Second Post of the day: Stimulus Ruminations

One aspect of current reality demonstrates that we now have a massive "stimulus" bill ready for President Obama's signiture. That is, we have a purported (pejorative, ostensible, claimed, idiotic, rational - choose your descriptor) economic stimulus ready to be applied, whether or not we agree with the concept and its execution.

We could argue that our economy would "ultimately" recover without the stimulus bill or at least with a massively reduced one. Politics derived from the sentiment of the population, however, mandates that something be done. I only hope that we're not in an economic "death spiral" that will lead to a "crash and burn" outcome.

I am aware of the controversy about whether or not President Franklin Roosevelt's New Deal spending actually lead to economic recovery. I'll comment on this issue with a later posting. The interpretation depends upon the data used and time at which the data relate.

Neither conservative nor liberal members of Congress or, as well, a large number of "talking heads" and economic "experts" distinguished themselves in constructing and passing this massive bill.

My liberal brothers and sisters clearly put too many spending measures in the bill, measures that may promote worthy outcomes and programs but are difficult to link to the desired economic stimulus. We observed the usual liberal Democratic fixation with social goals. To a large extent, I define these spending programs as forced charitable strictures. (More about this concept later.)

My conservative brothers and sisters had an overwrought focus on reducing taxes, in my opinion related to the wrong socioeconomic classes. The conservative Republican fixation on cutting taxes on persons with high incomes to produce a "trickle-down" effect to stimulate the economy clearly did not work during the eight years of President George W. Bush's tenure. Yes, I know the theory (more an hypothesis than a theory) sounds good but, come on, the deficit was $5 trillion dollars at the beginning of President Bush's administration and $10 trillion at the end. Why? Because my conservative brothers and sisters in Congress and the administration didn't control, much less cut, budgetary spending along with the tax cuts. Also, don't raise the issue of costs for the wars in Iraq and Afghanistan. These expenses accounted for a relatively small part of our GDP and annual budgets. (I'm not talking about the entire defense budget, only the expenses directly related to the two wars.)

In view of my earlier posting today, I'm not so much interested in assigning blame to individuals for economic mess as I am in exploring the past in order to "fix" things in the future. Therefore, the following is not blame-assignment as much as a lesson: If my conservative brothers and sisters believe the bulk of the spending in President Bush's administration resulted from liberal Democratic "budget-busting", we must ask - "How many budget bills did President Bush veto?" I can recall only one. Yes, the Democratic legislative majorities might have overridden all of President Bush's vetoes but he had the "bully pulpit" and could have attempted to influence public opinion and, thereby, legislative outcomes. The lesson for the future relates to Presidents using the "bully pulpit". Now, regardless of whether or not we agree with President Obama, he is using the "bully pulpit".

A significant part of our economic problems derives from a system of taxation that has outlived its usefulness in the 21st Century. As an hypothesis, a progressive income-basis for taxation might be relevant provided: (1) There are no exceptions/exemptions whatsoever, except for issues directly related to our national defense, (2) spending must be rigorously controlled.

As a relevant aside, I will comment on "wealth redistribution", a criticism against President Obama leveled by my conservative brothers and sisters. Let's get real. Anyone who has ever owned a home, especially one financed through a mortgage, participates in "wealth redistribution" through significant tax breaks. We may ague that a budget is too high or too low but once passed, the money to pay for that budget must come from taxpayers. Home owners, through their various deductions/credits/etc., force other segments of taxpayers to make up the difference lost to the IRS. That, my brothers and sisters, is "wealth redistribution" on a grand scale. Widespread home ownership may be a laudable goal (which can be argued, however) but the owners should pay, not other segments of the tax paying population. The same thing goes for so-called "corporate welfare".

I think the present income tax system has been corrupted beyond "fixing". The time has come for serious consideration of a modified system that might incorporate elements of a national sales tax and a flat rate income tax. I candidly admit that a sales tax in our current economic situation would not generate the requisite income; however, budgets could be cut and we could engage in the Keynesian approach of running manageable deficits leading to spending stimuli on the economy, at which time growth/re-growth could generate funds to reduce the deficit and balance budgets.

With respect to budgets (national, state, local), I object to what I've termed, "forced charity". Much of our social spending may be for worthy causes such as health care for the indigent, distribution of vaccines, unemployment insurance, etc. What I object to is being forced to participate in these programs. I believe the bulk of our "charitable endeavors" should come through the Community of Believers, not governmental taxation. (And by the way, I think churches/religious organizations should receive no taxation exemptions.)

I firmly agree that some programs can best be managed and the benefits distributed through appropriate governmental action. Nevertheless, we should be careful about this process.

Again, perseverantia usque ad finem – perseverance to the end