IS THE DEFICIT TOO BIG?
It was, when it was being incurred to fight a needless war and to lower taxes on hedge fund managers.
It’s not now, when it’s being used to avert depression and put Americans to work doing the work America needs doing.
We don’t need more T-shirts or casinos. We do need energy efficiency, a smart electric grid, a massive shift to alternative energy, digitized health care records, repaired infrastructure – Parade’s recent cover story suggests 150,000 of our bridges are structurally deficient or obsolete – and schools up to the challenge of 21st Century global competition.
The Republican mantra that the President’s proposed budget “spends too much, taxes too much, and borrows too much” is misguided. It evokes Hoover’s tight rein on spending (that got the 1930’s off to such a great start). It’s a call to lower taxes even more than the President has requested (the President’s budget would lower taxes on 95% of working Americans). And it would cause us to borrow even more (because where else would we get the money to lower taxes even further?).
I know, I know – if you just lower taxes on those at the very top, the economy will boom. They are still saying that!
But look how well the economy is doing now, after eight years of enormous Republican tax breaks for the very wealthy.
Look what those Reagan/Bush/Bush tax breaks did to the National Debt, which was 30% of GDP when Reagan was elected and is 85% of GDP now.
Look how slashing the top tax bracket in the early 1920’s – from over 70% to 25% – preceded the Great Depression.
So . . .. is the answer really more tax cuts for people with jobs or wealth – much as we all love tax cuts . . . or is it spending to employ people without jobs or wealth, to begin transforming our economy?
Look at one more thing: World War II. Massive government spending (and taxing and deficits)* with a compelling purpose: a war that simply had to be won. And was. And then the government spending came way back down, private enterprise – by then booming – picked up the slack, and a powerful nation went on to great things.
*Federal tax receipts in 1944 were $44 billion, up five-fold from 1939. Federal spending was $91 billion, up tenfold, leaving a gargantuan deficit.
Today we face another extreme threat . . . but fortunately, instead of bombers and tanks, we could be building windmills and solar panels; instead of blowing up Japanese subs, we could be greening our buildings and rationalizing our health care industry and strengthening our schools.
It’s a “war” that simply has to be won. And then government spending can come way back down and private enterprise – by then booming – can pick up the slack, and a newly shaped-up nation can go on to further great things.
So c’mon, Hooverites and ditto-heads: get with the program.
Oh – and here’s a thought . . .
FORGET SELLING THEM CITIZENSHIP – SELL THEM HOUSES
Joel G. recently suggested we offer citizenship to 2 million foreigners at $1 million a pop – $2 trillion.
Okay, every $2 trillion helps. But here, espoused by John Mauldin, is a plan aimed not at selling passports, but at stabilizing the housing market by selling houses to foreigners – perhaps a million a year for two or three years – with the promise of a green card, under certain conditions, as a sweetener.
. . . Let me put up front a few benefits of a program that would allow legal status to immigrants buying a home. Housing values would stabilize and in many cases rise. The massive losses because of bad loans that are being subsidized by US taxpayers would be stemmed, saving many hundreds of billions, if not a trillion or more dollars. The excess inventory of homes would quickly disappear and the millions of jobs that were lost as home construction fell into a deep depression would come back. If housing values rise, many families would be able to refinance their homes at lower rates and have more income left over after paying their mortgages. $12 billion in commissions would end up in real estate agents’ pockets, helping a very battered and bruised group. Hundreds of billions will flow into local businesses, as these new immigrants will need to furnish their homes. This could mean as much as a half trillion dollars in sorely needed stimulus in the next few years, without one penny of taxpayer money and actually adding taxes back to governments from local to national. And we are not bringing in 1 million foreigners, we are attracting 1 million mostly middle-class new Americans, which, if we are smart in how we do this, will result in more jobs for all Americans. So let’s jump right in and look at the details. . . .
☞ I have a lot of quibbles (do we even want to go back to homebuilding at the previous pace? or would our efforts better be redirected for the next few years at greening existing homes and building schools and the smart grid?) – but it’s an interesting notion.