Stimulate This

Ahh...the so-called stimulus package. No, it's not a new medical device or even a clever name for someones manhood (though that is clever...[back pat]), but if it were either of those then it might be more worthy of appreciation. How about what it's actually called: The American Recovery and Reinvestment Act of 2009. Wow. That just..sounds so impressive.

Only it's not. Well, to be fair, it's price tag is very impressive. Nearly a trillion dollars. Let me show you how many zeroes that is.

1,000,000,000,000

Can you wrap your head around that number? We've gotten so complacent in hearing billions thrown at this economic problem that we're a little numb. Unfortunately, we can't afford to be.

Literally.

Of course, to be honest, the main problem is not its size. If that trillion dollars were spent in such a manner to actually do some stimulating, then far fewer people would be complaining. As an aside, 1 trillion dollars in my wallet would unequivocally stimulate me personally. Just sayin'.

Let's call this bill what it really is: The Take Advantage of the Democratic Majority and Pay Back All Our Interest Groups Act of 2009. On second thought, that might not fit on a T-shirt. How about: The Extremely Naive Imma Get Mine Act of 2009. Even opponents would support the acronym: ENIGMA. Yeah...has a nice ring to it.

You see, the vast majority of the crap in this stinker has absolutely nothing to do with stimulating the economy. It's got money going to just about every special program around, and a hefty dose of new ones for good measure. I'm not saying these groups don't need to be created, or the existing ones don't need to be funded (though I probably would on most of them); what I'm saying is that it doesn't belong in this bill!

You've got Obama at the White House telling Americans, "We need to do something NOW. Something FAST. Here, take a look at what I did. Well, actually, I didn't do it; Nancy Pelosi and Co. did it. But trust me, it's good. Listen, and listen carefully: if we don't do something it will be a CATASTROPHE!" [soundtrack: duhn duhn duhnnnn] Look, man, if it's so dang important and urgent, then why bother putting all this crap in there? Let's do some real stuff that has been PROVEN to provide stimulus. Forgive me, but I don't think that improving STD education (350m) is going to stimulate the economy.

Furthermore, did you catch how the Democrats are so forgiving of their own dissension (i.e. the Democrats who voted against this bill in the House) but so critical of the Republicans who did the same? They say, "We understand that certain members come from conservative districts and have to vote as such", then in regards to Republicans, immediately follow with, "We'll go district by district to hold them accountable." WTF? It's ok for Dems from conservative districts to vote conservatively, but not ok for Repubs to do the same?

So what has been proven to stimulate the economy? Two words: TAX CUTS. Not tax rebates, not temporary discounts, just plain ol' across-the-board cuts. This has been proven throughout history to be very effective at stimulating the economy. When did they work? Bush imposed significant tax cuts right after becoming president in 2000 that brought us out of a recession. In the same vein, in 1964 there was a cut in personal taxes, which created a rise in consumer spending. Don't stop there - what about the Mellon tax cuts of the 1920s and of course the Reagan tax cuts of the early 80s. In every case, across the board tax cuts immediately spurred growth and cause a rebound of trouble economic times. How about 'across the pond'? Ireland's economy was in dire straits in the mid-80s. They decided to significantly cut government spending and lower taxes on both businesses and individuals. Their per capital income went from being 63% of the UK's average to actually beating it in 2000.

"Hold on," you say, "If you lower taxes you will reduce revenue." Let me respond by saying, "WRONG." Historically, you can actually increase government revenue! After the Reagan tax cuts, for example, income tax revenues went from $244b to $446b throughout the 80s. Holy Hairpulling, Batman! Despite the possibility of increasing government revenue, that's not really something I care about. I'd much rather that revenue was reduced, would would hopefully force shutting down some wasteful spending programs. But regardless of whether or not revenue was increased, it can definitely be shown to stimulate the economy.

How? Well, it's actually rather simple. Like it or not, it's the rich that keep this economy going. They buy big, expensive things. They invest their money. They create businesses. When you reduce their taxes, they have more to spend, and they loooooove doing that for all those things. Additionally, there's a overlooked side-benefit: they don't feel forced to shelter so much of their income from the government. Eh? You mean you didn't know that the more you tax them the less they report as income? Ah, how naive. The rich will always look for loopholes to reduce their tax burden, but if their burden is lower, then they don't feel the urgency to look as hard. Think about it on a personal level - when you made minimum wage you paid taxes and likely deducted nothing. You just did the 1040EZ and went on with your life. Now you're older and make a lot more money, and you probably wouldn't think of using the ol' 1040EZ anymore. It's much more effective to itemize your deductions and minimize your tax burden. I'm not rich at all, but even I do this! It's all a matter of scale. When I was taxed at minimum wage, I paid next to nothing in taxes. 25% of a buck is only a quarter, after all. But 25% of $1000 bucks is a whopping $250!! Big difference, huh? It's when the tax burden becomes great enough to warrant your attention that you start thinking of ways to make it as small as possible. The reverse is true too, if the burden is reduced, then you don't feel the need to invest the time and envergy to reducing it.

What about job loss? We're losing jobs at an incredible rate - how do tax cuts help with that? I'm glad you asked. You did ask, didn't you? Well, it happens at a lot of levels:

• Like I said earlier, rich people buy things. If they want to buy more than they are now, then that increases demand. When you increase demand, supply will naturally creep up to meet that demand. This means that factories have to make more widgets which means they need to hire more people. Result: more jobs.
• Rich people with more money also take that money and invest in companies as anything from stockholders to venture capitalists. This causes the businesses to grow and - you guessed it - hire more people. Result: more jobs.
• Finally, rich people do something else that directly creates a growing work force. They start businesses. A friend of mine heard a good line on the radio the other day, and it pertains to this fact. Think about this - you'll never get a job from a poor person. Poor people don't hire you; rich people do. Result: more jobs.
  

So let's review - tax cuts, while technically only applying to that portion of the population that actually pay taxes, actually dramatically improve the economy on nearly every front and would undoubtedly turn our economy around. History is on the side of tax cuts.

The problem with tax cuts are that they become an emotional issue for people. How can you tell someone who is poor that you're not giving them any money, but instead you are cutting taxes on everybody else; i.e. essentially giving them more money. It's a hard sell, and it's one that Democrats classically use to oppose tax cuts. On the surface, it seems a bit unfair. However, one could equally argue that it was unfair for that same person to not be paying taxes at all. I don't want to veer too far off here, but look at it this way: nobody argues about the sales tax and that's because everybody pays the same amount no matter how much you spend. You'll pay the same percentage if you buy a car or a box of toothpicks. In other words, it's unemotional. Unfortunately our income tax is not structured that way and as such, becomes very emotional for people. The Fair Tax would alleviate this, but that's a topic for another day.

Unfortunately, the people in power don't and will likely never support tax cuts. They will continue to play the poor card and the "economic equality for all" tag line. They will strive to remove every incentive for someone to work out of government dependency and establish themselves financially; in short, to live the American Dream. They will take this nationwide crisis and use a call for a solution as an opportunity to push their own agendas. It's a shame, too, because the right kind of stimulus could do just that: stimulate.

The saving grace in all this is that the American people, so far, arent' standing for it. At last check, the approval rating for this bill was in the 30s. It has plummetted from when it was originally proposed. The American people are thinking: "Hang on. We're not saying we agree or disagree with all this stuff, but shouldn't we be trying to get out of this crisis right now before we, oh I don't know, fix the Smithsonian up ($150m)?"

I know I am. Let's stimulate this economy the tried and true way: tax cuts. We can debate all of this special interest spending through the normal legislative process. Don't sit there and tell me there's a major crisis and the time for action is now and shove this piece of paper (actually several hundred) down my throat yelling, "Sign it! Sign it! We have to do it now!", while putting so much extra crap in the fine print that the thing just stinks. You're like a predatory lender, only you're a predatory spender.

It reminds me of another president not too long ago being criticized for basically using the same emotion, fear, as leverage for his agendas. Actions which were a campaign point for Obama and the Democrats during the past elections.

I guess it's different when it's their agenda...