Stimulated Economists

Campus Report ^ | January 30, 2009 | Bethany Stotts

[bs9021]

Stimulated Economists

by: Bethany Stotts, January 30, 2009

Just as Professors and Economists banded together to express their dismay at the economic demerits of the $700 billion in Troubled Asset Relief Program (TARP) funding, so too many academics and economists are concerned that the pending stimulus bill, H.R. 1, focuses on Keynesian spending that will expand the national debt without actually stimulating the economy.

In a letter to President Barack Obama contradicting the president’s assertion that “There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy,” these experts argued this is “not true” and they do not believe that more government spending is a way to improve economic performance.”

They continue,

“More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s ‘lost decade’ in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today.”

Instead, the academics suggest the government promote “reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.”

217 economists from 124 colleges and universities signed onto the statement, organized by the Cato Institute; an accompanying ad was published in the New York Times on Wednesday and in Roll Call and the Washington Post on Thursday, January 29, according to an article by Declan McCullagh, published online by CBS News....

[WilliamofCarmichael]

"More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s."

A sound, simple way to stimulate the economy?

I don't know the agenda, if any, of the Institute for Policy Innovation but here is an excerpt from their 1996 Tax Policy & the 1960s: Another Look At the Kennedy Tax Cuts by Gary and Aldona Robbins Senior Research Fellows.

"Economic performance and tax policy during the 1960s went hand in hand. Tax cuts, particularly those on capital, led to a doubling of the 1950s growth rate. But as taxes were increased after 1965, growth slowed and the decade ended as it began, with recession . . . lower taxes on capital, particularly the tax depreciation changes and investment tax credit, accounted for over three-fourths of the economic boost from the tax cuts of the 1960s."

My memory is of reduced personal taxes and reduced withholding -- the easiest, cheapest way of putting money in the hands of the people -- NOT BY "GIVING" A STIMULUS CHECK TO THE PEOPLE BUT BY NOT TAKING SO MUCH OF OUR EARNINGS!

LBJ increased taxes after 1965 -- and started raiding SS funds, I believe -- to pay for "guns and butter (his 'Great Society')."