Eight months ago, when the Democrats and the administration rammed through the $787 billion stimulus package, the public was lectured that the massive spending bill was needed to “save or create” jobs and stop the rise in unemployment.
Well, unemployment has continued to rise—nearly 2.9 million jobs have been lost since the stimulus bill passed—flummoxing the administration. And unemployment is likely to cross the 10 percent mark soon.
Republicans tried to work with the administration in shaping the legislation. Republican leaders met with the president with a list of tax cuts they thought would leave more money in people’s pockets, encourage investment and economic growth, and would ultimately be more effective in stimulating the economy than temporary spending sprees.
President Obama pooh-poohed their proposals. The president pointed out that Democrats won the election and so they got to decide. He mocked the tax-cutters who claimed he was spending too much by saying that’s what a stimulus bill does—spend money.
Ironically, the failure of the first stimulus bill has encouraged those who never learn from history to argue that we need … another stimulus package.
Maybe the president should consider some of those Republican-proposed tax cuts he originally ridiculed, like:
- A 5 percent across-the-board income tax cut.
- And a freeze at 15 percent on capital gains and dividends tax rates.
Plus, Republicans have proposed:
- Immediate expensing for business equipment to encourage companies to buy new capital equipment now.
- Reducing the corporate income tax rate, which is the second highest in the world.
Of course, if the president doesn’t want to call it a stimulus package, that’s fine. Why tar the ideas from the start. Better to adopt them and just call it good economic policy.
Today’s TaxByte was written by IPI resident scholar, Dr. Merrill Matthews.