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Spreading the Wealth


Or rather, spreading the pain and the blame.

Obama is working pretty hard to bring Republicans in the House and Senate over to his brand of Keynesian economics by packing his proposed "stimulus" package with loads of tax cuts.   Around $300 billion, in fact.  It's not a little ironic that the left has suddenly decided that tax cuts are beneficial to the economy and to taxpayers in general.  It's just too bad that they're going about it all wrong.

  • It will include a $500 rebate for nearly every working American (whether or not they pay federal income taxes).  For low earners, this is welfare (an expensive and ineffective spending program rarely mistaken for a tax cut).  But even for high earners, this is just a rebate.  It's very similar to the stimulus checks that were sent out in 2008 (both in structure and size).  I don't recall precisely how that worked out, but if I recall correctly, it solved everything.
  • The "corporate tax cuts" included in the plan will enable businesses to accelerate write-offs related to losses incurred in 2008, and will offer some incremental job creation incentives.  If Obama's past rhetoric is any guide, those job incentives will be strongly concentrated among (or possibly limited to) federally blessed "green jobs" and companies who promise not to make efficient and rational use of the global labor market send jobs overseas.

One the infrastructure side of the argument, Obama is using the fallacy that urgent spending is needed on infrastructure to fund pork projects.  Over at RedSate, Brian Faughnan highlights a CBO study on infrastructure spending that shows spending has actually been continually increasing over the years.

Robert Bluey goes on to show that it wasn't until 8 years after FDR's New Deal that the U.S. had less than 20% unemployment, and that came with the start of WW II.

[caption id="" align="aligncenter" width="352" caption="Unemployment Rate During the New Deal"], Unemployment Rate During the New Deal[/caption]

Obama's New New Deal spending tactics won't revive the economy, but will in fact plunge us further into debt and create deficits in the trillions, something the President-elect blithely admits, but doesn't seem too worried about.  That doesn't sound much like the Obama of October who said:

"Runaway spending and record deficits are not how families run their budgets, and it can't be how Washington handles people's tax dollars," Obama said in his Oct. 1 speech, delivered shortly before the Senate bailout vote.

Washington Post, Oct. 14, 2008

All this deficit spending should have the Blue Dogs up in arms, but no one's seen hide nor hair of them.

In another play to the Republicans Obama wants on his free-money team, the President-elect has promised that the stimulus will be a pork-free zone

The President-elect said "he will not allow Congress to attach any of those earmarks -- lawmaker's pet projects -- to the stimulus bill." CNN's The Situation Room showed Obama saying, "We're not having earmarks in the recovery package, period."

However, House Republicans have already blinked on earmarks, so apart from the public's opposition, there aren't enough anti-earmarkers standing in his way to really make a difference.  But just because members of Congress can't get their piece of bailout pie, doesn't mean that this bill is by any means less porky.  Amanda explains at

Obama requested mayors around the nation compile "shovel-ready" projects worthy of government funding and they responded with a whopping 800 pages worth of ideas, many of which would make the average taxpayer hopping mad. The final list, presented in a report called "The Mainstreet Recovery Ready to Go Infrastructure Project" contained $72.2 billion worth of projects that were essentially, earmarks.

The Wall Street Journal culled a list of the most offensive projects in an op-ed today. The "mayoral priorities" included:

$1 million to upgrade the Los Angeles County Convention Center elevated "catwalk" for cameras and lighting
$350,000 for an Albuquerque, N.M., fitness center;
$94 million for a parking garage at the Orange Bowl in Miami
$4.5 million for Gretna, Florida, to bottle water with recyclable bottles
$35 million music hall of fame in Florissant, Missouri
$3.1 million for a swimming pool in Tulsa.
$80,000 for a tennis facility in Santa Barbara
$6 million to renovate the beach at Surfers Point in Venice, California
$1.5 million to reduce prostitution with education programs in Dayton, Ohio
and Ponce,
$5.7 million to improve a cruise ship terminal in Puerto Rico

It's clear that the Economic Stimulus plan is a train wreck on many levels, still, it's undeniable that people are losing jobs and things are generally sucky out there.  With all the talk focusing on spending and tax cuts for people who don't pay taxes, the positive steps Congress can take to put things on the right path are being ignored.  Here's an excellent story that shows how less government and rolling back regulations can save jobs and let business thrive.   The title pretty much says it all, "Mississippi Jobs Saved, Without a Bailout!"

Hundreds of Mississippi jobs are saved thanks to a change in regulations that stand to save three big furniture manufacturers, millions.

While lots of companies are looking for the government for bailouts, here's a story where government took the lead and didn't offer money exactly, but made it easier to do business.


So, 5 years ago, supervisors and industry leaders began the process of getting a foreign trade zone manufacturing designation.

It would allow three local furniture companies to buy raw materials to be assembled here, without paying a form of tax called a tariff of 7 to 17 percent.

Lane Manufacturing President Skipper Holliman tells me this move will make his company more competitive. He says it might be cheaper to buy pre-make materials from overseas, but it can take 12 to 14 weeks to get them. Workers here can respond to changing market tastes more quickly.

Those familiar with the plan here, say it proves it doesn't always take a bailout to save an industry. Sometimes just making it easier to do business is enough. "The cost advantage is still there to bring it in from offshore but this tariff going away there's 17% going away that evens out the cost a lot more." said Holliman.

H/T: Taxing Tennessee