The New York Times reports:
GOP politicians are now talking about deficit spending and the national debt? Ironic, isn't it?
Apparently, House Minority Leader John Boehner and his GOP colleagues are not ashamed of obvious hypocrisy or flip-flopping -- and they don't seem the least bit embarrassed when offering up "solutions" that have repeatedly been tested and failed.
When George Bush took the White House, our national debt was about $5.7 trillion. In February 2008 (even before the various corporate bailouts that started in March), our national debt was about $9.3 billion. (It's higher now, partly because of the $350-$700 billion bailouts under TARP, which President Bush helped sell to Congress and us taxpayers in October.)
Mr. Boehner and his GOP colleagues were not screaming about deficit spending during the Bush years. When Republicans controlled Congress from 2001-2006, in fact, they repeatedly endorsed the borrow-and-spend policy that contributed so heavily to our current, massive national debt.
Here's another piece of GOP wisdom: not only is John McCain is opposing Obama's stimulus plan, he's also advocating for more Bush-style corporate tax cuts -- the same ones that failed to create jobs and essentially enriched a relative-few people who didn't actually need further enriching:
"'We need to make tax cuts permanent, and we need to make a commitment that there’ll be no new taxes,' Mr. McCain said. 'We need to cut payroll taxes. We need to cut business taxes.'” (NYT)
That was President Bush's strategy, and where did it get us? Did big companies create tons of decent-paying jobs here in the U.S., thereby stimulating consumer spending? Not really. Many companies simply cut U.S. jobs and shipped them overseas, where employees work for dirt.
Big companies paid less in taxes and saved on the cost of workers, which meant that more shareholder dollars were available to flow into the personal pockets of corporate executives and managers.
Many big companies found loopholes enabling them to not pay taxes or to pay negative taxes (i.e., to get rebates). Many big companies simply repatriated offshore and dodged some taxes altogether.
Payroll-tax cuts might stimulate consumer spending -- on the part of Americans who haven't lost their jobs yet and have no cause to worry about losing their jobs over the next couple of years. That means millions of people likely wouldn't benefit from payroll-tax cuts. Those who do benefit might be more interested in saving money in case their jobs disappear.
It's astounding that with such facts of recent history staring us all in the face, some Republican politicians are still chanting the old, worn-out lines about cutting corporate taxes.
John Amato at Crooks and Liars has sound advice for President Obama:
"Obama, please stop playing nice with the Republicans in Congress to pass your legislation. The country rejected conservative philosophy and turned to you to try and navigate us out of this economic Armageddon that we are facing.
"I understand that you've promised bipartisanship and you've kept that promise. However, implementing the massive corporate tax cuts in your plan to appease the Boehners of the right is counterproductive....
"We need sound, but unfettered spending for stimulus and not some watered down bill that will be unable to do the job. As you've already seen, phony CBO reports have shown up to try and neutralize your plan before it even became realized. That CBO report was nonexistent, of course."
"Republicans lost the election and they need to reorganize their party if they want to be relevant again. It's fine to bring them into the discussions, but you should have started this negotiation with zero room for tax cuts and then worked up from there. I find it appalling that an economy which was based on tax cuts that led us to the abyss is now being considered as a major component of your plan while infrastructure spending is less than twenty percent of your plan.
Of course, House Republicans might simply be posturing, as they did when the first Bailout Bill was voted down.
Even if all House Republicans vote against an economic-stimulus bill, House Democrats can pass it. If the bill ultimately becomes law and if Obama's plan fails, then all those House Republicans can point the finger at Obama and the Dems.
If the bill becomes law and succeeds, Republican politicians can remain silent -- and people would be happy enough with the plan's success that they'd fail to focus on early Republican obstructionism.
In short, House Republicans have little to lose by opposing Obama's efforts to do something to fix our economy.
Memeorandum has commentary.
Other Buck Naked Politics Posts:
* Real Bonuses Based on Fake Profits
* Save Jobs by Cutting Executive Pay
* Execs Made Millions While Driving Companies into Ditch
* Krugman on the "Voodoo" Bank Bailouts
* GAO: Bailed-out Companies have Offshore Tax Havens
* Are Bailout Funds Being Misused?
* Cleaning up Political & Corporate Culture Could Help Economy
* Merrill CEO Shamelessly Spent Millions of Shareholder Dollars
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I find it disturbing and hard to believe that you blame the current economic situation on tax cuts made by the previous administration. It seems to me that tax cuts, no matter what the size, favor the people that get paychecks allowing them to keep more of their money, and this spend more money.
Posted by: Sam | January 26, 2009 at 01:28 AM
Deb Cupples at Buck Naked Politics has written a Pulitzer quality summation of where tax cuts fit into a stimulus package.
It is such a great article I wrote a post on my blog completely about this article
Posted by: averagejoe | January 26, 2009 at 08:04 PM
Hi Sam,
I'll respond in two parts. I all-cap some words NOT to indicate shouting, but because I can't bold or italicize in the comment field.
PART I: Corporate Tax Cuts
Tax cuts free up extra money that companies COULD use to create jobs, BUT if the tax-cut legislation doesn't require job creation, then companies are free to take the tax cuts yet not create jobs.
Because tax cuts increase a company's bottom line, Boards often (at executives' urging) end up funneling the tax-cut savings into a relative-few execs' and managers' pockets.
Despite Bush's corporate tax cuts, many U.S. companies paid their execs' better AND shipped jobs overseas.
Thus, a whole lot of Americans ended up unemployed while a few execs/managers ended up fabulously rich (courtesy of company shareholders).
You're right: Bush's tax cuts, alone, did NOT cause the current economic crisis, but they DID help increase our annual budget deficits and ultimately our national debt.
Also contributing to the national debt was Bush's and the GOP Congress's (from 2001-2006) insistence on borrow-and-spend policies.
I think that Bush and the GOP Congress (from 2001-06) contributed to the current economic crisis largely through their lax approach to regulation of the banking, finance, accounting, and securities industries -- NOT through the corporate tax cuts.
PART II: Individual Tax Cuts
What I question is a PAYROLL tax cut, specifically (NOT all tax breaks for us ordinary folks). That's because payroll tax cuts affect only people who get paychecks (i.e., who haven't lost their jobs).
I apologize if I was unclear about that.
A real tax rebate or credit for us ordinary folks might be good, in that it would help people who need money. It would also enable us to spend, which would support businesses and help our largely-consumer-driven economy.
Would tax credits be better than stimulus spending (e.g., creating jobs) for increasing consumer spending? I'm not sure of the answer.
Some argue that ordinary folks who fear losing their job in the next few months or years will not spend a small (e.g., $500) tax break but will instead save it for a rainy day. That's understandable.
In that case, the money-saver is better off, but the economy wouldn't be stimulated.
Again, I'm not sure what the solution is re: this issue.
Posted by: Buck Naked Politics | January 27, 2009 at 01:22 AM