Some high-level backup for my thoughts
As most people know by now, President Bush and House leaders approved an economic “stimulus” plan earlier this week, a package that will be put to a vote in the House next week. It will take members of Congress with real stones to say “no” to this but they would have my support. I disagreed with the whole concept and said so here.
While I’m no better than an armchair economist, there is a group out there who actually studies the “dismal science” of economics and they share my skepticism about the effects such a program would have long-term. The Club For Growth also sees this as the “wrong way” to go. According to Club President Pat Toomey:
“One-time rebates and temporary business tax breaks that the President and the Democrats seem to be coalescing around are the wrong approach. If we truly wanted to stimulate the economy, we would make the 2001 and 2003 tax cuts permanent tomorrow. Instead of doling out temporary rebates, it is essential that we increase incentives for work, savings, and investment, and you do that by lowering marginal tax rates and making those reductions permanent so people have the confidence to plan and take risk.”
So far so good. Toomey and his group also address another tax issue:
“Temporary rebates, as many have discussed, are merely a redistribution of wealth from one group of taxpayers to another, without changing the underlying factors that drive economic growth. They won’t help us avoid a recession.”
“In contrast, permanently indexing capital gains for inflation will boost the economy by encouraging capital formation and investment. It will almost certainly boost the stock market instantly. If President Bush wants to stimulate the economy immediately, rebates won’t do the trick, but indexing capital gains for inflation will be a big help.”
I also think that suspending backup withholding would put money in people’s pockets immediately, but I guess the Club For Growth won’t go that far.
What makes this a little more relevant to the local scene is the fact that, as astute voters like the ones who read monoblogue or this site know, Andy Harris has the endorsement and financial backing of the Club For Growth. (At least Red Maryland has the endorsement part down, as you’ll see here.) The question may have to be asked at tomorrow’s GOP candidate forum in Chestertown whether the aspirants on our side have the will to tell Americans that a little pain right now will make for better times in the long run or if they’ll pander to the short-term desires of our instant gratification society and “stimulate” them.
Crossposted on monoblogue.