Feb 03 2010

It’s the tax cuts, stupid

Category: Congress,economy,Obamaharmonicminer @ 9:29 am

There is one guaranteed way to stimulate employment. That’s to cut taxes for employers, and make it known that the cuts will be in place for a very long time.  That stability will be the enticement that employers need to feel confident about expanding their operations.  This is historically verifiable for anyone who looks.  But in a strange dream that somehow strategies that have never worked before will now start to work,  Congress looks to create jobs, but will it be enough?

Democrats in Congress are furiously crafting legislation to spur job creation, but experts warn that the benefits could be too small to make much difference.

Senate Democrats plan to meet Tuesday to discuss a package that could provide billions in help for strapped state and local governments, as well as infrastructure projects. They’re also considering tax breaks to small businesses for hiring workers and to help make homes more energy-efficient.

The House of Representatives passed its own $154 billion jobs plan last month.


Some analysts warned that such limited stimulus measures would hardly make a dent in a $14.2 trillion economy, however.

“It’s more of a painkiller than a cure,” said Robert Bixby , the executive director of the Concord Coalition , which monitors fiscal issues.

“While $150 billion might give the economy some stability, it’s not large enough to make much of a difference,” added Muhammad Islam , an associate professor of economics at St. Louis University .


“The roadblock is just general business confidence,” Bethune said. “Whether this kind of legislation will do the job is hardly clear.”

During his campaign, when a reporter pointed out to Obama that across-the-board tax cuts had created economic booms in the past, he said, regarding even-handed tax cuts for all economic classes, “It’s a matter of fundamental fairness,” by which he meant that tax cuts that benefit all economic classes, including the “rich,” are somehow unfair.  The Left, of course, is only for “targeted tax cuts,” meaning tax rebates to people who pay little or no tax..  and who do not engage in the kind of economic activity that creates jobs.

Crystal ball time (not that it’s especially difficult to predict that what has happened before will happen again):  the Democrat congress will not lower taxes generally, in a way that affects all businesses and likely employers.  They will fund a bunch of non-productive public works projects that will create flurries of employment, but nothing sustained, nothing that leads to a true recovery.  They will lionize themselves for small gains, and portray themselves as the great rescuers of the economy. 

Hopefully, the electorate will know better.  Of course, they didn’t in 2008.

Reagan proved that cutting taxes during a recession is the surest road to recovery.  Obama and the Democrats are raising them, regardless of what they say, simply by allowing the Bush tax cuts to expire in 2010.

Some people are slow learners.