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GOP Insanity
One of the popular ways that insanity can be defined is "doing the same thing over and over again, expecting a different result." Each time I hear the Congressional Republicans call for more tax cuts, this comes to mind.
Once again, the Republican proposals are dominated by tax cuts for corporations and a reduction in the capital gains tax. The Democrats need to stress the fact that consumers and corporations are not spending the money that they already have; giving them more money will not help the economy much. I recall reading a survey of recipients of last year’s Bush checks which showed that they spent only 20% of the money; they saved the rest or paid down debt. Therefore, let's put the tax cuts in the hands of those who will spend the money, and inject the money back into the economy.
The GOP members in both houses of Congress continue to demand a decrease in spending, and to pick apart the recipients of government funding. Why is it that Republicans are getting away with arguing that spending on certain categories (school snacks, weatherproofing, etc.) doesn’t constitute stimulus? Have they never heard of second-round spending or multiplier effects? We've tried it their way, and it didn't work. Now it's time for a new vision.
Government procurement ensures that something is actually purchased, and that someone is actually paid for it. It ensures that demand for goods and services is greater than it would have been otherwise. All of this money goes straight into the economy, and into paychecks. Tax cuts provide no such control. Nobody has any idea what people would do with tax cut money under current circumstances, but logic and recent history suggest a high propensity to save.
Now President Obama is taking his case to the people of America. He will hold a prime time press conference Monday night, and will be in Indiana Monday and Florida Tuesday for town hall meetings to tell citizens about his solutions to the economic crisis. His choice of states is compelling, as these were states that went blue for the first time in several years. This sends a clear message to Republican Congressmen that their obstructionist position and their stale and time worn cry for tax cuts could be costly.
I applaud President Obama for walking the walk, and attempting to craft a bi-partisan bill. I’m all for bi-partisanship. However, it appears the Republicans see it as a sign of weakness. Taxpayers who have lost substantial value in their 401(k) plan and/or their home, who are losing their jobs, paychecks and healthcare, want them to step aside and pass the Obama plan as it was meant to be. And the Democrats in the Congress should get off their knees, stand up, and just say “ENOUGH” to trying to appease the more-tax-cuts crowd! It's time to stop the insanity!!
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Here is someone who disagrees. I would appreciate it if someone could point out the fallacies in his argument with actual facts. I really don't know enough economics to comment, but I'd like to learn.
http://www.forbes.com/2009/02/04/tax-cut-stimulus-opinions-contributors_0204_peter_ferrara.html
I fully expected you to disagree. The situation in Ireland, which was cited as the example in the link you gave, is not as simple as corporate tax rates only. There are other factors at work, such as: Ireland has achieved the highest trade surplus relative to GDP in the EU. We have been negative for years. This greatly affects the value of the dollar. It's all way too complicated for me to fully understand.
We could argue these points back and forth until my nerves fray, but it's like proving one's point from the Bible. We can always find something to back up our opinions. The bottom line is most economists agree that the stimulus is needed.
To illustrate your point about opinions...
There are economists (quite a few in fact) that have differing opinions on the stimulus. Not all are in agreement that this bill is a good one. I find economics is a lot like politics in that you will find many that support one theory over the other (demand side or supply side):
To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth. –Statement signed by more than 200 academic economists
"It's all way too complicated for me to fully understand."
We can agree on that point. I don't know enough about macroeconomics to even give an educated opinion.
I do believe that the private sector rather than the government is what has made this country the greatest nation of all time, so naturally I'm going to look for opinions and experts that lean in that direction.
Anarchy is not what has made this country great.
There have been times when the government has needed to step in over the years and ensure that this nation remained a going concern -- the Whiskey Rebellion, the Civil War, Sherman Anti-Trust legislation, the New Deal, Eisenhower's Highway program, Reagan's defense build-up, etc.
I could quote more but it would take a bit more research. These are just the best known examples.
"For those who plan with audacity and execute with vigor,
progress is the magnificent by product."
Tax cuts don't make fiscal sense unless there's a budget surplus.
The notion that tax cuts stimulate the economy is only true in the short term when it results in further deficits that must be covered by borrowing, at interest, to pay the public debt. In the long run, tax cuts only exacerbate the very problems we're trying to use tax cuts to solve-- our economy is based on smoke, mirrors, and debt.
Umm, no.
No more than does government spending make fiscal sense unless there's a budget surplus.
Tax cuts do stimulate the economy in the long term, not the short term, and right now that's part of the problem. The economy needs some short-term stimulus and some long-term correction.
"For those who plan with audacity and execute with vigor,
progress is the magnificent by product."
I had this in mind when I wrote that.
There was an GOP amendment (Thune Amdt. No. 538) last night that wanted ALL the stimulus money to go for mega rebates. The motion was rejected.
If I were selfish . . . I would be all for this...however it is not a realistic idea.
They hide the purpose of the vote: No Statement of Purpose on File.
That vote bugged me all day.
I watched the vote last night. I couldn't believe what I was hearing.
Senator Thune's amendment would strike the entire $936 billion Senate stimulus bill and replace it with a $936 billion across-the-board-middle-class tax rebate for 182 million Americans. The amendment would result in a tax rebate of $5,143 for single filers and $10,286 for married couples who file jointly. Eligibility is capped for all tax filers at 2007 adjusted gross income of $250,000.
A tax rebate won't prevent bridges from falling in Minnesota. A tax rebate won't rebuild homes in New Orleans. A tax rebate won't replace the losses in my retirement accounts. A tax rebate won't reduce our country's support for oppressive oil-rich regimes. A tax rebate will not lessen environmental pollution. A tax rebate will not feed a child except for a short time (giving a man a fish versus teaching a man to fish). A tax rebate will not reduce the federal deficit. A tax rebate will not reduce the trade deficit.
I could probably go on. Should I? Do I really need to?
"For those who plan with audacity and execute with vigor,
progress is the magnificent by product."
Tax cuts are stimulative. It's just that, contrary to the stubbornly-held GOP gospel, putting the money in the hands of the poorest classes, will result in the best bang for the buck. The poorest classes (even those who pay little or no tax because their incomes are so low) WILL spend that money-- because they absolutely have to in order to survive. The wealthier classes may or may not spend all or part of their tax reduction-- they have that option.
This is not an argument FOR tax cuts vs infrastructure spending. the stimulus should contain both. It is an argument AGAINST more cuts for higher income individuals and large corporations.
"It is an argument AGAINST more cuts for higher income individuals and large corporations. "
And that is what is really upsetting to Repubs in Congress.
Thanks wc, you always have a way of summing things up perfectly. This blog was not intended to be an arguement of tax cuts vs spending, but of getting the money to the places where it will do the most good for the country. It is also about insisting that the GOP step away from that old gospel, and consider the rest of the citizens.
Congressional Republicans: You need to lead, follow, or get out of the way. You haven't been able to lead, you obviously can't follow, so just get out of the way and let the President do his job!!
While I am not advocating tax cuts 'for the rich' , it is a huge FALLACY to say that if the money is not spent by 'the rich' that it does nothing to stimulate the economy. That ignores fundamental economics. These dollars do not vanish from the economy - it is entered in the financial system where it can be loaned out or invested in stock/mutual funds/bonds/businesses that spur job creation.
Someone explain to me how any spending is now stimulus b/c that is where this boondoggle is now heading. Do you think these dollars in spending will not have any consquences? Where is the money coming from? I keep posing this and it keeps getting brushed off as no issue. But yet it is! These dollars that are spent will have to be paid back either in higher taxes or bonds which will reduce money in the system. Or worse the FED keeps printing away and we end up in a stagflation situation.
Perhaps the GOP is being insane or obstructionist or whatever you want to call it but if it causes a dialog to discuss these issues then I am happy for that. This situation is far different that Reagans where Dems voted for business tax cuts or Kennedy's where his chief economist promoted marginal rate cuts.
We need to GET IT RIGHT. If this fails then what? We are already are at 8.3% of GDP in debt and the stimulus as it is now is projected to be 12%. Think about what have we gotten for that 8.3%?
I am very disappointed that both parties have chose this vital piece of legislation to dig in their ideological heels. I would have thought that the message of doing what is best for the nation would have sunk through Boehner's, Pelosi's, Reid's, and McConnell's brains. There is a solution out there - get of your collective high horses and get to work FOR America!!This situation certainly reminds me of one of my favorite political quotes:
The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it. ~Ronald Reagan
Mary, while I appreciate your viewpoint, the bottom line is, we've had eight years of this kind of " fundamental economics" and look where it has gotten us.
Everyone keeps citing Reagan as an example, acting as if the situation is the same as when he ran against Carter. Reagan did a wonderful job of cutting taxes, but the rates were much different then.
I know we could both keep citing articles to support our views, but it would serve no purpose. I strongly feel that it is time to try something different. A week or so ago, I heard a discussion where an economist stated that tax cuts have been tried, and spending has been tried, but that this is the first time that a balanced combination of the two has been offered. President Obama wants a bill that is about 60% spending and 40% tax cuts. It's time to try some new ideas.
<I am very disappointed that both parties have chose this vital piece of legislation to dig in their ideological heels.>
I do agree with this totally though, and think it is time to put the nation first. President Obama wants to do that, and is confident enough in his plan to be willing to put his whole political future on the line. I trust that far more than I trust any political posturing or talking heads. I no longer subscribe to any one economic mantra, but try to look at the big picture and keep an openmind. If I'm making a mistake, I'll pay the price financially. So be it.
I guess my argument with this stimulus is yes we have have across the board tax cuts, rebates, and increase in gov't spending (medicare part D, TSA, Homeland Security, states flush with surpluses) for the past 8 years so technically we have already tried the spending/tax cut approach. The problem is that Governors, Senators, Representatives are more concerned with re-election that running the business of the government and making astute financial decisions about what is best for all Americans rather than special subsets of the population. That is not going to change and one of my biggest stumbling blocks on supporting most anything the government or basically any adminstration. The Peter Principle is very evident.
Is that working? No one is addressing monetary policy, the FED, things that contributed to our economic collapse during the Great Depression.
I really wonder if it would it not be better for the long term to ride this out instead of the kitchen sink approach since it seems quite dubious the actual benefit of this legislation.
Slightly OT but interesting...
Tax Policy Center has graded both the Senate and House versions of the bill. Overall doesn't appear to be favorable for either version.
Here's an interesting perspective to how food stamps could help stimulate the economy.
http://money.cnn.com/2008/01/29/news/economy/stimulus_analysis/index.htm?postversion=2008012913
Here's a very good opinion piece from the Boston Globe about why Obama is having trouble selling his "stimulus" plan:
http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/02/08/three_weeks_in_and_no_one_has_obamas_back/
A few highlights:
What happened with Obama's economic stimulus plan also stings. Democrats couldn't wait to push as much of their liberal economic agenda as possible, as quickly as possible, whether or not it helped Obama's post-partisan agenda. Their nearly trillion-dollar package merely reordered the funding priorities that have existed for decades.
"We have his back," declared House Speaker Nancy Pelosi at a retreat for House Democrats in Williamsburg, Va. This expression of solidarity came after Pelosi allowed her members to stab Obama in the back. With Pelosi's acquiescence, the House-passed bill was packed with items that are easy for taxpayers to think of as old-fashioned spending, not economic jump-starting.
Meanwhile, Senate majority leader Harry Reid happily confirmed that he will make sure his home state of Nevada benefits from the stimulus package, via spending targeted for Las Vegas's airport and casinos. To average citizens, that sounds like pork-barrel business as usual.
But even the supposedly nonpartisan Congressional Budget Office is challenging Obama's premise. It put out word that his plan would help in the short run but would hurt over time, by vastly increasing government debt.
I agree that Pelosi did Pres. Obama no favors by having certain things in the bill that were questionable. They were a small piece but enough for the GOP to use them to trash the whole plan. The Dem's did not counter fast enough. I do think Obama will take control of the situation and this will all come together for the best. Lesson learned? Yes, indeed. At least we can say our President is aware of his "human-ness" and does not claim to be perfect. I think we will see a tougher Pres. Obama in months and years to come, which is probably a good thing.
As for the CBO article, we've discussed that here and it seems they don't exactly have a reputation for getting things right, so the fact that it is nonpartisan is irrelevant.
Most of us here knew before the inauguration that reining in Pelosi would be a major challenge for the President. The House version contained things that didn't belong in a stimulus package. The GOP took those things, made it sound as if they composed the biggest part of the bill, and won the spin war while Obama was attempting to build a bipartisan deal. If President Obama had to make a mistake, I would rather him err on the side of attempting to fulfill a campaign promise and his vision for Washington, than to go in with his partisan guns blazing. The result is that 81% of the American public thinks he acted in a bipartisan manner, as opposed to the GOP.
But I feel he's kept his guns holstered long enough. Bipartisanship is a two way street. Now our President will push through what he deems best for our country. That is what we elected him to do, and he knows full well that his future rests on this. If he has that much confidence in his proposal, then by damn so do I!!
The public will see through the "just say no" strategy of the GOP, see them as obstructionists in due time. It would be another thing if they were giving ideas, proposing real plans, but they don't have much in the idea arena-so they are now showing the only cards they've got.
Sen. Claire McCaskill even said on one of the Sunday shows (I'm paraphrasing): "by the way, all Republicans were invited to our Senate meetings on the stimulus package so if they did not come, it was a choice to not get involved." Basically only 3 Republicans stuck around and even tried. That's pathetic, especially when they are whining that they are being "left out of the process." The Dem's need to keep reminding the public that they (the GOP) have been MIA for this process-BY CHOICE!!!
Reminder: from the most recent CBS poll:
In the CBS News poll, eight out of 10 believe the economic recovery bill should be a bipartisan effort, with only 13 percent saying it would be all right for the legislation to pass with support only from the Democrats who control Congress. Eighty-one percent told CBS interviewers that they think Obama is generally reaching out to congressional Republicans in an attempt at bipartisanship. But only four in 10 think that congressional Republicans are returning the favor, compared with 49 percent who believe that congressional Democrats are attempting to be bipartisan.
As I posted in the forums, Gallup has a new poll, which doesn't spell good news for the GOP:
Democrats with spine Suzi? Ha! I see you haven't followed my party in a while. Nothing scares them more than a midterm election..lol!
I think Republicans are making a political bet. If the stimulus largely is seen has having no effect, then they can run against "wasteful spending" in 2010, while Democrats as always, are scared of their own shadows...
By the way..
I apologise for being so angry and partisan lately..It's just I knew where this debate was heading and was frustrated..
I'll pen a personal letter to RFO soon, that'll explain things a bit more.
Thanks warsame. Apology accepted. ;-) We've all been frustrated, no matter what our party affiliation. With the exception of President Obama, this whole thing has been a partisan circus, IMO.
Just try to remember that the parties are actually made up of "we the people", and sooner or later these clowns have to answer to us, their employers.
I'm Suzi, a part of RFO administration, moderator, blogger and southern Republican who, up until this election, has voted for every GOP presidential candidate since Nixon. What about you?
While we appreciate your input, there are too many flaws in it to discuss, so let me point out one of the most obvious. Comparing the failure of a small construction company, and it's effect on the economy to the collapse of major banking institutions is absurd. (A big part of the problem is that the "assets" have lost their value, and no one wants to buy them).
I could go on, but we have already discussed most of this. I suggest you take the time to read past threads, and take the time to find out what the Republican values really were before they were hijacked and turned inside out.
Thank you for posting.
The reason you are not an economist is because you are not willing to see the long-term effects of TARP, nor are you able to understand the consensus of economists saying that without that capital injection, as foolishly administered by Paulson as it was, every industry, even yours, would be in even worse shape.
You're saying you're doing fine. More power to you. But do you have contracts for next year? 2011? What if those clients don't have the cash and you can't make payroll? What then, smart guy? Who are you going to turn to? Ron Paul?
A businessman who only knows his industry really has no business dictating what political policy should be. If you want your changes that badly, I suggest you start lobbying.
----It's sad that we've reached a point where 'government service' is a dirty word... If we're the greatest country on earth, maybe we can have the greatest government.
Lewis Black
So, keep up the name calling tough guy!
Irrelevant red herring.
By the way, I also own part of a software company that is doing quite well. Yes, the stock market drops when there is bad news and businesses fail - but by 1/5??
You are aware of stock market indices, yes? Let's take the Dow Jones Industrial Average, unless that's too many words for your addled brain. In early September, it had five digits-- 11K points at times. Today it's hovering around 8 thousand. I was being generous by saying it's down a fifth, but that tumble was triggered by Lehman's failure, among other things. But what are facts in a purely rhetorical debate, which folks like you seem so adept at?
How many businesses have you started? And you think the proposed stimulus bill will work?
I wasn't the one shouting "You aren't REAL Republicans!!1!" and then boasting of my credentials like they actually matter in a debate about macroeconomics. How many economies have you managed outside of SimCity?
----It's sad that we've reached a point where 'government service' is a dirty word... If we're the greatest country on earth, maybe we can have the greatest government.
Lewis Black
To wit, I've updated my profile as (fake) I. R. Herring. I'm sure Uncle Gravlax would approve.
----It's sad that we've reached a point where 'government service' is a dirty word... If we're the greatest country on earth, maybe we can have the greatest government.
Lewis Black
Hahahahahahahaha! The two of y'all are cracking me up!
I love you both, I. R. Herring and James T. Possible!
<Hey magus_melchior why don't you list your real name on your profile?>
This is a hoot!! 98799 doesn't even give a fake name on his profile registration.
Now, Mr. Numbers-for-a-name, if you have something to discuss, rationally and in a civil manner, please do so. If we are supposed to be impressed with your name dropping and social circle, I'm afraid you missed the mark. You would be surprised at some of the people we all know, but we don't feel the need to try to impress.
A troll by any other name is still a troll.
Suzi, I found you a new weapon for your Troll Patrol duties.
Open Fire!