The new Congress has a housewarming present ready for President Obama—a whopping $825 billion spending package that reflects the majority’s spending priorities and also helps the new president fulfill some of his campaign promises.
At any other time and under any other administration, this would be called the largest pork-barrel spending bill ever to emerge from Congress. But in some sort of Orwellian “newspeak,” the spending package is being referred to as a “stimulus bill.”
Most economists believe there are certain actions the government can take to stimulate the economy in the short term. But this bill includes few of them, instead focusing on enormous increases in spending on education, experimental energy programs, mass transit, airports, lakes and parks, and a number of provisions that would probably embarrass even Keynes.
Some of these spending provisions might very well represent good policy. But such enormous increases in spending should not be deceptively labeled as economic “stimulus” and rushed through Congress without specific justification and deliberation.
About a third of the $825 billion is slated for “tax relief,” but that’s mostly myth. Almost all of the tax relief is actually new government spending in the form of refundable tax credits to certain populations that Congress and President Obama wish to reward.
Let’s be clear: This is not an economic stimulus bill. It is President Obama and the Democratic leadership paying off all of those interest groups that helped put them in power. But a lot of Americans—and virtually everyone in the mainstream media—has fallen for the line that this somehow is economic stimulus.
It’s not too late to build some genuine economic stimulus into the stimulus bill. Allowing businesses to immediately expense new investment would create new jobs and encourage business spending. Allowing billions of dollars in overseas corporate profits to be brought back to these shores at a favorable tax rate would provide true economic stimulus and aid our economy’s liquidity problem at the same time.
Reductions in the marginal tax rates—such as lowering or eliminating the capital gains tax, lowering the personal income tax, lowering the corporate income tax, etc.—have been proven over time to quickly jumpstart economic growth.
Will anyone in Washington stand up and declare that this stimulus bill has no clothes?