the stimulus plan stinks! It’s got BO all over it!

It’s available at http://www.cbo.gov/ftpdocs/96xx/doc9619/Gregg.pdf It doesn’t say that the stimulus plan stinks. Actually, it makes no effort to come up with a bottom-line judgment. After all, the CBO does objective analysis; it doesn’t decide policy.

But the letter does make at least several interesting points.

First, the short-term stimulative effect of the plan will probably be very significant.

Second, the tax-cutting part of the plan will probably be much less helpful than the spending part.

Third, the long-term effects are harder to estimate than the short-term effects.

Fourth, even if the plan does slow down GDP growth ever-so-slightly in the very-long-term, that might be offset by other harder-to-measure gains in health, education, and human welfare produced by the investments paid for by the stimulus plan.

In terms of dollars spent, perhaps 1% of the proposed stimulus package fell into the category of ‘pet projects’ that some House democrats wanted to piggy-back onto the bill. Nancy Pelosi has to accept responsibility for allowing that foolishness (She seems a little drunk with power now days and Obama needs to take her to the woodshed). But most of the things that the GOP wanted cut from the House and Senate bills were smart, multi-purpose solutions that would have created jobs and, at the same time, kept several states from going bankrupt. The cuts in education are particularly difficult to understand, given that they would have generated jobs and, at the same time, improved the quality of our children’s education. That and many other useful items were cut from the Senate bill because the GOP chose to play a dangerous game of chicken with the Obama administration, holding the bill hostage while demanding a ransom of tax cuts and less spending.

Here is the sad fact about tax cuts: they’re a joke for 95% of us.

Tax cuts routinely add up to a net increase of just a few dollars per paycheck, in the process of depleting an already anemic Treasury. The stimulating effect of tax cuts on the national economy is virtually undetectable, as studies of the last tax cut have shown. But, what Republicans are looking for here isn’t an actual solution to the economic free-fall we’re in anyway. They just want a campaign slogan for the next election. Their ideology, rather than any expertise in economics, tells them that the marketplace has to go through these “cycles” now and then, and that the government should do nothing. The reason for this is because the “government” is evil and, therefore, anything it does will only make things worse. (Where were these people for the last 8 years). Again, this is an ideological, rather than economic point of view. The vast majority of people with advanced degrees in economics couldn’t disagree with it more. Even George W. Bush’s and John McCain’s former economic advisors support the stimulus.

A lot of people are very angry about the way the GOP has held the stimulus package hostage, forcing the administration to cut much needed items that would have created jobs and repaired our crumbling infrastructure. States are cutting essential services, and California isn’t even sending out tax refunds for the first time in the state’s history. The argument that tax cuts are going to pull us out of this vertical nose-dive is sheer idiocy. And, leading that debate is a solemn-faced John McCain, having graduated 895th in his Naval Academy class of 899 midshipmen with zero understanding of economics. This intellectual giant has recently announced that President Obama’s stimulus package is just a big spending bill which he cannot support. He calls it “generational theft”. The man is marching like a lemming toward the edge of a cliff, along with the rest of his party.

In the next election, the GOP is going to be eliminated as viable national political party. We can only hope that their short-sighted, self-serving ideology doesn’t drag the country into a Depression before that happens.