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Why I Oppose Tax Cuts In Economic Stimulas Bill

January 25, 2009

Months before the general election last year it was clear that a major fiscal boost would be needed to energize the national economy.  Members of Congress understood that a major stimulus bill would be need to be passed in the first weeks of 2009.  However no one last September could have predicted the economy would suffer such a collapse so quickly.   The stimulus bill that was discussed last fall took on an urgency following  the election, and the economic implosion.  Now an $825 billion bill is working its way through the Congressional bill-making process.  And it deserves our attention, and support.  But it must be the right type of bill that will do the most good for the country’s needs at this time.

While there are many positive parts to the stimulus measure that will be required for economic gain, there is a portion of the plan that seems to make no sense to me.  That is the portion concerning tax cuts, some $275 billion worth of them, that are not needed.  While tax cuts are sexy sounding, and great for politicians to talk about with constituents, the facts do not seem to warrant them at this time.

My suspicion is that a large percentage of fearful citizens who have been battered by the economy will take any tax cut and put it into savings.  That is not the way to spur the economy, and therefore the cuts will make good politics, but poor policy.  At a time when consumer spending is decreasing by $400 billion per year it is essential that we work to kick start the purchasing of goods and services rather than save money.

It is my belief that government spending on ‘shovel ready’ projects, and long term infrastructure needs such as green technologies, would do much more to rescue the economy than tax cuts.  I think it more important to put as much federal money into the portions of this bill that will do quick positive things, than in politically expedient tax cuts.  It should also be noted that many economists with long resumes also understand the benefits of stimulus spending vs. tax cutting fever.

As the bill stands now roughly 40% of the stimulus measure goes to tax cuts, and I think that is a wrong policy decision, especially given the size of the deficit.  While I agree that deficit spending  should not be a deterrent to making sure that the correct amount of stimulus is provided to do the work required, I still think the money should be used intelligently, and applied where it will produce the biggest bang.

Finally, I think that many Americans understand that this is a time to accept a responsible role in solving the national economic problem.  If that means not having a tax cut to insure that our long-term economic foundation is more stable, then that is what needs to happen.

I suspect James and I  are like many other Americans.  We now own our home, and as a result of modest living have no debts other than a car loan.  Like every other American that is invested we took some hits over the past months.  If you hear the tax cutters talk we would be the ones to benefit from the stimulus bill.  But we do not need a tax cut.   We know that things will get better if all the citizens work together for the larger goals of putting stimulus funding where it will do the most good.  And I hope that our elected officials know that we are supportive of them if they can find the political courage to undo, or limit, the tax cuts in the stimulus bill.

  1. Mike permalink
    February 17, 2009 10:59 AM

    Whew! I thought I knew it all! Tax cuts do work and the $700 Billion which passed while Bush was president went to the banks and only $350 Billion of it. Obama has the other $350 Billion on top of the new stimulus(?), I mean welfare package. What the heck does a railroad from LA to Las Vegas have to do with anything. Yes it will create a few jobs, but it will take several years to get that into the economy! It is now that we need the money. We could take time to debate what pork money we wanted to dole out after we got fast money into the economy to jump start (stimulate) the current economy. According to most experts we should be coming out of the downturn in about 2 years and this extra money will have the Jimmy Carter effect and drive up inflation. We need another Ronald Reagan who can get real experts to help him/her out, not crooks!

  2. Rudy Ramos permalink
    February 16, 2009 2:08 PM

    Numbers, figures and ideas, everyone should run for president since some feel they have it all figured out!

    I think we all need to ask ourselves an ethical question? Why did we approve the 700Billion to Bush and his lying administration without a flinch? Did we not kick ourselves in the butt, what the people seen were a complete rip off!

    Why now when an honest and sincere President asks for the same thing and shows he is going to hold everyone accountable, no one wants to vote a yes.

    I say allow this stimulus bill to pass, IT WILL NEVER BE AS BAD FROM WHAT BUSH DID WHEN HE GOT THE MONEY this is WHY we are in the boat we are in today!

    Everyone is looking of what can happen, but as we all know analyst and their ideas don’t always come true, in fact most of the time they are way off. This is a new day a new era and a new mindset. Tax cuts or increases. I am in complete agreement for whatever Obama wants to do because our last administration was a complete hoax not driven towards the American economics.

    We will suffer for many Decades because of the past President PERIOD!
    Don’t blame Obama for anything that he is now trying to Heal now I love all of his ideas and I admire his courage to stand up for the people not the multi-millionaires & Wall Street Etc….! Who pocket and reap all of the rewards.

  3. Micheal J. Brown permalink
    February 8, 2009 1:56 AM

    Tax cuts work. If applied properly tax cuts have immediate impact. Cuts withholding can take effect in the next paycheck for the working. The boss does not have to pump money into the government and can expand or upgrade or just plop it in the bank. Stimulas money has to be contracted out and then hiring and training have to take place followed by materials order and delivery before work begins. Then the job is complete and employment ends. The only job creation comes from the filling of a need. The three actual needs are food, clothing, and shelter. All other business revolves around these basics. I personally guarentee if we send the money to every American citizen in the form of of a one time payment it would be deposited in the bank solving the banking crises folowed by spending on late mortgages or as down payment on purchases and ending the real estate glut(ie. shelter) which solves the original problem.I am sure if people need food they would use the money to buy it so we would not have to issue food stamps and some of the food recipients are the children who are going to have to pay this bill and therefore they shoud at least derive some benefit from this package. I do not think there is a shortage of clothing in America.
    You like socialist governance because you are either a government employee or a scialist. There is no evidence that any country the size and robust as ours has ever suceeded with a socialist government. Our military that protects us from external evil forces is the only governmental body that works as best I can figure. Please name one you think can manage to properly spend 800 billion dollars better then the American citizenry. My comments are pointed at the collective you that think tax cuts are bad.

  4. February 6, 2009 9:06 AM

    Thank God most people are responding in favor of tax cuts (history proves this). I believe the government is actually trying to ruin business. They want to make us all dependant on them, they hold the power. Hey it’s our money they are spending anyway people! Business don’t pay taxes, it’s in the cost of the product they sell (embedded taxes). Individuals pay taxes through the cost of the product. Most of what they are proposing is PORK and will not help anyone except for the people that they have to pay favor to for their political contributions, so much for change, its business as usual in DC. Time for the Fair Tax!

  5. goalsquash permalink
    February 2, 2009 10:32 AM

    You’re math on the tax cuts is erroneous. $275 Billion out of $825 billion (likely actually closer to 1.25 trillion) is at the most 33%, not 40%. But that doesn’t sound as dramatic, huh? Plus, the famed “shovel ready” infrastructure projects are a) only about the same percentage or less of the bill, and b)won’t actually happen for 18-24 months, as getting the projects vetted and working does take time. We don’t want to hurry the projects and get infrastructure like Illinois has – it has to be redone every 5 years or so. Plus, Barnie Frank(enstien) and his ilk have shown so much disfavor in allowing any of the money to go to “white male construction workers” who so dominate the construction trade, that potential significant delays could occur trying to find alternative workers instead of the qualified ones.

    Tax cuts are the quickest way to stimulate the economy. Not a “tax cut” to people who don’t pay taxes, that is welfare. A tax cut to people who can use that savings and expand their business, hiring additional employees and driving the economy. The democrats in the House just don’t get it. Hopefully the Senate will find a brain (difficult with Harry Reid in place) and reject all the pork spending that has no business in a stimulus bill.

  6. Solly permalink
    January 27, 2009 10:58 AM

    I agree with those who say that what’s good for bidness is good for America. More tax cuts for them. They are the bedrock of our free enterprise system, and are responsible for where we are today, unbridled free enterprise! Capitalize the profits and socialize the risk! Government is the problem, not the solution! The NY Mets need a Citibank stadium! Get out the shovel and send more billions to them. They are committed to the economy through their $50 million jetliner purchases…..oh that’s right, the French economy

  7. Patrick permalink
    January 26, 2009 6:52 PM

    Concerned about the deficit? Oppose the spending. Interested in creating jobs? Give businesses an incentive to hire more people–tax cuts. Poor people don’t create jobs, so don’t send out welfare “stimulus” checks to people who don’t pay taxes to begin with–ever.

  8. January 26, 2009 3:50 PM

    Economic recovery, and eventual, health, depends upon the health of businesses – the job creators in a capitalist system. Tax cuts to businesses is better than the government’s throwing around money because each business can fine-tune its own decisions to create wealth. And don’t be too quick to demonize “wealth,” because jobs don’t grow on trees.
    As for the deficit, tax cuts must be balanced with government cuts in spending. That’s the other part of the equation necessary for the economic health of our capitalist system. Government will benefit if business grows, a point often lost by “profit haters.”

  9. tomjerkweed permalink
    January 26, 2009 11:48 AM

    Considering my grandchildren, probably long after I am dead will be paying off this little “Economic Stimulus Package”, maybe it is just time to say “Enough is enough”. Tax cuts and all.

  10. realtopics permalink
    January 25, 2009 11:02 PM

    Economic stimulus package why do politicians rely on gimmick so much, if it sounds good and reassuring to the public then lets run with it.

    The first 350 billion dollar did wonder in shoring up the economy so far didn’t it. Let us face it the so called experts have not a clue what to do to stop this economic slide so they are drawing at straws.

    No one thing is constant when people feel as though they have more cash in there pockets they are willing to spend more. With food prices at an all time high, mortgages and rents, oil for heating homes and job cuts at an all time high, raised taxes is the last thing that will bring comfort and reassurance to customers. If they feel as though more money is going out, then they tighten up on their purse strings.

    Unfortunately Uncle Sam cannot bail us out all by himself, he is rich but not that rich. And believe it or not taxes alone does not bring in enough money for this country to stay afloat. Not to mention more Americans shop and spend money products and services than those that pay taxes, so the economy would be better off if people feel as though they have more money to spend.

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