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A Suggestion: Congress Should Be Taught 'Economic Literacy'

by Karen Hatter | February 6, 2009 at 04:08 pm

157 views | 8 Recommendations | 3 comments

In discussing some of the ideas coming from the Senators, offered as adjustments to or rejection of various elements of the stimulus package currently being haggled over in the Senate, this columnist contends:

Actually, what's striking is that supposedly intelligent people are horrified at the thought that, during a deep recession, government might try to help the economy by buying up-to-date equipment for the people who protect us from epidemics and infectious diseases, by hiring people to repair environmental damage on federal lands and by contracting with private companies to make federal buildings more energy-efficient.

What really irks so many Republicans, of course, is that all the stimulus money isn't being used to cut individual and business taxes, their cure-all for economic ailments, even though all the credible evidence is that tax cuts are only about half as stimulative as direct government spending.

Many, including John McCain, lined up this week to support a proposal to make the sales tax and interest payments on any new car purchased over the next two years tax-deductible, along with a $15,000 tax credit on a home purchase. These tax credits make for great sound-bites and are music to the ears of politically active car salesmen and real estate brokers. Most economists, however, have warned that such credits will have limited impact at a time when house prices are still falling sharply and consumers are worried about their jobs and their shrinking retirement accounts. Even worse, they wind up wasting a lot of money because they give windfalls to millions of people who would have bought cars and houses anyway.

Read 2008 Pulitzer Prize winning business columnist Steven Pearlstein's article, Wanted: Personal Economic Trainers. Apply at Capitol.

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Pythiian1

at 11:37 on February 7th, 2009

Great piece, Karen. The infrastructures of the US desperately need to be renovated and improved, but none of these opposing senators see such needs as necessary for public safety and for the good of the nation. Of course, they've all conveniently forgotten the collapsed bridge in Minnesota, broken levees in New Orleans; and other aging infrastructures in the country. The renovations of these infrastructures would definitely create the necessary jobs during this time when there's a huge job loss in America.

I find it ironic that the same senators who are now cautioning not to rush are the same ones who rushed to award the previous $700 bail-out package. At the time, none of these senators bothered to challenge former Secretary of Treasury's refusal to limit any payout and bonuses to executives of troubled companies.

Roy C

at 19:47 on February 6th, 2009

The problem isn't buying up-to-date equipment. The question is: does this provide a stimulus to the economy? Yes, if the equipment is needed, it is needed. But that is different than a stimulus that will, in turn, create a lot more jobs, such as building a bridge, which has a multiplier effect.

We expect some pork, as it is called, but stimulus is historically seen as infrastructure improvement that can be done rather quickly that doesn't create a new permanent bureaucracy.

WWII's spending was a stimulus. Making murals at the Rockefeller Center didn't do it.