by Bill Kavanagh: Paul Krugman expresses my concerns about the size and focus of the stimulus package. It looks like 40% of the plan that’s going to fund tax cuts will be wasted expenditure, like the Bush stimulus cuts last year. People, justifiably, will pocket any tax cut money that comes their way, rather than stimulating the economy by spending it. The country is scared. Direct disbursements, to the extent they are necessary, need to focus on those who are falling through the cracks, not on a wide but economically useless tax cut.
What we need now are jobs—and activity in the economy. Spend the money on construction projects already in the works, internet and education, healthcare, green technology, housing and public transportation. Spend every cent it takes to pull the country back to health. Let the multiplier effect of this activity start up the private sector again. Then we’ll trim our budgets and start paying down the debt. Going into a Depression isn’t the way to balance the budget!
The only ameliorating effect compromise will have now is to placate the Republicans, who are suddenly getting religion on deficits in the middle of a huge economic crisis. They shouldn’t be given a veto on the stimulus package. The crisis belongs to them—and to their President— and asking their permission to fix it is political masochism. Not to mention how dangerous compromise is to all the people who are losing jobs, homes, their health, and whose losses cause them to fall into a desperate economic spiral. That sort of catastrophe for American families is the kind of disaster that destroys communities—and the confidence of the public in the government.
On a political level, my concern with the proposed stimulus plan is that there’s exactly one chance to get it right now, or nearly right. If Obama spends $775 billion on a plan that apparently doesn’t work, his Administration will be dead in the water. Done. It’s not like the opposition will be giving him the benefit of the doubt for trying and let him propose a bigger program later. They’ll scream that he’s thrown all our money away on make-work—and that it isn’t helping. They’ll never say that the tax cuts were a mistake or that the program wasn't big enough to work.
Obama’s program needs to be as bold as his rhetoric. Being timid about the numbers or the deficit won’t paper over the reality that it’s his political neck sticking out right now, not the Republicans’. And by the way… it’s our economic lives that are at stake.
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(See Memeorandum for comment.)
Kavanagh also posts at Bill's Big Diamond.
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