture of “Business” as giant corporations who employ thousands of people. This is the government that creates tax programs that seems to totally ignore the problems of these hard working and often self-sacrificing citizens. JUST “ordinary Americans” pay the bills of the rest of the people, they are the ones who don’t have deep-pocketed adovcates with loud voices and large presence. They pay their bills, and pay their taxes, and send their children to war to fight for the freedom of everyone else. They send paychecks home with their employees and stretch their own budgets to make ends meet. Is there a voice anywhere for “ordinary America”?
8. Joe | 02.03.09
The “stimulus,” no matter the form it takes, is not going to save the economy, period. The economy is going to do what it has always done in cycles, and we’re all in for a tough time for a while (some people more than others). It’s arrogant and idiotic of our government to believe that it can repair the damage by spending taxpayer money on government programs in which the government shouldn’t even be involved. Is common sense dead in Washington, or is this just a political play to fund pet projects of liberals who are ticked off about how things have gone for them in the last eight years? Personally, I think it’s both.
9. Keelaay | 02.03.09
This national debate was had and determined with the election of President Obama and the democratic majority in both the house and the senate. If the electorate had wanted tax cuts instead of a spending stimulus, they would of elected Sen McCain and his fellow Republican senators and congressman. The people have spoken… now lets get on with it.
10. Brandon | 02.03.09
Targeted spending is much better. Tax cuts almost ALWAYS leads to deficit spending. Check the facts on that. When we spend money on programs that create real, long term jobs…this stimulates the economy much better.
When we pay taxes, we’re paying for a real service by the government. So long as they’re servicing us in a beneficial way, our dollars go much further.
11. Valjean | 02.03.09
Public spending is spending whether it’s given to pay for programs or given to individuals through tax adjustments to do with as they please. It all comes out of the same budget. To claim reducing one’s taxes is not spending is Houdini accounting and PR. It’s simply not true.
12. Broken Record | 02.03.09
Tax breaks, tax breaks, tax breaks–broken record.
It must be noted that after the Asian financial crisis, it took only 4 to 5 years for the region’s economies to recover because its residents have a high savings rate reaching 30% to 40% of total GDP. In the West the savings rate is only 14% to 15% of GDP. Therefore this recession will not be an easy one to get out of. The downdraft in equity markets has shaved hundreds of billions from personal retirement accounts. People are going to be forced to and should save more out of current income to fund retirement needs. Boomers started turning 63 last year, therefore there is added urgency to the savings theme.
14. Neo | 02.03.09
Tax cuts only make the rich richer. payroll tax cuts would be a different matter. but we can’t have that because it wouldn’t make the rich richer. and isnt’ America really all about keeping the Ownership society happy?
the stimulus package is the way to go. the rich have already gotten oodles of tax cuts by tax cut george for the last 8 years.
15. Minnesotan | 02.03.09
I agree that the spending on infrastructure aspect has a longer term impact on the overall economy. But, when you try to visualize the direct benefit of first level job creation, picture this:
The company that won the bid opted to use an “imported workforce” who no doubt took most of the wages they earned back to Mexico; a very reduced impact on the (local) economy.
16. Paul Duffany | 02.03.09
Thank you for the opportunity to write concerning this subject.
While the two options put forth sound complete to the American people;
I know that it is cobbling them into a forced decision while covering the truth about the issue.
The issue is the Banking System. Search your history and you will find that the Founding Fathers were adamantly against a central bank.
In the end the Bank owns everything.
Not Acceptable!
With Banks able to create money as debt by loaning money they dont have, tax credits, or any adjustment to this corrupt system does NOTHING.
Do the math, how does a war stop economic hardship? Do the hard math, not just “well lots of people had to work to support the war” because this logic is childish.
Tell the people why we went into the last depression, how it was fixed, and why are we going into this one.
Please live up to our expectation of unbiased reporting to protect our Democracy.
Thanks,
Paul
17. dennis | 02.03.09
I guess I am a bit confused.
After 12 years of a Republican congress that wanted as much deregulation as possible and as big a deficit as possible with tax cuts, the results have been pretty depressing. How could the Republicans present the same ideas as new and pertinent to the present situation. My reading of history shows that Hoover proclaimed and tried the same remedies that McConnell is espousing. They did not work the first time.
I seem to remember a definition of insanity which goes like something like this. Insanity is doing the same thing repeatedly and expecting a different result.
It seems that society has changed and it would also appear that the very things that are being decried would provide funding to things that are most labor intensive at the present time. That would seem to be the goal. Labor intensive will involve many people getting paid. They will hopefully spend part of their paycheck.
18. Jack | 02.03.09
Well as history shows us, tax cuts do not fix the economy… Why are we so afraid to invest in our own dang country? As a tax payer, I’d rather see billions go to fixing our own country than to fixing one we just bombed.
19. Ed Nelson | 02.03.09
Ronald Reagan taught the world to keep government out of the taxpayers pockets. His policies made the world a better and richer place for everyone. Obama doesn’t get it. He owes the radical freeloading left too much to do the right thing and lower everyone’s taxes. His “Spend our Way to Prosperity” plan will fail.
20. john | 02.03.09
Education is key. Student loans, etc. This is our future. Taking that away would be insane, but many Republicans are against helping the future generation out.
21. Matt | 02.03.09
Our children are going to have to pay back the deficit interest and principal. Let’s invest in programs so they may benefit them in the long term.
22. Arthur Yeager | 02.03.09
Tax cuts tend to be anti-stimulative because the wealthier the recipient, the greater the dollar amount received and since the wealthier recipient already has sufficient funds for spending, the money will be mostly saved rather than spent. No net effect on the economy.
On the other hand, when the government spends every penny is infused into the economy. That puts cash into the hands of those who will spend serving to continue and multiply the effect stimulus.
23. TJ Weldy | 02.03.09
Our government is in shocking, crippling debt. Every choice carries a cruel price. Suffer a brutal downturn now or severely limit our children’s future. Perhaps both are unavoidable. What is certain is that tax cuts won’t work, if they did, we wouldn’t be in this position right now.
24. SirDiesAlot | 02.03.09
All this spending will amount to very little after its initial impact unless it is spent by private business. You can build a road, but once it is built many jobs will disappear leaving only its maintenance. But if a succeeding business uses money, lets say tax cuts, to expand, the jobs do not disappear, they instead invite more growth. And a tax cut rather than a break is more likely to encourage business to spend. That’s because it is more permanent. Cuts more effectively dispel uncertainty.
25. JMW | 02.03.09
Why does the gov’t act like it’s entitled to our money only to spend it for us?
With all of the taxes we pay, they want to give my wife and I $1000. back and expect us to say “Thank You”?
Taxes need to be cut for individuals, small businesse and corporations. We’re being taxed to death!
A $915 BN PORK project bill is not the solution to anything… particularly short-term.
Read FDR’s Follies… it shows the real impact of socialist programs.
CUT MY TAXES!!
26. Chris Rich | 02.03.09
Remember who is the general beneficiary of these expenditures. It is the citizen.
27. Jason | 02.03.09
I’m curious to know who the “many economists” are that claim that counter-cyclical tax cuts are more effective at stimulating the economy than direct government spending. Such claims go against the very basics of the accepted economic theories.
28. Nikos Retsos | 02.03.09
Definitely, tax cuts is the wise way to move a stalled economy. And I certainly mean tax cuts for the low and middle class - not corporate tax cuts as John McCain argued during his campaign. Tax cuts should be spread
across the lower and middle social spectrum where the money is needed, and where it will be spend immediately to jump start the economy while alleviate suffering at the same time. People raking millions in bonuses on Wall Street, while the U.S. Treasury deficit sinkhole get deeper and millions of Americans get desperate, don’t need tax cuts to spend more, and the recovery will not come from them.
Spending, on the other hand will have a limited effect. Most of that will go to the states where politically connected contractors will get the most with little benefit to the public at large, or to small business. The Blagojevich story, and Richardson withdrawal from an Obama cabinet post, proved that the connected get the lion’s share in State expenditures. And, of course, the federal government is a hog, and various other organizations pursuing conservation and climate causes spend about 90% of their budgets on administrative costs - not on hiring.
Tax cuts are better because people will go home with more money in their paychecks when the tax withholding is reduced. And with that money will cover needs that are unaffordable now, such as their mortgage and home maintenance, medical costs, digital TVs -they are going to need them in 2 weeks, new tires for a car, etc,. That is the spending needed for the economic recovery because it will spread across many sectors of the economy and start the recovery ball rolling.
And talking about sectors of the economy, lets not forget that many of those sectors have lobbyists in Washington that have affected how the stimulus bill was written to benefit their sponsors. And the only way to make sure that their lobbying doesn’t get the lion’s share, while others get little or nothing, in to pass the stimulus money as tax cuts directly to the average Americans.
Nikos Retsos, retired professor
29. Wayne | 02.03.09
Just a reminder to include when thinking about the issue:
“Every government interference in the economy consists of giving an unearned benefit, extorted by force, to some men at the expense of others.”
Ayn Rand
30. Brian | 02.03.09
Republican = FAILURE. This has been proven. If you got money from the tax cut, what will you do in this terrible time? I will save it because I do not know when will I be out of work. If a company gets tax cut, what will that company do? I think it will use that to offset its losses rather than hiring more employees. Or maybe it will use that to give more “BONUS” to the executives!
31. TJMCFO | 02.03.09
We need to bring back the following to stimulate spending and lending :
1.Investmant tax credit (10%) on capital purchases such as furniture, machinery and equipment and vehicles (used in business)
2.Deductibility of personal installment debt interest for purchases (car/boat loans etc.)
3.How about a tax credit for purchasing an AMERICAN car ???!!!
32. Matt | 02.03.09
I don’t understand the philosophy of the government needs to spend the tax payers money to fix the economy. Didn’t they try that by bailing out the banks? That went real well. Say the people save their money instead of spend it, that just means the banks have more money, which the banks use to invest into other companies to try and make money. Thus more money in the economy, which eventually means more jobs. The government is completely inefficient at spending money, always has been and always will be because of politics. Government jobs would just be temporary jobs anyway. The problem is there isn’t enough sound currency in the economy due to inflation from over government spending. Now the government wants to fix it by more government spending? Completely insane.
33. Peter | 02.03.09
Republicans are against student loans? Cite/source?
As a recently departed Republican, I’ve never heard this, even anecdotally.
We are, as a general rule, against giving something to people with the exception of people that have now way to get for themselves.
Things you work/pay for always have more meaning. Loans are fine.
I was raised working poor, and simply did low cost college, until upper division courses, which I then borrowed government-backed loans to pay.
People that think somehow others should pay them to have a high paying job is ridiculous. Get out there and pay your own way.
And I’m absolutely fine with them not going to college. I still need people to clean my pool and mow my lawn!
34. john 2 | 02.03.09
What I find fascinating is that government spending is being positioned by the Republicans as contributing to the deficit, stealing from our children, etc. and tax cuts are positioned as if they are free… they end up as the same thing from a deficit perspective… they both increase the deficit. Reminds me of the “what weighs more, a pound of lead or a pound of feathers” riddle. Now, if you believe that consumers will better invest the tax cut than the government will spend, that’s a different point…but I think I’d rather have some bridges and highways fixed, with dollars going into workers pockets to spend, than for consumers to run out to Best Buy and get HDTVs where most of the input costs originate in China.
35. Tom | 02.03.09
So what is the grade for the last item, the tax write off for small businesses?
Investing in post-secondary education will have an immediate affect and help displaced workers get trained for new jobs. Plus it would increase the demand for teachers since someone has to teach them.
Funding for research at universities would be spent immediately too. Awards could be issued in as little as 5 months allowing the funding to hit this coming summer or fall. Research means more funded students, new products and new industries.
Tax cuts to individuals while appealing just doesn’t bring economic stimulus. Tax cuts to the top 5% does not mean business investment, it just means stock inflation which we just overcame. We need investment in stuff that brings new goods and services to market. Its slower but it will last longer.
As for government projects, well if we’re going to give people money we may as well get something for it.
But enough with the bailouts of the banks,etc. These guys screwed up. Throwing good money after bad is just BAD POLICY!
36. JC | 02.03.09
Ok - let’s try this again…tax cuts are not used to put cash back in peoples pockets to spend…they are meant to allow capital/business to expand and create more jobs, which puts more money in peoples pockets to spend.
We continue to be afraid to talk about tax cuts for business or wealthy thanks to effective class warfare - but the reality is that giving money to the middle class directly is a waste of time.
Cut corporate taxes to 0% for 24 months and watch jobs start coming back.
37. Cynder Gray | 02.03.09
Which economists are being cited for this story–the same ones that brought us this mess to start with?
It’s clear to see that tax cuts disproportionately benefit the wealthy who have not done much to improve our economy and instead see fit to outsource jobs, import H1-B visa workers and undermine the middle-class institutions at every turn.
The very people who created this mess and fail to see their part also want to participate in the clean-up?
It’s time to call conservative economic theory for what it is: failure.
38. some guy | 02.03.09
we’ve been cutting taxes for the last 50 years, enough is enough, with a 10 trillion dollar debt, its time to start raising taxes on certain income groups
39. sicko | 02.03.09
“The irony is that the biggest cuts in Mr. Obama’s plan, which put money directly into taxpayer pockets, may not be particularly efficient at jolting the economy back to life. That’s because people may choose to save a portion of the cash.”
You mean we’ll just put the cash away and not use it, oh, yeah, just the like the “folks” that got the TARP bailout money! Ironic indeed.
40. joseph bugado | 02.03.09
dont give any money to those welfargo banks they want money but they go las vagas to spend it its crazy obama whats happening to all tax payer money please spent it wisely sign doctorwhite
41. Susan | 02.03.09
If we want the government to expand by creating jobs that is called socialism. The burden of those new jobs falls on the backs of the taxpayer. If we don’t want socialism then we must make the environment for that job growth to materialize from the private sector. I am a business owner. Where we need help at this point is grappling with soaring energy costs. It would make a world of difference for us to have substantial help from the government to attack our energy loss in the way of credits, or a one time amount to apply to new windows, insulation, furnace improvement to name a few possibilities. Another option that would help enormously is a credit for the purchase of new equipment which would have energy saving qualities. The savings we would see would allow us to expand because we have the business, and thus could hire even more people.
42. Ryan | 02.03.09
“And I’m absolutely fine with them not going to college. I still need people to clean my pool and mow my lawn!”
Peter, have no worries. Low-skilled workers will not disappear, especially not in a country like the US which attracts millions of immigrants who would be happy to clean your house!. Worrying about such petty/ego-centric aspects of the potential effects of the recovery program is counter-productive and irrelevant. Not to mention morally questionable.
I understand Republicans believe that people should pull themselves up by the bootstraps, but you gotta give them boots first! This is where the government comes in. We are behind you, Mr. President, please do not compromise too much in an attempt to be bi-partisan.
43. Peter | 02.03.09
@John
I have never heard anywhere that Republicans are against student loans. Where did you learn this? I believe this is hate speech directed at Republicans and you should be ashamed of yourself! Quick, go sign up for a government sponsored “How to let your anger go and how to feel better about those you hate” class. See Republicans do have a heart!
44. GMRoe | 02.03.09
Infrastructure spending is a tried and true way of stimulating the economy. It creates jobs and revenue for the government. It also pays for itself after awhile (highways are a great example).
I can’t really say the same about tax breaks. Sure, I wouldn’t mind some extra cash, but I don’t thinks it’s an adequate solution.
45. John Berkebile | 02.03.09
History is clear - cut spending and reduce taxes versus increased Federal spending and increased taxes. FDR proved this when he worstened the Great Depression through increased taxes and huge government spending. JFK had 5 years of improved economic conditions due to his tax cuts. Learn from history!
47. Allen Taylor | 02.03.09
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
48. Tim | 02.03.09
In February of 2006, the US Congress approved the largest cut to student loans in the history of our country, with only 4 Republicans voting against the cut.
http://money.cnn.com/2005/12/22/pf/college/congress_loans/index.htm
“It is the largest single cut the federal government has made to student aid programs and is expected to increase the debt burden of students and their families as many borrowers of student loans will face higher interest payments, the newspaper said.”
49. Gary | 02.03.09
The recent economic problems resulted from excess spending whether it be on houses, cars, or home equity borrowing that fueled other spending. So now the solution is to encourage more spending? As usual Congress led by the Democrats want to prop up every special interest group in existence by sending them some money. How does spending on condoms, aids education ( I would guess that people from other planets have heard about this topic by now), and the arts help create jobs. The fact is governmemt does not create jobs and should not be looking at any stimulus plan (really a spending bill). Why doesn’t government ever reduce spending or eliminate worthless programs?
50. Web Smith | 02.03.09
Spending and tax cuts are the same thing when the government borrows to replace the lost revenue.
This stimulus bill is nothing more than a lot of spending on social reform that the radical liberals who are now in charge hold so dear to their heart. It violates every letter of the Constitution.
Instead of committing treason, they could start doing what we should be doing as Americans and pour trillions of dollars into the economy without borrowing and spending a dime.
52. Chris Thomas | 02.03.09
Hard to imagine that saving money that would otherwise be paid as taxes is a bad thing for the economy. Especially when compared to pork projects which target relatively few individuals.
53. adrien | 02.03.09
Answer, Neither. Money should be put back into Government! Subsidies should stop,and end immediately. Stop paying farmers and ranchers from growing all the food they want, so that prices can be brought back down plus end the ethanol scam so that ranchers can afford to feed their stocks corn again. Everyone needs to Eat.
54. Forrest Breyfogle | 02.04.09
What I am missing with the stimulus package and other efforts is discussion about what we should be doing differently relative to policies creations and business practices so that there are improved efficiencies and practices to increase competitiveness. We need to put in place systems that encourage the 3 Rs of business; i.e., everyone doing the Right things, and doing them Right, at the Right time.
The American Management Association (AMA) in its 2008 winter issue described a system that addresses these needs. This article with an example implementation can be downloaded from the link noted below:
http://www.smartersolutions.com/blog/forrestbreyfogle/?p=711
55. Dave Thomas | 02.04.09
“And I’m absolutely fine with them not going to college. I still need people to clean my pool and mow my lawn!”
What pay(hourly), benefits(Medical),place to live should this person receive and how many of these people do we need?
56. Jane | 02.04.09
John Boehner and other Republican congressmen have made public statements to the effect that while increasing student loan availability is laudable it is not stimulus and should not be in the stimulus bill. This is obviously false - as mentioned above it would provide jobs for teachers and provide retraining for displaced workers. The press release from the republicans yesterday listing the pork in the bill also mentioned the student loan provisions.
57. Jane | 02.04.09
Anything that has to be rushed is going to fail. There will be no solutions in a rush job, only more mistakes. The union auto industry had to be bailed out immediately and what is happening there. Even though they had to come back it was still a rush job and nothing was accomplished. We just threw that money to the wind. Besides if you look at the plan as it stands there are a lot of things in it that are not related to giving anyone a boost. (unless of course your on an A list with the Senate) We need to work on a reform for all political offices. A list of requirements that have to be met so we really do get people that are at the top to help “we the people”. People that actually know what they are signing and what it really means to the average Joe.
58. Ben | 02.04.09
“The irony is that the biggest cuts in Mr. Obama’s plan, which put money directly into taxpayer pockets, may not be particularly efficient at jolting the economy back to life. That’s because people may choose to save a portion of the cash.”
Well unless people are sticking that money under their mattress, it still goes back into the economy. Or is suppose to and once again banks are both the problem and the solution. Credit freeze? You have my money and holding onto it does neither me nor the economy any good. Money works best when it’s in motion, kind of a “green” electricity that powers everything.
BTW the last stimulus checks that Bush gave were limited to people who made a minimum amount. So the unemployed didn’t benefit. A lot of the poor didn’t.
And last Congress is up to it’s usual habits with pork attachments to stimulus bills. We sink while they fiddle.
59. Mary Heinricht | 02.04.09
It seems that over-spending got us all in this mess. We have to change our “economy” in fundamental ways. People buying more things they do not need and pay interest for will not get us back on track.
We need to re-establish jobs that pay a living wage and industries that do not ruin the planet we all rely upon. This is not going to be quick fix. The less we listen to the “gurus” that got us into this mess, the better.
I think the economists and gurus should have to eat as much more food each day as they want “the economy” to grow. Then maybe they would learn what is sustainable and reasonable - or they would explode and shut up.
60. William Giesenhagen | 02.04.09
The present so called stimulus bill is a hoax. Spend, spend, spend is all that all politions understand. Their order of business is: Me first, my party second, the country maybe, the people only if they think it will reelect them. Tax cuts have worked but spending on ridiculous items must stop. Any stimulus bill must help the economy NOW and spending on all special interest must stop NOW.
61. Aine Keegan | 02.04.09
What is the plan for us old folks that loss our savings (thanks to Barny Frank & CEO of the Banks) I paid my bill and bought a house that
I could afford, that I plan to live out the rest of my life in, which I may have to sell!I pay my credit cards in full each month. I never filed for Bankruptcy I have not taken a vacation for the last ten years.
I pay my Income tax. And Now I am being penalized for being a good citizens.
And I bet there are a Millions of us old folks that are in the same
positions.
62. dizizcamron | 02.04.09
@6
How does deficit spending violate the constitution? Unlike most state constitution there is no constitutional amendment requiring our national government to keep a balanced budget.
There is also a great deal more to this stimulus package than social reform. As this article states, tax cuts make up the largest portion of this bills cost. The second largest piece of spending in the bill is various infrastructure investments, which again has nothing to do with social reform. Your criticism is nothing but a conservative platitude that can be cut and pasted onto any issue. It sounds more like a regurgitation of a comment Rush Limba would make about….anything he felt like.
I totally accept that lots of people in this country want a much smaller government presence in their lives. But its time for everyone to accept that we will never return to a pre-World War 1 era of Federalism. The interstate system, the power grid, the hoover dam, and the early stages of the internet were all built with funds from the federal government. Sometimes private industry simply doesn’t have the means to undertake a project of immense cost that may not have an economic payout for decades. And sometimes, undertaking those projects is still the right idea.
63. Caponer | 02.05.09
There certainly are plenty of places for taxpayer’s money to go. I look ahead to the almost certain era when the gas-fueled automobile is ready for the museum, and it cannot be too far away, when there will be a real need for some form of mass transit. This will be needed in non-urban areas as well, so this means bus transport. Rail is fine but rail does not go into all neighborhoods. Who is planning for a new generation of buses? When I was a youth, I could take a bus to almost everywhere in West Virginia where I lived. Now, it is almost impossible.
64. Phil W | 02.08.09
A tax cut to a business without much profit or an unemployed person will do little good. However, a credit for a business hiring makes more sense and so does spending for projects that require labor like infrastructure. Obama has his hands full with both Republicans and Democrats on this as too many members of Congress politicize this important piece of legislation that needs to maintain focus.
65. Tom Shaw | 02.10.09
What do you mean tax cuts are only a temporary fix? If they lower the tax rates, it means that you take home more money for as long as the tax cuts remain in effect. THAT MEANS LONG TERM! President Kennedy and President Readon both proved that across the board tax cuts increase tax revenues to the government because they result in significant increases in consumer spending. History doesn’t lie.
66. James | 02.18.09
Some people need to read up on Basic Macroeconomics. One comment said that we should cut taxes because “[the worry that people would spend the money on paying off old debts is ridiculous and that’s what we should want them to do because debt and overspending is how we got into this mess]”. Well, while that last part may be true, in stimulating the economy, that’s creating real stimulus (i.e. jobs, growth, technology, etc), we have to rely on new spending…not old spending. When a person gets a tax break and the money goes directly into the hands of people…they take that money and spend it on old debts or savings (which in theory is good)…BUT if you take that same amount of money and the government directly injects it into the economy by buying goods and services or allowing business to grow…then business (small and large) hire new workers, expand, and/or give raises…then those people get income or raises and take the new money and pay off old debts and creat new spending because of their increases confidence and income security. Face it…a tax break for the hundreds of thousands of unemployed workers doesn’t do anything. Allowing those people to go back to work allows them to yes, pay off old debts, but by having a permanent job…they can buy groceries, get their car fixed, go to the movies, etc. It’s all just a logical process. You know…so many people complain about government involvement…but look at countries were their is no government. African countries without a government in place are in horrible condition. There is a place for government…and even though there are horrible mistakes made in Washington, we have to allow for our market economy to work in the best way possible.
67. Dana Bruno | 02.19.09
Government spending is not the correct way to fix the economy. It may seem like a great solution in the beginning, however in the long run, this country is going to be faced with high interest rates, and fewer people are going to be able to get credit because the banks still are not lending. If government purchases rise, that means there is a decrease in public savings. When there is low return to savings, interest rates sky rocket and then no firms or businesses invest because the high interest rates affect their profit. When they have less profit, they either lower wages, or create a hiring freeze because they cannot afford to hire more labor. The more tax cuts that are given to the people, the more they will spend it, which is what we need right now. This economy needs an increase in spending and consumption and giving money back to the people (tax cuts) is the way to go. Also, in this wonderful stimulus package, there is a clause that states “Buy American”-sounds great at first, but when we focus on “buying American” we limit if not cut off trade with other countries and we end up hurting ourselves..which is how we got into the great depression.
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1. Marilyn Moody | 02.03.09
Yes, let’s give the Republicans what they want. Cut taxes for people living on $50,000 and below. That will help the poor and the older residents of our country. We could compensate by reducing the tax cuts for the filthy rich.