Sunday, February 08, 2009

Is it possible the Republicans still don't get it?

I have watched the stimulus bill "discussion" with astonishment.

Setting aside the complete hypocrisy of Republicans who supported Bush's $1.3T tax cuts (primarily for the wealthy) AND the $1T+ war in Iraq, arguing that $800B to jump start the US economy is "irresponsible"...

Don't the Republicans know or talk to a single economist? Virtually every economist I've seen, read or heard says that government spending (on virtually anything; although spending on infrastructure sounds vastly more responsible) IS an effective way to combat the worsening recession. Not only is it effective, it is multiple times more efficient way to bost GDP per dollar spent than tax cuts alone. And that a larger spending package is better than a smaller one.

The main idea of stimulus is to put people back to work. If you lose your job, you spend less; and millions of americans have lost their jobs in the past few months. This is bad for the economy. If the government spends money on bridges and roads, this puts people back to work. When you get a job, you are going to spend most of what you make. That is how stimulus works.

Meanwhile leading Republicans are united in their belief that the world is flat....errr...that ONLY tax cuts are effective stimulus. Of course they very vocally decry giving tax breaks/credits/refunds to people in the lowest income brackets...insisting that is welfare! the very people that are most likely to spend every penny of stimulus. Eliminating the lowest earners means the Republicans tax breaks would go to the more affluent. But it is not at all clear that an affluent tax payer would spend this marginal tax dollar, rather than save it. In fact recent evidence (even Republicans should be able to remember last year!) points to the fact that maybe $0.30 per dollar of marginal tax cuts are spent--call it the negative multiplier.

You would think that a disintegrating economy...we lost 600,000 jobs in January alone...might be enough to prod the Republicans on work with Obama. Unemployement jumped 1% in just the past two months! Instead they think they can roll Obama's outstretched hand of bipartisanship into a straight-jacket. Obama is thankfully too clever to fall for such foolishness.

I almost wish Obama would force a Senate Republican to filibuster the stimulus...I'd pay good money to see that...but instead he will work with a few Republicans that can see past their nose.

But I'm really forced to wonder who the Republicans think they are kidding? At least while the American economic pie was growing they could argue that their policy of tax cuts for every ailment was benefiting someone. But now that the deregulatation/free market fundamentalism has clearly gone bankrupt, arguing that more tax cuts are just what the economy needs is frankly daft.


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