To Comfort The Afflicted
And Afflict The Comfortable

To Comfort The Afflicted And Afflict The Comfortable

Thursday, October 29, 2020

New Observercast

Trickling Out More Voodoo

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BY EDWIN E. VINEYARD

Spokespersons for the Republican Party, aided by their media pundits, have made great efforts to make Americans think that the Obama stimulus plan has failed. Is this true? If so, then what is the Republican alternative plan for the solution to the economic recession that has gripped this nation?

In answering these questions let us begin with a recent media flap over a statement of Vice President Joe Biden in which he “spilled” the truth. “We, along with most economists, misread the seriousness of the situation last January,” he said. “It was a lot worse than we thought.”

Republicans jumped all over the “we misread” portion of this honest statement, labeling it as an admission from the Obama Administration that they bungled the handling of the economic emergency and the stimulus package.

Biden was pictured as making a major gaffe. Maybe he did – he told the truth. That is foreign to some.

But if we put certain observations together, we come up with some understanding of the problem:

[1] The situation was indeed worse in January than either economists or the administration thought.

[2] The stimulus package was only half as much as economists thought was needed, and only three-quarters of what the administration requested. The reason – Congress would not pass a larger measure because no Republicans helped.

[3] Only about a quarter of the stimulus money has actually been spent.

The job loss rate has been slowed. Unemployment has not increased as fast. Markets have gained back some ground. State governments have been saved. Until Republicans began their hoopla about the stimulus failing and the doomsday talk of the increases in the national debt, consumer confidence was coming back.

To some degree the Republican talk must bear some responsibility for any failures in the working of the stimulus package. It is difficult to be positive when so many are so loudly shouting that the country is going to hell in a hand basket. Of course, their leaders said they wanted Obama to fail.

Addressing Republican charges about the deficit as an aside, it would take two stimulus packages the size of the one passed to equal the national debt added by the unnecessary Iraq War. It would take 2½ stimulus packages to equal the debt created by the Bush tax cuts for the rich. Those listening to the outcries of Republicans should put these costs into perspective.

All things considered, it is too early to judge whether the stimulus has been successful or a failure. It is not too early to say that it has indeed been at least a partial success, as per the afore-mentioned results.

Now, what have the Republicans offered as an alternative? Good question. Somewhat belatedly, they offered tax cuts. Tax cuts also cause deficit problems. So, what kind of tax cuts? Who benefits from those proposed? These are significant questions.

Tax cuts offered by Republicans are these:

[1] A tax credit [write-off, not income deduction] for businesses investing in new equipment and facilities. This means the government really pays for these improvements. Businesses profit.

[2] Accelerated depreciation for current investments, meaning all these could be charged off income at a faster rate than now allowed. This means that the government loses tax money. Businesses profit.

[3] Doing away with corporate income taxes. Again, this means bigger profits for corporations.

The idea is that old disproven “trickle down” idea again. Tax cuts have a mild, but not sufficiently effective, stimulus to the economy. Economists and past experiences have disproven that voodoo plan. By far the greatest stimulus effect comes from placing money somehow into the hands of average consumers directly.

There might be better ways of putting money into consumers’ hands directly than the Obama Administration’s efforts through infra-structure projects for jobs, aiding states in maintaining education and social services, “green” initiatives, and the like. If so, then the detractors of his plan need to come up with such ideas, not the old disproven notions of the past.

Dr. Edwin E. Vineyard, AKA The Militant Moderate, lives in Enid, OK and is a regular contributor to The Oklahoma Observer

Arnold Hamilton
Arnold Hamilton
Arnold Hamilton became editor of The Observer in September 2006. Previously, he served nearly two decades as the Dallas Morning News’ Oklahoma Bureau chief. He also covered government and politics for the San Jose Mercury News, the Dallas Times Herald, the Tulsa Tribune and the Oklahoma Journal.