« BACK  |  PRINT

RS

MEMBER DIARY

Obama Mimics FDR’s Failed Policies

Government Spending Will Not Reduce Unemployment or Help Economy

By: Robert Bluey (Diary)  |  January 6th, 2009 at 11:34 AM  | 

RESIZE: AAA

President-elect Barack Obama is trying to bribe Republicans with $300 billion in tax cuts as part of a much larger economic stimulus proposal. Will the GOP take the bait?

As hard as it might be for Republicans to walk away from a large tax cut, they shouldn’t be fooled by Obama’s big-spending approach. The president-elect wants to spend hundreds of billions of dollars on unemployment insurance, Medicaid eligibility, infrastructure projects, and even bailouts for states such as California, New York and New Jersey.

Government spending will not spur long-term economic growth or reduce the economic pain felt by Americans. History offers us a good guide. Take a look at the chart below to see the effect of President Franklin Delano Roosevelt’s spending spree during the Great Depression. Unemployment remained above 20% despite the New Deal programs that liberals so fondly embrace today.

It took World War II to pull America out of the Great Depression, not the New Deal.

New Deal Unemployment

Tags: , , ,

COMMENTS

POSTING RULES  |  LOGIN TO COMMENT  |  REGISTER TODAY
  • usrbinperl

    Let’s stop using the term “tax cuts” when referring to this boondoggle, shall we?

    Refundable tax credits aren’t tax cuts. Mailing checks out to people who already owe no income tax has been tried before with no success. On the same note, extending net operating loss from 2 to 5 years is the same thing, only you’re sending welfare checks to businesses as opposed to individuals. As to the other two pro-business components, raising the upper bound of cap ex deduction and one-year tax credits for job creation, it’s more of the same. The point is, neither will have significant impact in a down economy where companies aren’t hiring and aren’t making equipment expenditures. The larger point is that it’s all spending. Tax credit? Government writes a check. Extending NOL? Government writes another check. You get the picture.

    None of this influences consumer or business behavior in any way. To increase confidence you have to cut rates. If you really wanted to stimulate from the supply side, you’d halve the payroll withholding rate, which would both increase the velocity of money and cause immediate changes to consumer behavior.

    Until then, let’s call this proposal what it is: vapor. I see no “tax cut” component here, it’s 100% spending, and our congressional Republicans should call it what it is.

  • The_Gadfly

    Vote to make the tax cuts a significant part of the bill, then vote against the complete measure, but in thinking more about it, I agree: Sink the whole stinking pile.

  • IJB

    Voting for tax cuts, but against the whole package at the end, gives the GOP the best of all political worlds:

    The GOP can say they made a bad bill “better” through their efforts (and you can bet a significant percentage of Democrats would vote against any amendment that cuts taxes, so the GOP can claim almost exclusive credit for that), but in voting against the whole package they can then deny any culpability when the final bill produces no beneficial results a year from now.

    I think your strategy is the best political response possible for the GOP.

    Let’s get the word out! We have a plan now!!

  • http://beaglescout.wordpress.com LJ “Beaglescout” Miller

    GOP: Yes, Mr. President. We agree that tax cuts would do a lot of good for the economy. They just need to be the right kind of tax cuts. If businesses are failing and need more money, then temporarily drop capital gains and corporate taxes to zero, and let them go up to 12% after 3 years as the permanent rate. That’s the rate in Ireland, which has turned its economy around. Also allow corporations to immediately expense capital improvements when the money is spent. Repeal Sarbanes-Oxley while you’re at it. Also return the bank reserve requirement to 8% like it was for years before Hank Paulson got it changed. Finally, re-institute Glass-Steagal completely. In other words, cut business taxes to improve business finances, and do what Karl Denninger says to do on the regulatory front.