The economic situation is pretty bad. While the Bureau of Labor Statistics published that last month’s unemployment figure was at 7.6%, the unemployment figures for Elkart Country, the one to my immediate east, is at 15.3%. While people across all industries are loosing jobs, Congress is playing politics. The Democrats have put too many campaign promises into the bill that can wait for a future bill, and the Republicans want to bill to be a big tax cut. (At first, they complimented the President on a balanced bill incorporating tax relief along with spending – albeit that they wanted more input in, but I guess they decided it is politically better for them to fight the bill.) Well, we have gotten tax cuts for the last 8 years, and they haven’t gotten us that far. More so, the point of a stimulus package is to stimulate the economy – spend. People aren’t spending (not even the money they have from all their past tax cuts), so government must. (Good article on Obama’s reaction to the Republicans calling it a ‘spending bill’ instead of a ‘stimulus bill’) When people spend again, government pays back the money it borrowed to spend – it doesn’t take the surplus and give it back to people in the form of tax breaks, leaving the debt unpaid. It is simple Keynesian economics.
Another argument against the bill is that it will give money to the states (here is a nice breakdown of the 2/3s of the bill that is not tax relief). I, for one, think the states really need it. They have lost money from sales tax, local governments have house in foreclosure, and are not getting property tax on them, and at the same time, services for the poor and the newly poor are drastically increasing, along with the cost for essentials for survival. On top of that, states are running out of money to pay unemployment benefits. In Elkart, the public libraries have installed new computers because they have never been as busy as they are right now with people needing to enroll for unemployment online – and many do not have Internet access at home and have waited in long lines at the Work One office. Work One (the unemployment office) is swamped during the day, and will be extending their hours to accommodate the increase in demand. Why wouldn’t one want to give money to the states? This is not free of costs. The states and local governments need help, and the federal government is the only one who can fill this role.
This is not the time for posturing. People and small businesses are looking to government to help them. Providing the supply side of the equation may produce more, but you need people to buy it. I argue that one needs to work on the demand before the supply, and it is time government step up to the plate to help everyone in need – not just those who benefit from the tax cuts of the last 8 years.
Georgette's musings 