Trying to Gain Republican Support for Stimulusby Tim Manni
The United States’ next major spending package is nearly fully formulated, expected to total somewhere in the range of $700 billion – $1 trillion. In what has been deemed the “American Recovery and Reinvestment Plan,” the latest stimulus package has been designed around infrastructure repairs, unemployment relief, state budget recovery, and most recently a large tax-cut initiative designed to garner Republican support. According to the Wall Street Journal, a $300 billion tax-cut program will be aimed at both individuals and businesses:
Republicans and business leaders hadn’t seen specifics of the proposals Sunday night, but welcomed the idea of basing a bigger proportion of the stimulus plan on tax cuts. Their response suggests the legislation could attract relatively broad support, and it highlighted the Obama team’s determination to win backing from varied interests.
Yet, will the proposed tax-cut plan, which would account for about 40% of the stimulus package, be enough to gain support from Republicans who fear more “unfettered spending?”
Our friend Rebecca Wilder at NewsNEconomics.com points to infrastructure repairs, another major spending portion of the stimulus package, as an inefficient attempt at economic progress. Ms. Wilder argues the ineffectiveness of domestic-construction initiatives in the past. “…if the rise of domestic construction production was to blame for the loss of productivity in the first half of 2000, why are the longer-term spending initiatives centered on construction projects? The focus should be on expanding our most productive sectors – manufacturing and exports – to stimulate innovation and productivity.”
One of Paul’s posts on Friday warned against “unintended consequences” that have fallen upon viable individuals and companies as a result of government assistance (i.e. housing, and most recently Ford’s latest competition). Economist Joseph Stiglitz has said the same thing as it pertains to the latest stimulus — “Bailouts, too, are aimed at correcting mistakes of the past, so they are backward-looking. We would be much better off spending our money forward-looking. If we spend $700 billion on new technology and innovation, we’d have a stronger, new, real economy. Up to now, the discussion has focused on the sectors that have been mismanaged rather than the sectors that are creating our future.“