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 No Time to Argue About the EconomyPosted on Jan 15, 2008By Marie Cocco WASHINGTON—Now that even the Bush White House sees grim economic news as a sign that perhaps we should do something besides pretend things are rosy; now that Republicans on Capitol Hill sense in the broadening of economic bitterness the latest peril to their hold on even safe seats; now that Democratic congressional leaders are pledging to work with a president who has thwarted them for a year, does this all mean we are about to hold hands and help Americans out of their economic stress? Probably not. We are more likely to watch a nasty rerun of economic battles past, one that may go on for so long that a stimulus package will come too late in the economic downturn to churn up anything but hot air. If history—and early hints from the White House—is any indicator, the fight is going to be over a couple of false arguments we’ve heard before. The first rests on the unshakable belief among Republicans that tax cuts, and never direct government spending, are the only way to stimulate the economy. This was pretty well disproved by the New Deal, not to mention the deficit spending that has helped to prop up the economy during most of the Bush presidency. The second fight is almost certain to be over who should get a tax cut or one-time rebate to be included in any stimulus package. This is a more obscure battle. But it is significant. Democrats will likely argue that millions of taxpayers who generally earn $30,000 or less, and who pay Social Security and Medicare payroll taxes but don’t necessarily make enough to pay income taxes, should get a piece of whatever Washington doles out. Republicans often deride this idea as something akin to giving a tax cut to people who don’t pay taxes. Advertisement Most economists agree that some of those who receive tax cuts save all or part of the extra money. It doesn’t take a Nobel laureate to realize that those most likely to save the extra bucks have higher incomes than those who would spend all of it. Common sense dictates that any tax cut meant to stimulate spending—which is, after all, the point—must be targeted toward middle- and lower-income earners. Wal-Mart shoppers deserve a tax break in part because they’ll spend it. Saks shoppers, not so much. Even so, consumers are likely to spend at least some of their tax cuts on imports, according to Larry Mishel, president of the Economic Policy Institute. That, he argues, doesn’t prod job creation at home, as would—gasp!—direct government spending on road repairs and other public works projects. In truth, we haven’t the time to fight this enduring argument, which not only splits the two parties but can divide Democrats into antagonistic camps. But that doesn’t mean a temporary, targeted increase in government spending can play no role. The coming recession, if we have one, has its roots in high energy costs that are forcing consumers to cut back on other spending, and in the mortgage meltdown that has struck hardest at homeowners of modest means. Since skyrocketing energy prices are an urgent problem, pumping money into federal fuel-assistance programs makes sense. Aid to those at risk of losing their homes to foreclosure does, too, and for some of the same reasons. But some ideas make no sense at all unless what you’re really intending is a sop to campaign donors and ideological soul mates. One gaining currency among Republicans is a business tax cut meant to spur investment in productive equipment. But the immediate problem isn’t lax production. It’s that people aren’t buying goods that already are on the shelves and in the showrooms. More preposterous is the notion that making permanent the tax cuts passed early in Bush’s tenure could now become a quick fix. It won’t be the first time the Bush tax cuts, which began as a campaign promise during the 2000 primaries to thwart other Republicans, have rhetorically morphed into an all-purpose elixir. But at least now this falsity can be exposed in a glance: The tax cuts already are in effect, so making them permanent after 2010—presumably after any recession has passed—helps no one this year. And help, if offered, must be delivered now and not, say, in October—the month when politicians most want to deliver it. Marie Cocco’s e-mail address is mariecocco(at)washpost.com. © 2008, Washington Post Writers Group CommentsAre you a Truthdig member yet? Login now, or register with Truthdig. Add Your Comment |
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By Just someone who actually knows about the economic, March 25, 2009 at 11:13 pm Link to this comment
(Unregistered commenter)
Quick summary of what I’m about to say: Random people who know nothing about the economic system shouldn’t write economy articles
Thing I’m saying: Much of what’s said in the article is at least somewhat wrong… I’ll just list them:
“The first rests on the unshakable belief among Republicans that tax cuts, and never direct government spending, are the only way to stimulate the economy. This was pretty well disproved by the New Deal, not to mention the deficit spending that has helped to prop up the economy during most of the Bush presidency.”
First of all, as many economists now know, tax cuts help the economy (see William Niskanen of the Cato Institute’s studies). Second, the New Deal was an area of excessive goverment spending; and third, no one is sure if the New Deal helped the economy back then or not.
Here’s another one.
“The second fight is almost certain to be over who should get a tax cut or one-time rebate to be included in any stimulus package. This is a more obscure battle. But it is significant. Democrats will likely argue that millions of taxpayers who generally earn $30,000 or less, and who pay Social Security and Medicare payroll taxes but don’t necessarily make enough to pay income taxes, should get a piece of whatever Washington doles out. Republicans often deride this idea as something akin to giving a tax cut to people who don’t pay taxes.
The way out of the impasse is pretty easily found—if politicians want to find it.
Most economists agree that some of those who receive tax cuts save all or part of the extra money. It doesn’t take a Nobel laureate to realize that those most likely to save the extra bucks have higher incomes than those who would spend all of it. Common sense dictates that any tax cut meant to stimulate spending—which is, after all, the point—must be targeted toward middle- and lower-income earners. Wal-Mart shoppers deserve a tax break in part because they’ll spend it. Saks shoppers, not so much.”
Someone with brains and time, economist or not can find the discrepancies in that statement. If you can’t find it, well, it’s probably because you don’t have this back-knowledge. Tax-cuts are easy to regulate. Figure the rest out yourself.
Ooh, look.
“The coming recession, if we have one, has its roots in high energy costs that are forcing consumers to cut back on other spending, and in the mortgage meltdown that has struck hardest at homeowners of modest means. Since skyrocketing energy prices are an urgent problem, pumping money into federal fuel-assistance programs makes sense. Aid to those at risk of losing their homes to foreclosure does, too, and for some of the same reasons.
But some ideas make no sense at all unless what you’re really intending is a sop to campaign donors and ideological soul mates. One gaining currency among Republicans is a business tax cut meant to spur investment in productive equipment. But the immediate problem isn’t lax production. It’s that people aren’t buying goods that already are on the shelves and in the showrooms. More preposterous is the notion that making permanent the tax cuts passed early in Bush’s tenure could now become a quick fix. It won’t be the first time the Bush tax cuts, which began as a campaign promise during the 2000 primaries to thwart other Republicans, have rhetorically morphed into an all-purpose elixir. But at least now this falsity can be exposed in a glance: The tax cuts already are in effect, so making them permanent after 2010—presumably after any recession has passed—helps no one this year.
And help, if offered, must be delivered now and not, say, in October—the month when politicians most want to deliver it.”
I know it’s over now, this thread is a year-old, and only now it’s bla bla’d, but doesn’t hurt to get an update: they’re making more energy. Wow…
The point I’m trying to prove is: eh, where’s the newest thread?
Report thisBy Marshall, January 17, 2008 at 9:12 pm Link to this comment
“The first rests on the unshakable belief among Republicans that tax cuts, and never direct government spending, are the only way to stimulate the economy. This was pretty well disproved by the New Deal, not to mention the deficit spending that has helped to prop up the economy during most of the Bush presidency.”
At least you’ve admitted that tax cuts are ONE of the ways to stimulate the economy… an important concession to the facts after Dems made much noise about their ineffectiveness. And deficit spending has been around far longer than this administration has.
The value of committing to making the cuts permanent is the psychological boost for both business and consumer. Consumers can bank on their taxes remaining lower in the future, and businesses can bank on consumer spending remaining higher. The psychological boost is a proven tool in stimulating the economy, just as it can provide a dampening effect on spending when it ebbs.
And tax cuts for business don’t just spur production, they produce higher wages and have a checking effect on inflation as businesses don’t feel the need to charge more for their products. Coupled with permanent consumer tax cuts as they have been over the last eight years, they promote a feedback cycle of consumer spending and increased hiring and production.
Report thisBy hippy pam, January 17, 2008 at 4:39 pm Link to this comment
There are NO JOBS-very little MONEY-nearly EVERY CONSUMER ITEM is made ELSEWHERE-CONSUMER GOODS are made where there are NO SAFETY GUIDELINES-FINANCIAL INSTITUTIONS are OWNED by FOREIGN COUNTRIES-his imperial highass emperor BUSH*T is BEGGING…for….
Report thisWHATEVER…..AND LITTLE JENNA BUSH HAS DECIDED TO GET MARRIED ON “THE RANCH”...........BUT YOU AND I-MY FRIENDS…..WE WILL STILL FOOT THE BILLS!!!!!!
By John Borowski, January 17, 2008 at 5:44 am Link to this comment
(Unregistered commenter)
In order to cure the rapacious type of greed and criminality on Wall Street, the Federal Reserve (A group of foreign wealthies) keeps giving a booster shot of lower interest rates in the buttocks of the criminals there. Until the interest rate drug wears off up, up, up goes the stock market despite the bad news raining down. This looks like a good way to juice the economy, but let us look at the negative side of it. The government of Bush & company tell us inflation is low, low, low. Conversely, when inflation is low, low, low your Social Security will be low, low, low the following year. (You can tell how low inflation is by noticing how heavy your wallet is these days) Every time interest rates are lowered the American dollar is worth less than it did yesterday. Anyone that sells you stuff will not be willing to price his items on yesterday’s dollar. They will demand you give more of the cheaper today’s dollars. Because the US depends on the savings of foreign nations to address the debt of this country, (Americans have very little savings) they hold trillions of yesterday’s dollars. They are seeing their yesterday’s dollars melting into today’s dollars like a snowman on a warm winter day. This is causing a great deal of cursing and gnashing of teeth by the foreigners. China alone has $1.53 trillion of foreign exchange reserves in yesterday’s use to be dollars. Why would China and all of the major countries prop up our debt ridden country to keep the living standards in this country from collapsing? If they used their wealth to prop up the living standards of their own people wouldn’t it be better for them? (They had better not if they know what’s good for them) Reasons for this will be told in a later chapter.
Report thisBy John Borowski, January 17, 2008 at 3:58 am Link to this comment
(Unregistered commenter)
What good is antigerm soap? In the end germs and gravity will get us all.
Report thisBy cyrena, January 16, 2008 at 11:42 pm Link to this comment
So Purplewolf…does this mean I don’t have to purchase my own any longer?
I mean, if they’re gonna just start putting the stuff in the water, that could sure save us a bunch of money.
I don’t know how the phramies are gonna feel about this though. Dana must not have consulted them, before she made this announcement.
Report thisBy purplewolf, January 16, 2008 at 5:36 pm Link to this comment
This just in :
White House spokes person Dana Perino just announced,” That the Bush administration has headed off the Depression/Recession, that rumor has been perdicting, by adding massive doses of a wide variety on anti-depressant pharmaceuticals to all the nations water supplies. In a move to bring the economy a much needed boost, Mr.Bush has also passed into law that all people living in America are to take “UPPERS” at least 4 times a day, thus bringing up the whole country.
Report thisBy John Borowski, January 16, 2008 at 5:15 am Link to this comment
(Unregistered commenter)
An idiot can say the stock market is going up and be correct 75% of the time and look like a genius. A genius can say the stock is going down and be wrong 75% of the time and look like an idiot.
Report thisBy SamSnedegar, January 16, 2008 at 2:25 am Link to this comment
It’s not recession you have to worry about, it’s depression . . . the only solution I see for it is to steal ALL the mideast oil, not just the Iraqi oil.
Obviously Cheney and his bosses see it the same way, for they are intent on neutralizing Iran so they can mop up on the Emirates, Kuwait, and Saudi Arabia. Once we have stolen that oil, we’ll be safe for as long as any of us here shall live.
Unless of course the world doesn’t like our “solution” and comes for us like we went for Hitler’s marauders; it would be a helluva war.
Hey people, it’s about WEALTH, not about money. Enron had plenty of money.
Report thisBy cyrena, January 15, 2008 at 9:42 pm Link to this comment
Excellent recap of just how much the BASICS have gone up in the past 6 years, while the incomes have decreased for the average American. I could add some other figures, but you’re right…it’s too depressing. My rent…up 42% and it was already over inflated by about 1000%.
That’s just for starters.
And, they think there MIGHT be a ‘recession’?
Yeah right…whatever…
Report thisBy purplewolf, January 15, 2008 at 9:35 pm Link to this comment
Just heard on Countdown with Keith Olberman that Bush is begging the Saudis to lower the cost of a barrel of oil. How pathetic.
Report thisBy purplewolf, January 15, 2008 at 9:13 pm Link to this comment
Most of those who recieved these fix all tax cuts that Bush claimed were going to work the first time around, didn’t help the middle and lower income people in former “Buick City, U.S.A.” And even Bush boasted at the time the average tax cut would be about $300. My, with such a vast amount of extra money, I just don’t know why we are worse off now. I mean, less than a dollar a day in extra money won’t even buy you a Big Mac from McDonalds dollar menu.
I remember Bush, with tears in his eyes talking with some dupe who recieved his $300 tax cut who said (for the TV cameras of course) now he could afford to hire another person to work in his business. That would last about a week and a half of a 40 hour work week,at minimum wage. How is that going to fix America Mr.Bush?
I checked my back ledger books and just since 2002,the average utility bill has gone up in my area over 98% (usage about the same now as in 2002), water up 67%, gasoline, well we really don’t want to go there, food cost increases due to higher fuel cost average around 20%, milk from $1.69/gal to $4.79. Just a few things, eating out, clothing, repair services,insurance(all of them), and housing are not included. It’s to depressing when you start to go back and compare these expenses and in too many cases peoples work hours have been cut ot eliminated, wages have been rolled back for many just so they could still have a job for awhile,i.e. Delphi, or wages remain stagnant. Yes,I can see how well these tax cut stimulus packages have worked for the average working American.
So tell me why the ecomony is doing so poorly and people are afraid of losing their homes when Bush, even last week, claimed us how well off we all are doing.
Report thisBy cyrena, January 15, 2008 at 10:38 am Link to this comment
GAnderson always says it well!!
But, back to your original intent Jackpine, I’ve been thinking the same thing, (about the former great powers who ceased to become great powers) for some years now.
Empires do crash and burn.
Americans have both short and long term memory issues.
Report thisBy endbushwar, January 15, 2008 at 10:00 am Link to this comment
For those who cannot see how this will all end….let me tell you how…....There will be lotsa nu money put in to make the party lively again…...Hey we’re RICH..Lets buya…____________. How do you spell HYPERINFLATION????? The victim will be the DOLLAR which investors are already wary about….. Do you remember the Mexican Peso?????? Hint, it wasn’t pretty….... Time to get out…of dollars. Time to get out of Republicans and Dems with NeoCon slogans too…..............Making the rich richer will not help MOST Americans—only the 5% that control the elections…...... Everyone else will be paying a higher price for their profits & prophets….
Report thisBy jackpine savage, January 15, 2008 at 8:27 am Link to this comment
I was going to post something about how our economy resembles those of other great powers in history, right before they ceased to be great powers. But G. Anderson, you said it so well that i’m not sure there is anything left to say.
Report thisBy Jim C, January 15, 2008 at 8:26 am Link to this comment
(Unregistered commenter)
Since we no longer produce anything what are we going to stimulate except walmarts bottom line . Most of their products are made elsewhere , so we might help the chinese , the japanese or the koreans . Maybe then they’ll loan us some more money . It seems , we’re screwed .
Report thisBy G.Anderson, January 15, 2008 at 7:37 am Link to this comment
Scientist’s have recently discovered the largest black hole. Billions of light years away, it has the mass of 18 billion suns.
Black holes of this size can easily swallow hole solar systems, and even if the printing presses at the national mint were to run day and night for the next 2,000 years they would not be able to produce enough money to fill it up.
Some scientists have also been concerned that a “mini” black hole generated in an experiment to re create the back bang, at the Hadron Super collider, might have the potential to escape it’s magnetic containment bubble and sink to the center of the earth devouring our planet and everyone who lives here.
Such and event would be a catastrophy, to say the least.
Kind of like what’s happening now in our economy.
The bubble has escaped it’s containment sphere.
Report this