- Is the reason you’re not investing in stocks these days (a) the prospect of having to pay 15% capital gains tax? Or (b) the fear of further losses? (Well, or – c – that you don’t have any money?)
- Is the reason you don’t start a new business that (a) if it made you a lot of money you’d have to pay a lot of taxes? Or that (b) you can’t get anyone to risk the funds you need to finance it?
- Is the reason you don’t hire new workers that (a) you’re paying so much in taxes? Or that (b) with business down so much, you don’t need them?
- Is the reason you’re not spending money as freely as you used to that (a) your taxes are too high? Or that (b) you’re afraid of losing your job? (Well, or – c – that you’ve lost half your net worth and suddenly realize you’d better get serious about saving for a decent retirement?)
- Is the reason you’re unemployed that (a) taxes are too high to make you want a job? Or that (b) you’ve sent out 400 resumes and called every connection you have, but no one’s hiring.
If the answer to all – or any – of these questions is (a), then Louisiana Govenor Bobby Jindal and his fellow Republicans may have a point in trashing the President’s strategy and pushing tax cuts to get us out of this mess.
Otherwise, can we please stop with that?
Indeed, you have to wonder how Governor Jindal would answer these questions.
My guess: He’d side-step them entirely and talk instead about how “the Kennedy and
Reagan tax cuts worked.” But Kennedy cut the top bracket from 90% to 70% and Reagan, to 28% – so sure they worked (although Reagan’s cut proved a cut too far, because that’s when we really began to pile on the deficits and balloon the National Debt). But when tax rates are already low? And in our current paralysis? I refer you back to those five questions. Would cutting taxes help?
Or else he’d ask a question of his own: “Do you really think the government can spend your money better than you can?”
And the answer is yes. At least for now, in this circumstance.
You, if you got a tax break, would either use it to pay down debt or increase savings – neither of which would create new jobs or break the vicious economic cycle – or you would spend it. What would you spend it on?
Would you spend it to keep cops on the street at a time of rising crime – or on Chinese-made clothes?
Upgrading our electric grid or another Korean-made TV?
Repairing our bridges or remodeling your kitchen?
Obviously, some of your spending – “greening” your home to be more energy efficient, for example – would be great. And obviously, some government spending, for all the scrutiny it will get (see, for example, recovery.gov), will be disappointing.
But as a general matter, the balance has shifted too far toward consumer spending and away from investment in national infrastructure.
Listen to Van Jones, profiled in the New Yorker last month:
“You have construction workers who are idle, and they’re going to be idle for twelve months, twenty-four months, thirty-six months,” he said. “They’re not going to be able to build anything. Let them rebuild everything. We have people coming home from wars, coming home from prisons, coming out of high school with no job prospects whatsoever. Let us connect the people who most need work with the work that most needs to be done.”
Another proposal involved upgrading the nation’s electrical grid, to allow power generated, for example, by wind turbines in the Midwest to be transmitted to population centers in the Northeast.
“You say, We can’t do it,” he observed. “And I’m going to say, Au contraire, mon frère, and I’ll prove my case. We used to have a country, allegedly, but you couldn’t drive across it, because all we had was a bunch of old dirt roads. Somebody, in the name of national security, said, ‘Hold on a sec. What if we get invaded on the West Coast, how can we get troops from the East Coast?’ So we created an interstate-highway system that connected the country to itself.”
He lowered his voice to a grumble: “ ‘Oh, we can’t afford to do it! This is insane!’ We couldn’t afford not to do it. Because the minute you did that the economy went through the roof. It was such a good idea that we did it again. In the name of national security, people in the Pentagon said, ‘If we have one big communications tower, and somebody knocks it out, then we’re blind, deaf, and dumb. We’ve got to figure out a way to distribute our information system.’ So they came up with the idea of the information superhighway—for you young people, that’s what we call the Internet. ‘We can’t afford to do this!’ We couldn’t afford not to do it. The minute we connected the country to itself, the economy went through the roof. All we’re saying is, let’s do it again. But this time, instead of connecting the country to itself to move bodies and vehicles or data around, let’s connect the country to itself so we can move clean-energy electrons around. Then you’ve got the strongest economy in the world.”
☞ And incidentally, Governor Jindal, it’s not “spending” if the money stays here and goes for things that will pay off – it’s investing. It can’t possibly be true that it’s better for us to borrow to pay people unemployment benefits when we could be borrowing to employ them doing work – greening America – that cries out to be done.
AND ONE LAST, RELATED THING
From politicalirony.com: “One of the interesting ironies about the economic stimulus bill that just passed is that by most any measure it is the largest tax cut in US history. It includes $282 billion in tax cuts over two years. In comparison, Bush’s largest tax cuts (in 2004/2005) totaled $231 billion. So why did the Republicans just vote overwhelmingly against the largest tax cut in history? Obama’s tax cuts are aimed mostly at the middle class, families and people who work. While Bush’s tax cuts primarily benefited the rich.”
Quote of the Day
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.~Adam Smith, The Wealth Of Nations
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