Tax cuts = Conservative's "pork"
Kevin Kamberg
Tax cuts are an inefficient mechanism of economic stimulus. As such their inclusion in the current stimulus plan amounts to pork for rightwingers more interested in pandering than in averting a monumental economic crisis.
But, pork was inserted by liberals too. Increased family planning access is arguably beneficial, but would that really do much to stimulate the economy? I don't see how. So why was it inserted into the stimulus bill if it is only conservatives who are being disingenuous about economic stimulus?
The centrist Eye on Oregon blog posits two criteria by which effective economic stimulus ought to be judged here in Oregon and which I would suggest all such stimulus projects nationwide ought to be judged:
...a project that (1) would put men and women to work and (2) would be a long term investment in Oregon.
I submit that both of these criteria have historically been proven effective. Here in Oregon we need look no further to see the embodiment of both criteria than Timberline Lodge on the slopes of Mt. Hood. Built at the height of the Great Depression in the 1930s, it was ordered built by President Roosevelt via the Works Progress Administration with the goal of putting hundreds of Oregonians to work while simultaneously creating a long-term investment in the region which we continue to reap the rewards of some seventy years later and, barring a catastrophe, will continue do so for generations to come.
As the Friends of Timberline website puts it,
Construction workers at the lodge probably numbered about one hundred at any given time, but the jobs were rotated (except for highly skilled workers) in order to give work to as many of the unemployed as possible.
But it was more than just about putting people to work. As E. J. Griffith, State WPA Administrator at the time put it,
"The Timberline Lodge project was distinctly an experiment...to get away from the leaf raking type of project; and this was the spark that fired the imagination of those who planned Timberline Lodge... It was to be a monument to the skill and industry of the unemployed and it is a monument the world will have to acknowledge."
Now is not the time to be playing partisan politics with our economy on the ropes. Congressional Democrats and Republicans alike need to have their feet held to the fire. Giving "our side" a pass because they're on "our side" makes us complicit no matter how loudly we point fingers and scream about the "other side" and their shenanigans.
President Obama needs and deserves our staunch support in keeping Congress focused on the point of the exercise!
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Feb 7, '09
The only problem with your premise is that republicons will accept those numbers. They have a tendency to go deaf, dumb and blind when they are confronted with facts that undermine their ideology. Of course, so do dimocrats.
The only tax cut that really makes sense is a payroll tax holiday. It help workers and employers and is shown to be very effective. Combine that with spending programs, and we might fix this mess before we start seeing nightly reports of people waiting in soup lines.
Feb 7, '09
Tax cuts = conservatives' "pork"
Right... because spending the limited resources that you produced yourself is the same as a politician pandering to his constituents through the spendthrift allocation of somebody else's money.
Feb 7, '09
To explain "increased family planning access": Kids cost a lot of money. Aside from the increase in jobs for social workers, getting people access to counseling and medication in order for them to control how many children they have is probably a good thing long term.
Feb 7, '09
re: Idler Tax cuts = conservatives' "pork"
Right... because spending the limited resources that you produced yourself is the same as a politician pandering to his constituents through the spendthrift allocation of somebody else's money.
Why is that different than a conservative sticking a tax cut into a bill because his wealthiest constituents that he meets with far more than the rest of his constituents demand a tax break? It's still pandering, it's just pandering to the rich instead of pandering to the rest of us. What it means is the revenue lost from that tax cut is going to have to come out of someone else's pocket, or else you are going to be looking at a whole lot more schools closing down or a whole lot more potholes in the road on your way to work. Or soldiers defending the country with outdated and overused weapons and body protection. Think that's impossible? That's what happens in countries where the government doesn't spend much on these things because they can't tax anyone. Look all over Africa or Mexico if you want proof. Libertarianism is a proud march to third-world status.
3:50 p.m.
Feb 7, '09
A couple of points...
First, the Moody's chart shows that certain kinds of tax cuts do produce a solid stimulative effect. They don't go into much detail, but a rule of thumb is that tax cuts for people with less discretionary income will produce greater stimulus and cost less than cuts for people with higher incomes.
Second, to suggest idea that the federal government is going to be able to spend our way out of a
recessiondepression through WPA-style programs is to take a trip through fantasy-land.The United States was a comparatively poor country before and after the great depression, and there is no indication of any kind that government can carry the kind of spending that will enable Americans to maintain our current level of affluence in the absence of a transformative technological breakthrough on par with the railroads, the automobile or the internet.
As Paul Krugman noted in a piece carried in today's Oregonian, the Fed basically used up the biggest weapon in its arsenal -- cutting the prime lending rate -- to build the housing bubble to a level that set the stage for our current economic collapse.
The best we can realistically hope for with the federal economic stimulus package is that it will provide enough backfill to keep state and local governments afloat during the near-term, and that some of the projects that are being seeded today -- alternative energy, electric vehicles, etc. will have a transformative effect on our economy and will help us to rebuild a measure of America's manufacturing base.
4:24 p.m.
Feb 7, '09
Libertarianism is a proud march to third-world status.
Now that is a quotable quote! I can't say as I've ever heard Libertarianism put quite that same way, but now that I have I must say that I heartily agree. There's much to admire about Libertarianism. But as ideals to inspire, not as practical principles to live by.
Feb 7, '09
Kevin, I grant you that politicians can pander with tax cuts, but that doesn't mean the recipient of a tax cut is getting "pork."
Feb 7, '09
Really wealthy people receiving tax cuts is not pork. It's veal.
Feb 7, '09
Really wealthy people receiving tax cuts is not pork. It's veal.
Funny, but still carries the embedded notion that someone's property is only theirs at the state's pleasure, which elevates the sovereign to a level I don't believe was intended by the authors of the Constitution.
Feb 7, '09
Oh, but it's all for the "common good", don't you see? It's very easy to be free with other people's money.
Feb 7, '09
“Selfishness is the greatest curse of the human race” William E. Gladstone
8:25 p.m.
Feb 7, '09
Vincent, are you saying that people who believe in things like universal health care, feeding the hungry, and ensuring that a safety net for seniors and people with disabilities -- not to mention people who want a world class transportation system or for government to invest in technologies that will enable us to grow and develop economically (i.e., the internet) don't pay taxes?
Feb 7, '09
Gil Johnson:
Really wealthy people receiving tax cuts is not pork. It's veal.
Bob T:
You can argue against it if you wish to, but it can't be pork if it was earned by the person in the first place.
Why don't you advocate a 100% tax rate for everyone so that in giving back large portions of it as "cuts" so we can live, strings can be attached on every dollar limiting what we can spend them on. After all, when the government gets the money in the first place it is considered to be "public money".
Bob Tiernan Mult Co
9:14 p.m.
Feb 7, '09
I think a lot more time is being spent arguing about the specific type of spending that constitutes "stimulus" than is justified. Some of the spending proposals were politically tone-deaf, but the need right now is for more spending to inject money into the economy sooner rather than later.
I hate to admit it, but President Obama was right; stimulus is spending, pure and simple. That's what fiscal stimulus means. And in that contact, tax cuts can be a form of spending, too.
I don't think tax cuts for high-income individuals or most businesses helps a lot right now, but middle- and low-income taxpayers can certainly use tax relief, even if they use most of the money to pay down their debt (God knows a lot of people need help paying off the consumer debt hangover from the huge spending binge of the last decade).
The problem is seeing proposal as presenting an "either/or" choice rather than a "call-and-raise." Hard as it is for most people to imagine, even a $1 trillion stimulus package is likely to be just a downpayment on what it will take to jumpstart this economy.
One of the reasons the New Deal failed to bring about a full recovery of the U. S. economy is that the benefits of increased spending were weakened by a tripling of taxes. It took the immense fiscal stimulus of World War II to finally jolt us out of the Depression. We could do without the world war, naturally, but we could sure use the stimulus.
The Senate compromise proposal to roll back $100 billion of the stimulus is probably good politics but bad economics. When this stimulus package finally passes, in whatever form, Congress should start work immediately on the next stimulus package. I have a feeling we're going to need it.
Feb 7, '09
"You can argue against it if you wish to, but it can't be pork if it was earned by the person in the first place."
So, rich people can afford private police and fire protection, private road repair, etc. and for the rest of the peons tough luck?
I'm all for the child care tax credit for working parents (who are lucky to have jobs). I believe in targeted tax cuts which prove their usefulness. But for years we were told that the road to "competitiveness" was only through tax cuts for the rich or general tax cuts and anyone saying otherwise was anti-capitalist.
And then, of course, Bill Sizemore saying "the common good" is a socialist notion.
Well, then, I guess the Founding Fathers were "socialists" for putting "We the people of the United States, in order to form a more perfect union, promote the general welfare...." in the Preamble to the Constitution.
Feb 7, '09
This is funny. Last week I was telling a conservative friend that the only thing liberal democrats vewi as pork is allowing people to keep more of their own money.
Of course now we see some libs getting hung up on the word pork. And the idea that it doesn't matter how the money is spent seems to becoming the cover for let's get r done.
What I found intersting, or funny, was the use of Timberline Lodge as a lesson for spending.
As a Timberline season ticket holder I appreciate the facility very much.
However, if it were not there and was proposed today our modern day Oregon liberals would block it from ever being built. Is there any doubt as to the calls that it would destroy Mt Hood forever?
Just as they have blcked the Pellican Butte resort in K Falls, Smith Rock Resort, Mt. Hood Meadows expansion resort and the Metolius Resort.
There is a lot of spending in the stimulus I would not fund and porbably funding I would that's not in there.
But you won. Own the stimulus.
10:18 p.m.
Feb 7, '09
One of the reasons the New Deal failed to bring about a full recovery of the U. S. economy is that the benefits of increased spending were weakened by a tripling of taxes.
That may have been part of it. But from what WPA Administrator Griffith said, as quoted in the post, it could be argued that spending stimulus funds on things like "leaf raking" likely muted the net economic effect.
Paying someone to rake leafs would be little more than a pretext to funnel money. Whereas paying someone to build infrastructure not only funnels money but leaves behind something of substance which contributes to the economy on it's own simply by functionally existing.
11:25 p.m.
Feb 7, '09
Paying someone to rake leafs would be little more than a pretext to funnel money. Whereas paying someone to build infrastructure not only funnels money but leaves behind something of substance which contributes to the economy on it's own simply by functionally existing.
Building infrastructure that lasts has a more permanent advantage to the economy and society generally, but it is not necessarily a more important short term stimulant. Leaf raking today may be more critical than bridge building next year when it comes to stopping the downward spiral of the economy right now.
12:29 a.m.
Feb 8, '09
Point well taken, Jack. I should have qualified my previous statement with "all else being equal."
Feb 8, '09
And then, of course, Bill Sizemore saying "the common good" is a socialist notion.
Well, then, I guess the Founding Fathers were "socialists" for putting "We the people of the United States, in order to form a more perfect union, promote the general welfare...." in the Preamble to the Constitution.
Bill Sizemore is an idiot, but this misses the point. No one is arguing against the obligation to make some contribution, via taxation, to the common welfare. The argument is that by keeping some portion of it you're getting a gift ("pork") rather than keeping what's rightfully yours.
It seems fair to say that the Founding Fathers never envisioned taxing as large a portion of income as is now done.
Feb 8, '09
Another in a line of great posts, IMO. It's nice to have someone at BO taking your POV on issues, well, more the issue selection is appreciated.
Personally, I think that inside most nouns one can find the purest of social evils. Any debate about a noun is necessarily suspect. It would be fascinating to see what folks would have responded if they had had to use a descriptive phrase (at least something with a verb) as a replacement for "pork".
Besides the word is too pregnant. From whole cultures, like Jews and Hindus and Muslims, that consider it unclean, to Americans that use it as a euphemism for public fraud to Homer Simpson's "magical animal" and the pork producers "the other white meat".
Maybe that's the ticket. "Republican tax cuts: the other white meat". Anyway all this pig imagery goes back to age old conflicts between pastoralists and urbanists. We use animal symbols to carry a lot of meaning. Compare that with a horse. Could you imagine it being advertised as, "Horse. The other red meat."
It seems fair to say that the Founding Fathers never envisioned taxing as large a portion of income as is now done.
If the founding fathers had been able to envision life in 21st century Amerika they would have looked the door to the room and set themselves on fire.
Feb 8, '09
LT:
"You can argue against it if you wish to, but it can't be pork if it was earned by the person in the first place."
So, rich people can afford private police and fire protection, private road repair, etc. and for the rest of the peons tough luck?
Bob T:
They no doubt can (like the Kennedy family and their armed guards at the compound), but that has zero to do with the point I made. I guess that means you lost this one. What do you do next, spew expletives?
Bob Tiernan Mult Co.
Feb 8, '09
zull:
That's what happens in countries where the government doesn't spend much on these things because they can't tax anyone. Look all over Africa or Mexico if you want proof. Libertarianism is a proud march to third-world status.
Bob T:
Mexico and poor countries in Africa are libertarian? Gosh, that's about the stupidest-ass statement on this blog all week. Besides, since when would you admit that in order to have the government fund whatever it wants you first need wealthy people? Your ideal society should be able to eb what you want it to be even if it's a shit-hole like Castro's Cuba. What happened down there?
Bob Tiernan Mult Co.
11:24 a.m.
Feb 8, '09
The argument is that by keeping some portion of it you're getting a gift ("pork") rather than keeping what's rightfully yours.
Abjectly wrong.
The argument is nothing more nor less than the efficacy of tax cuts as a means of economic stimulus under dire economic circumstances.
Feb 8, '09
Whenever I am in financial trouble, the first thing I do is go out and spend lots of money - that always seems to "fix" things...
Until the democrats wise up to the fact that spending will have to be dramatically cut, nothing will be fixed. What will the welfare state do, when the money runs out?
Feb 8, '09
Bob T.
If "tax cuts create jobs" really was true, there wouldn't be the high unemployment rate there is.
I believe in public spending to create jobs. I also believe that in these economic times, every public administrator (esp. those making over $100,000) should be able to pay their own car expenses or turn in mileage reports and be reimbursed rather than getting a high salary AND a car allowance like the deputy supt. and asst. supt. in our school district get right now.
I am not interested in debating economic theory, but in what works.
Idler said, " No one is arguing against the obligation to make some contribution, via taxation, to the common welfare."
Do you agree or disagree?
Feb 8, '09
Re: "It seems fair to say that the Founding Fathers never envisioned taxing as large a portion of income as is now done."
The founders also never envisioned a massive standing army. All you right-of-centrists need to at least acknowledge that our $ trillion-plus per year spending on the military-security complex will bankrupt us even if the banks and financial institutions don't.
I agree with libertarians that we don't need more taxation. We just need to end our wasteful, bloated spending on empire, corporate welfare and subsidies for the rich. Real libertarians are rolling over in their graves.
Feb 8, '09
Socialist. Tax cuts to help pull the economy up was the first tool used by your Dem hero John F. Kennedy. Tax cuts work.
Feb 8, '09
Yes, it's "conservative" dogma that tax cuts cures most ills in the economy. But let's look at three tax-change events in the last 30 years:
in 1981 the Reagan tax cuts are passed. Unemployment, which had been 7.1% in Carter's last year and 7.6% in Reagan's first year balloons to 9.7% and 9.6% in the years following the tax cut. Even in 1984, the third year after the tax cut, the unemployment rate is 7.5% despite 7.2% increase in real GDP. The term "jobless recovery" is coined.
In 1993, a modest tax increase is passed in Clinton's first year. Unemployment, which had been 7.5% in George H.W. Bush's last year and 6.9% in Clinton's first year, falls to 6.1% the next year, and drops every year of Clinton's Presidency, and is 4% in his last year.
In George W. Bush's first year, the unemployment rate is 4.7%. A tax cut is passed, and unemployment rises to 5.8% and 6.0% in the next two years.
In recent history, at least, there seems to be a negative correlation between tax cuts and employment.
7:42 p.m.
Feb 8, '09
I was deliberately provocative with the post's title. But the fact of the matter is that as mp97303 stated explicitly and Sal and others alluded to more generally, there is one certain type of tax cut which does produce a strong stimulus effect. Taking the numbers from the Moody's chart as a baseline, that one most effective type of tax cut isn't quite as effect as several forms of spending, but at least it's in the same ballpark and thus deserves very serious consideration. Certainly I'd very much rather see it included than any number of spending projects of very dubious stimulus value such as the family planning one.
I am about one thing here and one thing only: Whatever works. I lost my job in early December and the prospects out there right now are dim and getting dimmer by the week.
In terms of my own personal pocketbook, tax cuts in general have never translated into meaningfully increased purchasing power for me personally. Like the vast majority of Americans, I thrived under the presidency of Bill Clinton. The longer he was president, the greater my personal purchasing power became. That ended when Bush 43 took office and slowly declined ever since.
Feb 8, '09
Kevin
I couldn't agree more with you on your last paragraph above.
What I find so sad is that, in my opinion, the answers to our dilemma are staring us in the face, but the partisans, both D & R, won't allow themselves to see them.
As far as creating jobs goes, the only way to create long term jobs is to increase demand for goods and services. I have exactly the number of employees that are needed to meet my current demand. No incentive, tax cut or other inducement will get me to hire another person until more customers buy my product. It really is that simple.
Feb 9, '09
LT:
If "tax cuts create jobs" really was true, there wouldn't be the high unemployment rate there is.
Bob T:
I never said they did one way or the other, or partially. The point I made was that letting someone keep what was his to begin with is not "pork", or any kind of welfare. And that's all I pointed out. I'd hate to think that you think that your income is owned by the State first.
And you still can't come up with an answer.
Bob Tiernan Mult Co
Feb 9, '09
Abjectly wrong.
The argument is nothing more nor less than the efficacy of tax cuts as a means of economic stimulus under dire economic circumstances.
You've "abjectly" misread me, Kevin. I never argued with the efficacy of tax cuts as a means of economic stimulus, Kevin, only with the notion that a tax cut is pork.
<h2>Harry: Fair point about the standing army. However, defense is part of governmment's role as spelled out in the Constitution. There's a whole lot of other things we're paying for that aren't.</h2>