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Posted on 01/10/2003 9:01:46 AM PST by buffyt
The same arguments we have heard during every period of economic struggle since the Reagan years are being sounded again as Republicans and Democrats jockey for support of their own recovery plan.
The Democrats argue that President Bush’s $674 billion stimulus plan is skewed to the wealthy, leaving little for the poorest Americans who need it most and dangerously running up the national debt.
Republicans counter that Bush’s plan puts more money in everyone’s pockets, and that targeting tax cuts beneficial to big investors will facilitate job creation and economic growth. Penalizing the wealthy by omitting them from tax breaks, they say, is unfair and will discourage economic investment.
As is usually the case in Washington, each side’s proposal has its points worth serious consideration. What will be interesting to watch, with Republicans in charge of all branches of the government, is how many of the ideas in the Democrats’ $136 billion plan will make it into the final stimulus bill.
One Democratic proposal that should be included is an immediate $300 rebate to every taxpayer, putting needed dollars into the pockets of the working class as a way to increase consumer spending and confidence. It was a similar idea early in Bush’s term that lessened the pain of the current downturn for many Americans and has kept the current recession from being a devastating one.
But when it comes to long-term solutions, the Democrats have little to offer. President Bush and his economic team do.
The centerpiece of the Bush plan is the elimination of the federal tax on dividends, saving investors an estimated $364 billion. What makes the idea a tough sell is that about 42 percent of the savings will go to the wealthiest 1 percent of taxpayers, according to the Urban Institute-Tax Policy Center. It also has little immediate impact since the cut won’t take effect until people file their taxes next year. Still, it is a proposal with a vision toward the future that has already helped to boost investment.
Bush also proposes moving up income tax rate cuts scheduled for 2004 and 2006, giving a typical family of four with two working parents another $1,100 in their pockets in a year, according to the administration. On top of that, Bush wants to boost the child credit by $400 this year. Both will have a direct impact on the middle class, although again they won’t really feel it for another year.
The remaining aspects of each party’s plan, including investment incentives for businesses and aid to states, differ only in the amount of the allocation and are not likely to generate a great deal of disagreement in the end.
Still, while the arguments by each party against the other’s plan is familiar, something is vastly different.
While incorporating some of the basic ideology of the past, President Bush’s plan relies less on tired ideas and rhetoric and more on political boldness and pure leadership.
And it is perhaps the latter, as much as anything else, that will stimulate confidence and growth.
So what are you still hanging around FR for then? You must be a moth. :)
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