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A revealing ’stimulus’ package

Jan 25th, 2008 by Taylor Armerding

“Corporate greed” tends to be a constant refrain for Democrats, who use that as a justification for promoting higher taxes on businesses. They sell it to their useful idiots by contending that they’re only making business pay “its fair share.”
But what did they do when national panic began to build over impending economic recession? They joined with Republicans in passing a package that includes corporate tax cuts designed to (drum roll, please) “stimulate the economy.” That is because, as a number of them observed, when businesses get to keep a bit more of their profits, they tend to invest it in growth, which creates more jobs. And good jobs, much more than a quick $600 handout to taxpayers, is the surest way out of recession.
In other words, they’ve just made the argument in favor of the hated Bush tax cuts, which all of them neglect to mention have resulted in an avalanche of new money pouring into the federal treasury.
So, could they explain why they don’t want to stimulate the economy toward healthy job growth all the time?

Posted in Taylor Armerding | Comments

  • jacrlsn
    The democrats (note the small case) have themselves in a bind don't they?? Hello, Kennedy and Kerry !!!!
  • Uncle Bunky
    They are like hemroids. They dont go away. I wish Mass politicians were less concerned about people stimulating there muscles and more concerned about how there regressive taxes take us all down the tubes.
  • Uncle Bunky
    They are like hemroids. They dont go away. I wish Mass politicians were less concerned about people stimulating there muscles and more concerned about how there regressive taxes take us all down the tubes.
  • TENNIS LILLY
    Well first of all, the basic premise of your piece (as I take it, that democrats are hypocrites or have finally seen the light and embraced the Bush tax cuts) is flawed. We all know, and in fact leaders of both parties said, that the package is a compromise, both sides giving up some of their ideas and giving ground to the other side. There were far deeper tax breaks and subsidies for business as well as extensions of unemployment benefits, fuel assistance and increases in food stamp payments all left off the table to craft a bill both sides could live with and that the president wouldn’t veto.

    Second, "stimulus" is a generous term. While the government can certainly influence the economy with tax and spending policies, our ability to control a 14 trillion dollar economy is illusory at best. Arguably, the best role for the government is to a. discourage “bad” practices while encouraging “good” behavior (a surtax on coal fired power plants vs. tax credits for wind or solar power for example) while correcting, to the extent possible, the inherent inequities in a market driven capitalist system.

    The very notion that cutting taxes increases revenues is hotly contested by many economists. There's little evidence that the previous bush tax cuts had any long term impact. The notion that taxes should be cut for the wealthy (the top 2 or 3% of income earners) as an incentive for them to invest more of their money is similarly specious since the wealthy really have no place else to put their money. Bill gates isn’t going to hide a billion dollars under a mattress or put it in a savings account at your local bank, he is going to invest it, regardless of tax policy.

    Consider that many upper income earners will simply save or invest any tax cut or rebate. Some will pay off credit card bills. Most middle and working class folks (that’s the majority of us) will likely spend most of any rebate just as the poor who receive food stamps, WIC or a tax refund under the Earned Income Credit will spend theirs. That’s money going directly back into the economy, most of it in the communities where people live and work. It seems that tax breaks, rebates and "subsidies" like the EIC, food stamps, farmers' market coupons, WIC and welfare have greater and more direct benefit to our economy than tax breaks and subsidies for the wealthy and profitable corporations. We should stop worrying about the wealthy, they'll be fine.
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