Saturday, January 10, 2009

The Tax Cut Scam Cometh (Again)

Obama wants a large stimulus package to avoid having the recession morph into a full-blown depression. He also wants broad bipartisan support for whatever economic plan comes out of Congress. Republicans in Congress, to the surprise of no one who's followed their legislative and ideological history, are steadfast on only one item--more tax cuts. Gee, I wonder which quartile of the population they see as their constituency?

The Economic Policy Institute put out a chart on October 22, courtesy of Moody's, illustrating the relative effectiveness of various approaches to the problem. See for yourself how tax cuts measure versus food stamps, extensions to unemployment insurance and public works projects (to name a few) in terms of effectiveness.

Here's a rather stringent commentary by Brad DeLong about GOP objections to the proposed stimulus package.

Mark Thoma takes a more nuanced approach to the issue of tax cuts, but he too is highly skeptical of the claims and motives of Republicans:.

Clearly, tax cuts can't be the most important component in a package designed to get the economy moving again. As DeLong notes in another post, they may, however, serve a useful political purpose for Obama.

And what would be the estimated effect of the proposed Obama plan on unemployment over the next two years? Tyler Cowan offers a graph showing that without the stimulus plan, unemployment reaches its peak & starts to decline a year later than it will if the stimulus plan goes into effect.

In case you're wondering, a 1% increase in unemployment--at current employment levels--adds up to approximately 1.5 million additional people out of work. (Since the current level isn't constant, 1.5 million is a very rough guess by a non-statistician. The point I'm trying to make, though, is not the specific number, but rather that differences in percentages can mean a lot of human beings.)

Keep this in mind as the debate unfolds over the economic plan in Congress. And now that you've been enlightened (!?!?), please contact your Congresscritters or, if you don't happen to live in a place where said creatures need to be pressured to do the right thing, pass the links above to friends/family/colleagues/etc. living in (ahem) less fortunate places and convince them to contact their alleged representatives in both houses of Congress and urge them to support a stimulus plan that does not rely on tax cuts as a central means of dealing with the economic crisis.

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