"Stimulus" = More Big Spending
By Ernest Istook Posted in Congress — Comments (12) / Email this page » / Leave a comment »
Stimulus is Washington’s code word for a spending spree and government giveaways. Most of the proposals we're hearing fit that category.
To help low-income Americans, Congress should stop passing laws that make everything more expensive for consumers. Congress created the red tape that is strangling health care and making it unaffordable. Congress made energy prices higher by placing tons of domestic oil and gas off-limits and blocking nuclear power. And the new energy bill will send the price of cars, gasoline, and even food further through the roof.
Read on . . .
(Read "The High Cost of Congress".)
The mantra we hear of a "timely, targeted and temporary" stimulus tries to substitute repetition for common-sense.
Insisting that tax relief is only temporary should be a non-starter. We boosted the economy in 2001 by making a permanent and retroactive reduction in taxes. (That included lowering the 15% bracket to 10%.) We didn’t send checks just to buy votes, although they had to be part of the political compromises involved. They were early refunds based on the lower retroactive tax rates. The stimulus wasn’t the checks, because people used those to pay debts, not to build the economy. The stimulus was permanently lowering taxes. And it worked. Except that non-conservatives insisted that the tax cuts had to be temporary.
Now the temporary tax cuts are nearing their end, and it's reflected in the economy. America’s businesses are looking for a signal that it’s okay to invest and create new jobs again. Right now, they hold back because they know taxes are going up within two years since Congress has refused to make that tax relief permanent. Businesses aren't just responding to the mortgage industry problems. They're preparing for the body blow that they know is going to hit them soon, as well as the consequences of a liberal-dominated Congress.
If we use our resources for short-term fixes, we don’t have resources left for long-term problem-solving (except by even more deficit spending)
We don't hear what real fiscal conservatives sound like much anymore. Thanks for the reminder.
______________________________________
Donate to the Rs in Close Senate Races through Slatecard
Starting from the top on down here's some thoughts.
"Congress made energy prices higher by placing tons of domestic oil and gas off-limits and blocking nuclear power." Even with 50% greater overall US oil production, which would be very hard to achieve, the impact on global prices would be quite small. I would also think that states preventing or limiting offshore oil exploration have a large impact as well so perhaps it's just as easy to blame Florida, etc. I'm not aware that Congress is blocking nuclear power, in fact I think we're trying to promote it right now and several projects are in planning stages. Of course NIMBY, finding insurers, and government handouts the energy companies complain they need to build the plants are much larger issues and Congress could help there, but that's a totally different point.
"The new energy bill will send the price of cars, gasoline, and even food further through the roof." Gasoline higher? Increased fuel economy standards which results in lower demand will raise the price of gasoline? How do you figure that? I also think the price of cars, no matter how much Detroit is whining now will be proved to be crying wolf once again, and prices will go up slightly when all is said and done. Reduced dependence on foreign oil is a national security issue to me so I'm willing to pay a little more for that anyway.
Onto your larger point though, I for one don't believe businesses are factoring in Bush's tax cuts expiring in two years as a market force right now. Nor do I believe that the original tax cuts had a large impact on the economy. I think companies looking forward are far more concerned about the cost of borrowing over the last two years because they became spoiled by absurdly low interests rates before that. I bet that had a much larger impact on the economy but it simply isn't sustainable without inflation roaring back in and causing worse results.
The falling dollar helps some companies and hurts others but once again has a much larger impact that tax cuts expiring 2 years from now. Also, people refinancing their homes at much lower rates freed up more money in like 1-3 months than the tax cuts provided and that doesn't count the equity extracted when doing so that ended up being spent. I'm pretty sure the tax cuts had a trivial impact on the economy as a whole compared to these other factors.
I also believe a targeted tax rebate wouldn't make much of a difference anyway. Cut spending somewhere to PAY for the tax rebate and THAT might affect the financial markets, the value of the dollar, AND puts more money into the economy. But I'm not holding my breath waiting for that to happen...
You don't need to 'pay' more for gas, just open up drilling in the Gulf of Mexico, offshore the US East and West coasts, as well as Alaska.
We don't need a stimulus package that just encourages folks to spend more money. The problem is banks were too lose with loan requirements, and money was cheap - resulting in folks getting in over their heads. The banks should be incentivized to resolve mortgage problems vice foreclosing and individuals should be incentivized to reduce their debts.
The worst thing would be tax rebates or extending unemployment benefits and other such nonsense. Depending on how these pandering programs were funded, they could actually make the recession worse.
Remember the US T-Bill is close to loosing its triple A rating due to the increasing debt of Social Security and Medicare. Any more entitlement spending will destroy our economy by 2010 - long before those programs actually go insolvent. The next President is going to face very serious economic problems that will have painful and unpopular solutions because the can has been kicked down the road for decades.
====
"Enlightened statesmen will not always be at the helm." -- James Madison
Snark fully intended....
Stare decisis is fo' suckas -- Feddie
Always good hearing from you, and yes, this "stimulus" thing confirms our worst suspicions. Just sadly typical of the Tax-n-Spendocrats.
Stare decisis is fo' suckas -- Feddie
While I agree that the unknowns of future tax policy may play a bit in the minds of businesses, I don't think it's that dramatic of an impact. You're right that businesses aren't just responding to the poor mortgage industry, they're reacting to poor retail numbers, high unemployment numbers, huge bank write-offs, and flat production. Those play more in the minds than a potential tax increase if a Democrat wins in a year (which I still think will be tough to pass).
I'm anti-stimulus and probably in the minority on it. I just think too many people in this country turn to the government to bail them out of every mess they get into. This political issue will turn into a "who can make the bigger stimulus package" and ultimately hurt those Americans who were responsible with their money. While a small band-aid for the economy might help grab a few votes in November, I think the message we are sending is completely wrong.
Rather than hand out checks, why not just remove Federal Gasoline Taxes until the economy turns around? Most agree that the higher cost of fuel is inflationary, so why not let the Federal Government attack the problem directly?
------------------------------------------------
Eliminate the IRS and all payroll taxes! http://www.fairtax.org
at the moment. Which on the average of a 20 gallon tank per car is $3.60 at each fill up. Filling up once a week, every week would be 52 x $3.60 = $187.20 per person on average. This would also be a very temporary fix, most likely lasting only one year.
What has been thrown out there as of this morning on CBS's Morning Show was up to $800 per individual tax payer or $1600 per couple. The Treasury Secretary wouldn't confirm these numbers, but even if it were half what is being rumored, $400 would make a more immediate impact than $187.20 over a 52 week period.
Texas Proud and Texas Loud
You are just looking at a single consumer of gasoline - individuals.
The cost of fuel affects EVERYTHING. Every day approximately 385 million gallons of gasoline and 135 million gallons of diesel is used. That would equate to $95,680,000 would be injected into the economy DAILY - not to just individuals, but businesses as well. That comes out to nearly $35 million over a one year period.
Compare that to "refunding" $800 / individual taxpayer in the United States. There were around 91,000,000 individual returns filed and the marriage rate is about 55%, that would equate to about $40 million.
It is pretty comparable, but instead of relying on solely on consumer spending to stimulate the economy, it would be stimulated in nearly every area.
------------------------------------------------
Eliminate the IRS and all payroll taxes! http://www.fairtax.org
We have a great highway system criss-crossing this amazing nation.
How are we going to pay for that? I agree we are an overtaxed people, but highways/roads are a fact of life. The government announced a finding by one of the panels of transportation the other day a desire to increase the federal tax from 18 cents per gallon to 58 cents per gallon over the next 5 years.
They suggested this to pay for repairs/improvements to our deteoriating roads. Personally I wish a fund had been set aside to cover this and indexed against inflation, but alas, like most people they didn't bother to look at the future costs.
If they were to suspend the federal gas tax, I believe some of the state gas taxes would help to cover some of it, but not all of that.
Personally I think we should go to toll roads over the main highways and suspend the gas tax altogether. That way those who drive on it pay for it.
Here in Texas we have a lot of drilling companies coming in for the Barnett Shale craze. Some are not based in Texas and don't pay state taxes other than on fuel and other items they purchase in the state. They use and abuse our roads, but really don't cover the costs to do so.
So how are we going to pay for that if we go with the suspension of the fuel tax?
Texas Proud and Texas Loud
pay their employees more and still make a profit?
------------
Conservatism is about empowering people to do the work, not the government!
we can see how the Dems and Reps see the world at least as it relates to the economy. The Reps believe that tax cuts will stimulate economic growth whereas the Dems believe government spending will stimulate economic growth. This is a point upon which I hope every Rep points out the distinction. I believe the Bush tax cuts will themselves became a huge campaign issue.
Second, Hillary lead the charge in this so called economic stimulus and I really saw her waking the echos of FDR with it. At least, that is what I think she sees this package as paying homage to. This sort of take charge government response is reminiscent of FDR.
Here is how I analyzed her stimulus package
The Provocateur