Don’t get me wrong - if there’s objective evidence that the infrastructure in a certain area needs improvement, and the resources are available to do it, then by all means do it. The thing is, this should not be considered a ‘stimulus’ plan or a ‘jobs’ plan. You do it because it’s necessary.
A nationwide ‘infrastructure upgrade’ plan put forward as a stimulus will result in endless amounts of pork, lots of wrangling, and because it takes a long time to prepare such work the need for the stimulus will be long gone before the money ever gets to people on the ground.
I saw an article giving the results of the investigation just last week, so they didn’t know just after the collapse. The part, which had been specified too thin, was buried in the bridge, so inspections wouldn’t have detected the problem. I was away last weekend and reading the papers I missed through the week, so I’m not sure what day I saw it.
I absolutely agree. People are using this as an excuse to get money for their pet projects.
Actually, the rumor that some of the proposal was going to be giving tax breaks for capital investments sounds encouraging. A pure tax break would just raise profits without doing much good, but even though some companies planning to invest anyway will get a break, at least the cut is targeted.
That may be the case. It may also be the case that a politician’s “pet project” is also a needed infrastructure repair/upgrade. Not everything is a “bridge to nowhere”, and a state representative or Senator is probably well poised to pump up a needed infrastructure project in their area, no? Isn’t that why the US has representational governance, rather than at-large elections?
The problem though is that businesses tend not to expand when they think the economy is going into a downturn. And even if they did, they might have trouble with this recession since banks aren’t lending.
I suppose the least worse solution is, in fact, to give checks to the people so they can best determine where the money should be spent.
On an unrelated note, I don’t see how anyone can take Ron Paul seriously. He lost me at ‘return to gold standard’ and ‘withdraw from the UN’.
Despite $15 billion spent, the “Big Dig” higway project in Boston hasn’t solved anything-commuting times are essentially unchanged.
Of course, the indictments of corrupt politicians and contractors are just starting!-that ought to provide some tertainment!
My point is: government is pretty bad at spending taxpayer’s money effectively-remember-you were warned!
I’m all for infrastructure upgrades, and I vote for them all the time. This isn’t the situation for them. Don’t push a pet project, even a good one, as the solution for the oncoming recession when not a dollar will be spent on it until the recession is over.
There is no way that tax breaks for the rich produces enough benefits to make up for the huge budget deficits they create. Short term economic boosts are how you get out of recessions, its called Keynesian economics. Then at some point when our economy has recovered we have to raise enough revenue to pay for the deficit spending. The problem with this adminsitration’s economic ad fiscal policy is that they believe in supply sided economics (which is a lot like believing in creationism, believing cigarettes are not bad for your health or believing that the concern over global warming is some liberal conspiracy.
Why yes…I think I’ve heard of it. Those theories led to the economic boom in the 70’s…can’t go wrong there! (mostly tongue in cheek there…but only mostly).
As with the vast majority of your post, I completely disagree. The REAL problem with this administration, besides getting us into a series of foreign adventures that have cost us vast amounts of money, is that they are just like tax and spend liberals…except they cut the taxes to. So, I guess they would be non-tax and spend psudo-conservatives…or something.
Close. For starting a ruinously expensive military adventure and cutting tax revenues at the same instant, the precise technical term is “batshit crazy”. That’s a true fact, you could look it up.
Renob you are so funny. You say people who borrowed money to buy houses should have known better. However the loan companies who actually are supposed to be aware of whats going on, allowed billions of dollars in risky loans. They had no regulation and no rules to guide them. They made fortunes . They of course are blameless. You bounce from micro to macro economics when it suits you.
No oversight and rules have given us a precarious economic future. We should have regulated and punished them, Like the S and L fiasco the perpetrators will walk away wealthy.
Tax cuts without spending cuts are just another form of deficit spending. The Keynesian effect of deficit spending is far more responsible for any growth in the economy than the relatively mild effect of cutting taxes from 39.6 to 35% and it certainly dwarfs the effect of a monumental cut in the capital gains and dividend rate.
The largest peice of the Bush tax cuts (for individuals) is the 15% capital gains rate and qualified dividend rate. Tax cuts for investment income does relatively little for increasing production or consumption. It does tend to improve the savings rate but considering that most savings of the vast majority of Americans is in 401Ks and IRAs (and home equity) which are not subject to the preferential capital gains and qualified dividend tax rate, we are basically trying to encourage savings among people who basically HAVE to invest because they have so much money that they cannot spend it all. The real effect of this tax cuts has been to transfer savings from debt to equities (interest is still ordinary income).
The typical household with 100K in annual income produces about 1% of its income in capital gains and dividends (the rest is in stuff like 401Ks and IRAs that aren’t subject to capital gains or the qualified dividend tax rate).
The typical household with 500K in annual income produces about 10% in capital gains or qualified dividends.
Households with annual incomes in excess of 10 million get at least half their income from capital gains or waulified dividends.
This is just to say that the largest peices of the Bush tax cuts (on the individual side) are tax cuts for the ultra rich with a relatively smallbenefit for the overall economy.
Isn’t deficit spending a valid tool (you know, Keynes and all that)?
Isn’t a 1% increase in deficit spending going to increase the GDP by at least 1% (more if we can get a good multiplier going)?
If we wanted to fully fund our social security and medicare obligations, we would need about 40 trillion dollars. Medicare is the lion’s share of that and universal health care is the only way to significantly reduce the medicare portion of that number.
Some would say that an apt analogy is to compare it to the use of an antibiotic to fight an infection that your body will PROBABLY be able to fight off on its own (after a high fever and a period of misery).
I don’t know that the proposed stimulus is going to be well structured but just about every reputable economist thinks Keynes was onto something.
Keynes economic theories have pretty much been…well, maybe not discounted but are pretty much out of favor these days from what I can tell. Certainly I’m guessing John Mace isn’t going to be a big proponent of them…though he can answer for himself of course.
I find neither responsible economic policy, but YMMV. I’m more a proponent of cutting taxes AND cutting spending.
And I have no problem with that personally. After all, those ‘rich’ and ‘ultra rich’ are the ones who pay the lions share of the taxes AND they are the ones who provide the capital for economic growth. They don’t stuff those dollars under a mattress after all but invest it back into the economy. I realize that the point is debatable…but the fact that it IS a debate is something you need to recognize.
No, the problem with Bush’s weird lash up of an economic abortion is that he has cut taxes (which is good) but ALSO pretty much let the government run amok wrt spending and growth (which is VERY bad IMHO, no matter how you slice it). 'luci’s ‘batshit crazy’ term definitely comes to mind as an apt (even understated in this case) term for this mess.
You’re assuming two things. First, the problem with the economy is a shortage of investment capital, not a problem with consumption. After the bubble burst there was a problem of too much investment - or rather, too much manufacturing capacity and, for instance, telecom capacity for the needs of the public. A tax cut for the rich in this situation was particularly boneheaded, and was no doubt the reason it took so long for us to come out of the recession.
The second is that the capital will be invested effectively. Invested in equipment, yes (given the constraints above) but chasing up the value of stocks or in subprime mortgages not so much. How much does investing in increasingly sophisticated financial instruments really help the economy? How much extra productive capacity get created by paying a few billion bucks for Facebook? And we’ve seen worse investments, you must admit.
I wonder if anyone calls the the proposed rebate a regressive tax cut - regressive in that it gives a bigger percentage advantage to the poor as opposed to the rich.
I disagree…I think the whole 9/11 thingy is a more plausible explanation for a sluggish economy early on. I don’t think it took all THAT long to come out of the recession after the dot com bust either considering the extent that of the economic problems generated from it. Then again, I don’t see the current situation as worst than the post-dot com bust either…but time will tell on that one.
I disagree. Put another way, how much of the boom during the Clinton administration can be attributed to poor investment in what was known to be an increasingly bloated and shaky market. Yet it WAS a huge economic boom for the country while it lasted and set new high water marks for our economy. After the readjustment things picked back up and carried on from those old high water marks…and I fully expect that some time in the next presidents first term the economy to do the say, whether it is Obama, Clinton or Mickey Mouse at the helm.