Five months after passage of the $787 billion stimulus bill, unemployment is up, the stock market is languishing, and the national debt keeps growing at an alarming rate.
Only 10 percent of the pork-ulus bill has been spent on infrastructure, which was supposed to be a prime objective and guarantee lots of jobs on short order. Much of the bill has been sucked up by transfer payments such as Medicaid and unemployment compensation. These are worthy causes for people in dire straits, but they are certainly not stimuli that encourage investment and job creation.
On a side note, there are indications the spending so far has benefited areas that strongly supported President Obama in last November’s election, at the expense of “red” areas that supported McCain. Why does this come as no surprise?
Anyhow, some in Washington, concerned that the stimulus spending has not brought about the economic revival they hoped for, are talking about a second stimulus. In truth, the $787 billion was the second stimulus, as President Bush and Speaker Pelosi teamed up to pass a $168 billion “booster shot” to the economy in February 2008. (At the time, the left wingers all parroted the same talking point: that people would just use their $300 stimulus checks to go out to a big box store and buy Asian electronics products.)
Take it from me: A third stimulus is a horrible idea, won’t help the economy, and will only add to our staggering national debt. The problem with these stimulus programs is that not only does a lot of the money get spent on non-job-generating programs such as Medicaid, but it takes a long time for the money to work its way through the bureaucracy and grant process to the states and communities.
The best, most effective and immediate way to stimulate the economy and benefit millions of average Americans, would be to grant a payroll tax holiday, perhaps for a six- or eight-week period.
Employees receiving several paychecks without federal, FICA, and Medicare tax withholdings, would feel suddenly energized and empowered. Yes, in many cases they would use some or all of the extra money to pay down debt. But often, they would loosen up the purse strings and take the family out to dinner, buy a few lattes, go out to the movies, make that drive to the beach, purchase some new shoes, or pick up some home improvement supplies at Home Depot.
Such a scenario would actually have a positive effect on revenues flowing into Uncle Sam’s coffers, since the businesses benefiting from this additional spending would in turn earn more, and thus pay more in taxes.
This is simple, streamlined, and rational. But it’s not targeted toward paying off political cronies, so don’t expect it to happen.
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