Stimulus Plan Not Based on Sound Economics

[Joanne98]

The recent fight over a stimulus package to revive the economy speaks volumes about the current priorities of Republican leadership. Republicans often portray themselves as the party of free markets. Government - either through subsidies or direct spending - shouldn’t pick winners, offer incentives, or redistribute incomes. Yet the new stimulus package applies sticks and carrots to different segments of the population.

Carrots, in the form of tax rebates, and tax incentives go to the middle- and even upper-middle-class taxpayers. Most surprisingly, new tax breaks for corporations are included. Senate Democrats persuaded Republicans to add senior citizens and disabled veterans. Nonetheless, even in the face of a contracting job market, the unemployed were stiffed.

Extending benefits, we are told, discourages the unemployed from seeking new jobs. Yet if unemployment benefits supposedly encourage slothful behavior, don’t special tax credits for businesses risk encouraging imprudent or even fraudulent business investment? Didn’t low interest rates, a Federal Reserve bullish first on stocks and then on housing, and decades of Fed bailouts of imprudent banks and investment funds encourage excesses by banks, brokers and hedge fund
managers?

Maine’s two Republican senators are to be commended for supporting the extension of unemployment benefits, but the vote also indicates how marginal their voices are within the current Republican Party and how completely that party is captured by a narrow corporate agenda.

Unemployment benefits should have assumed a central role in any stimulus package designed to meet the president’s own criteria: timely, effective and short-term. The best stimulus package would have assisted the unemployed, funded state government programs currently being disabled all over the country, and limited direct rebates to poor and working-class citizens.

http://www.commondreams.org/archive/2008/02/19/7143/

[ixion]

1. rethugs are all about free markets...until it's time for a bailout

of an airline or bank or some other 'big' industry... then they can't write the check fast enough.