Thursday, January 08, 2009

Stimulus or Not?

Once again Krugman points to an analysis of the proposed $300 billion tax cut that suggests it's not going to be very effective. I don't think, at least among most people that have looked at it seriously, there is any doubt that we need stimulus, we need it now, and it had better be huge. Unless we are being led astray by political posturing, devoting nearly 40% of the stimulus to tax cuts that won't stimulate anything, just in an effort to win Republican votes , seems contrary at best.

How can Obama justify devoting 40% of the stimulus plan to non-stimulus spending? The thing is, everything we are hearing from top economists and seeing in our real life says we have a national emergency and tax cuts ain't going to get the job done. Yeah, Obama promised middle class tax cuts but the hard reality of our situation makes it time to defer those until we have the economic ship no longer taking on water. The stimulus package is not the place for honoring campaign promises that have nothing to with the very real economic emergency we are now facing. We can talk about tax cuts later. Cutting the legs out from under the stimulus package by nearly half just to cut taxes, as promised is insane and not the "change" we need or voted for. Worse even, if he is doing it to woo Republican votes then we are really screwed. Obama and his team need to define the package he is looking for from Congress, one that actually will stimulate the economy and take his 80% approval rating out for a spin and see how it flies. The Republicans have been ignoring the real economic needs of the country for long enough and it is time for them and their economic policies of cutting taxes and reducing government to be equally ignored.

Reportedly, the tax cuts in the stimulus were increased to $300 billion in order to woo enough Republicans to pass the bill with 80 or more votes in the Senate. The thing is, to the folks like me who have lost jobs or will soon lose their jobs and are looking at having to live off what is left in their retirement accounts and losing their health care it doesn't really matter if the stimulus package passes by 80 votes or simply 51 votes. Playing patty fingers with the GOP and sugar coating the stimulus to make them happy does absolutely nothing to improve our economic security.

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