Tuesday, February 24, 2009

President Obama on the Stimulus:
It's the Spending, Stupid

In a recent speech to Congressional Democrats President Barack Obama openly ridiculed Republicans for criticizing the stimulus bill as nothing but spending. He asked, rhetorically, “What do you think a stimulus is? It’s spending — that’s the whole point! Seriously.”

In the broadest sense the president is correct, but all spending is not equal, and all spending is not stimulus. Perhaps he does not know this. His comment was shallow and sophomoric; he sounded like a candidate, not a president.

The entire disagreement between the parties on the stimulus bill boils down to this: Democrats think, as President Obama suggested, the bill is stimulus because it spends a lot of taxpayers’ money. Republicans think it is primarily politically-oriented spending that contains a tremendous amount of social engineering, has many ideological strings attached, is for the most part not timely, and contains only a modicum of actual stimulus. Furthermore, they think it shouldn’t have been shoved through without debate or even time to read the bill before voting on it.

The financial markets agree with the Republican view, as evidenced by the downward trend of the stock market since the inauguration. Financial markets are a bet on the future, and right now the markets are betting against our future. It is a crisis of confidence: the markets have no confidence in the administration’s recovery efforts, of which this so-called stimulus bill is the centerpiece.

In the local daily newspaper last week, Dale McFeatters of the Scripps Howard News Service suggested that the alternative to passing the stimulus bill was to risk the economy crumbling, and wondered why all but three Republicans in Congress voted against the bill?

Mr. McFeatters then proceeded to answer his own question, noting that “the bill contains many programs ... that may be good ideas but aren’t stimulus and should have been tackled through the normal legislative process.”

In fact, the primary Republican opposition to the bill was that so much of it wouldn’t stimulate anything more crucial than Democrat re-election chances, even if all provisions were immediately effective, and many or most were not.

He went on to say that “the stimulus bill is hardly an elegant piece of legislation” but “it does contain genuine stimulus.” He enumerated those parts that he considered actual stimulus, and they totaled about $225 billion, less than 30 percent of the total of $787 billion that the bill authorized.

Perhaps the Republicans think all or most of the dollars in a stimulus bill should actually be focused on stimulating the economy.

Later, Mr. McFeatters said that Republicans were “grumbling” about the bill having too little tax relief for individuals and businesses. He pointed out that, by golly, the bill actually contains a $70 billion fix to the Alternative Minimum Tax, and then added, “which arguably is not stimulus but is something Congress does every year, so there is something to be said for getting it over with.”

Republicans reason that if one of the goals is to give people tax relief it is quicker, simpler and less expensive to just cut payroll taxes for employees and businesses and declare some period of time that income taxes will not be collected. Businesses will suspend the withholding and tax payment process, people start getting their money with the next paycheck, and business costs drop immediately. It will be a tax cut for every worker, income tax payer and employer in the country.

In contrast, the Democrat plan exempts income tax withholding for some employees, but not all, does not cut payroll taxes for employees or employers, and would give a “tax break” to people who don’t pay income taxes. It does not benefit employers, who are, by the way, the ones that we want to encourage to hire all those out-of-work people we keep hearing about when the president repeatedly tells us that we face the worst possible crisis in the entire history of the entire world, or maybe the universe.

Republicans and conservatives have legitimate procedural and policy differences with the president, with Congressional Democrats, and with their stimulus bill, and they are doing precisely the right thing by vociferously opposing it, and countering with what they believe are better and more effective measures.

Mr. Obama’s supporters might prefer to believe that opposition to the stimulus bill is just politics. They seem to think that think Barack Obama is something special — The One, you know — and is therefore due complete deference to his ideas just because he won the election. If you are a “good American,” they suggest, you should just obediently fall in line and support whatever he wants to do.

Such a narrow view ignores two critical realities: First, the president’s liberal agenda contains things that conservatives disagree with and believe are harmful to the country. Why would they want to support such an agenda?

Second, Barack Obama isn’t the savior many believe him to be; he is just a politician with a strong liberal bias and not enough experience, and he happens to be spectacularly wrong on how to fix the country’s problems.

Cross-posted from Observations

1 comment:

  1. Stimulus? It's the Spending, Stupid!
    Mocking Republican objections to the stimulus package, President Obama averred "What do you think a stimulus is? It's spending--that's the whole point! Seriously." The financial markets appear to agree with Republicans, though.
    Tuesday, February 24, 2009
    By James Shott
    Article Tools

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    In a recent speech to Congressional Democrats President Barack Obama openly ridiculed Republicans for criticizing the stimulus bill as nothing but spending. He asked, rhetorically, “What do you think a stimulus is? It’s spending — that’s the whole point! Seriously.”

    In the broadest sense the president is correct, but all spending is not equal, and all spending is not stimulus. Perhaps he does not know this. His comment was shallow and sophomoric; he sounded like a candidate, not a president.

    The entire disagreement between the parties on the stimulus bill boils down to this: Democrats think, as President Obama suggested, the bill is stimulus because it spends a lot of taxpayers’ money. Republicans think it is primarily politically-oriented spending that contains a tremendous amount of social engineering, has many ideological strings attached, is for the most part not timely, and contains only a modicum of actual stimulus. Furthermore, they think it shouldn’t have been shoved through without debate or even time to read the bill before voting on it.

    The financial markets agree with the Republican view, as evidenced by the downward trend of the stock market since the inauguration. Financial markets are a bet on the future, and right now the markets are betting against our future. It is a crisis of confidence: the markets have no confidence in the administration’s recovery efforts, of which this so-called stimulus bill is the centerpiece.

    In the local daily newspaper last week, Dale McFeatters of the Scripps Howard News Service suggested that the alternative to passing the stimulus bill was to risk the economy crumbling, and wondered why all but three Republicans in Congress voted against the bill?

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    Mr. McFeatters then proceeded to answer his own question, noting that “the bill contains many programs ... that may be good ideas but aren’t stimulus and should have been tackled through the normal legislative process.”

    In fact, the primary Republican opposition to the bill was that so much of it wouldn’t stimulate anything more crucial than Democrat re-election chances, even if all provisions were immediately effective, and many or most were not.

    He went on to say that “the stimulus bill is hardly an elegant piece of legislation” but “it does contain genuine stimulus.” He enumerated those parts that he considered actual stimulus, and they totaled about $225 billion, less than 30 percent of the total of $787 billion that the bill authorized.

    Perhaps the Republicans think all or most of the dollars in a stimulus bill should actually be focused on stimulating the economy.

    Later, Mr. McFeatters said that Republicans were “grumbling” about the bill having too little tax relief for individuals and businesses. He pointed out that, by golly, the bill actually contains a $70 billion fix to the Alternative Minimum Tax, and then added, “which arguably is not stimulus but is something Congress does every year, so there is something to be said for getting it over with.”

    Republicans reason that if one of the goals is to give people tax relief it is quicker, simpler and less expensive to just cut payroll taxes for employees and businesses and declare some period of time that income taxes will not be collected. Businesses will suspend the withholding and tax payment process, people start getting their money with the next paycheck, and business costs drop immediately. It will be a tax cut for every worker, income tax payer and employer in the country.

    In contrast, the Democrat plan exempts income tax withholding for some employees, but not all, does not cut payroll taxes for employees or employers, and would give a “tax break” to people who don’t pay income taxes. It does not benefit employers, who are, by the way, the ones that we want to encourage to hire all those out-of-work people we keep hearing about when the president repeatedly tells us that we face the worst possible crisis in the entire history of the entire world, or maybe the universe.

    Republicans and conservatives have legitimate procedural and policy differences with the president, with Congressional Democrats, and with their stimulus bill, and they are doing precisely the right thing by vociferously opposing it, and countering with what they believe are better and more effective measures.

    Mr. Obama’s supporters might prefer to believe that opposition to the stimulus bill is just politics. They seem to think that think Barack Obama is something special — The One, you know — and is therefore due complete deference to his ideas just because he won the election. If you are a “good American,” they suggest, you should just obediently fall in line and support whatever he wants to do.

    Such a narrow view ignores two critical realities: First, the president’s liberal agenda contains things that conservatives disagree with and believe are harmful to the country. Why would they want to support such an agenda?

    Second, Barack Obama isn’t the savior many believe him to be; he is just a politician with a strong liberal bias and not enough experience, and he happens to be spectacularly wrong on how to fix the country’s problems.

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