Less than half the money dedicated to highways, school construction and other infrastructure projects in a massive economic stimulus package unveiled by House Democrats is likely to be spent within the next two years, according to congressional budget analysts, meaning most of the spending would come too late to lift the nation out of recession.
A report by the Congressional Budget Office found that only about $136 billion of the $355 billion that House leaders want to allocate to infrastructure and other so-called discretionary programs would be spent by Oct. 1, 2010. The rest would come in future years, long after the CBO and other economists predict the recession will have ended.
The report does not analyze the entire $825 billion package assembled by House leaders and aides to President Obama. Parts of the legislation are scheduled to be considered today in the House Appropriations Committee. Other portions of the proposal — including $275 billion in tax cuts and nearly $200 billion for jobless benefits, health care for the poor and other entitlement programs — are expected to pour cash into the nation’s faltering economy much more quickly.
A lot of the “tax cuts” are in fact transfer payments to people who don’t pay income taxes, and while they may help those who are jobless, those who aren’t will also get them, and the effect on the overall economy of these giveaways is likely to be negligible, like the “stimulus” from earlier this year. Highways and bridges sound like a good idea anyhow, but it takes years to get such projects from the drawing boards to letting contracts and beginning work.
Cutting the corporate income tax rate would be the best, fastest way to kick-start the economy, being sure to leave previous individual tax rate cuts in place so small business owners who aren’t incorporated won’t be penalized.
Highways and bridges sound like a good idea anyhow, but it takes years to get such projects from the drawing boards to letting contracts and beginning work.
I imagine that the DOT in every state has projects that really, really *need* doing, with most of the paperwork done and no funding for completion. But there will be work/jobs all along the way, won’t there? Someone has to do the drawings, someone has to put the contracts out to bid, etc.
Good politics is bad economics and vice versa.
Good economics would be the nearly instantaneous stimulation deep and broad tax cuts would provide. Small business would have money to invest in staff and materials. Individuals with discretionary levels of income would exercise that discretion by buying.
But tax cuts don’t provide political payola anything close to hi-viz pork project that the Honorable Worthy of either Senate or House persuasion and crow about to the yokels back in flyover country. So what is the individual who every two or four or six years has to pass him/herself off to the electorate as a statesman/woman? Why, the only answer that is worth talking about is — The Other White Meat!
It’s been said we deserve the government we get. Looking at what we have, God help us swallow our just desserts.
For those who delude themselves into thinking the stimulus package is laden with tax cuts, please spare me. It is impossible to cut the income taxes of one who pays no income taxes. We call such things by their proper names – welfare or the dole.
Tax cuts do work in revenue building and economic growth. But they have to be coupled with reduced Governmental spending. Ronald Reagan proved that.
libraryjim, thanks. Restraint of government spending has been such a lost cause for so long that I didn’t even think to incorporate it in my note. You are exactly correct. Unfortunately, no matter the amount of revenue generated either by the proven method of tax reductions or the failed theory of tax increases the Honorable Worthies that infest Congress’s and Administration’s (and nearly all of both over many years) know no bounds in their enthusiasm to spend far more than they take in. But when you possess the magic spinning wheel that turns straw into fiat gold, why should you feel constrained not to just print more money. Paper and ink are cheap, after all, and spreading the largess may just equate to job security for the Honorable Worthies.
5, Bush and the Republicans learned what the Demecorats have long known: you buy votes through largess. Every time the Republicans actually tried sound fiscal management, the Democrats cleaned their clock. Republicans finally learned their lesson and finally started spending like drunken sailors.
Now the Democrats are firmly in control and you ain’t seen nothing yet.
6, as a card carrying drunken sailor I take umbrage at the scurrilous comparison of drunken sailors with politicians of any stripe. It is beneath comtempt, sir.
As to the high aims of the Democrats no in control, my real fear is the Republicans may learn from them and when they finally get around to doing something well it will be to spend even more than the Dems!
7, my sincere apologies to drunken sailors everywhere. And the Republicans have learned: spend and win.
Well, they can throw some of the spending my way. Bank account is getting low, and hiring freezes are continuing.