An Economically Stimulating Debate

Wednesday, January 16, 2008

David Keating, executive director of Club for Growth, a political action group promoting small government and low taxes, and Josh Bivens, economist at the Economic Policy Institute, a progressive think tank, debate the need for, and the components of, an economic stimulus package.


Josh Bivens and David Keating

Comments [11]

Chris from Cranford, NJ

Daist (Comment #8),

Brazil's ethanol is made from sugar cane, not corn. And we presently have a prohibitive tariff on that.

Jan. 16 2008 01:17 PM
RC from queens

Most manufacturing jobs according to Robert Reich are lost due to technology, not to outsourcing.

The reality is that you can't be a dummy and expect to live a middle class life anymore. We had a great economy for a while because the American worker had no overseas competition after world war 2. So companies could make money hand over fist and provide generous compensation to workers who did not have substantial education. Also there was a drive towards learning science and math after the USSR launched sputnik.

But in the world we live in today, its hard for a worker to justify 5-10 times the wages for doing a task that a machine or a cheap overseas laborer can do.

Jan. 16 2008 12:07 PM

bring the government BACK. forbid large bonuses to hedge fund managers and stock brokers, establish control over "Enron" type business, prevent ( and prosecure harshly) white collar crime, invest in SOCIAL spending.

Jan. 16 2008 11:40 AM
Daisy from Manhattan

Ethanol is a great alternative to oil to fuel our cars. Brazil has had much success using ethanol made from corn.

Jan. 16 2008 11:39 AM
Michael from Park Slope

Americans, Grow Up!

1) We (USA) are running a big trade deficite and foreigners are building up dollar holdings.

2) We don't get to tell foreigners they have to buy US Treasury securities, but not stocks of US-based companies.

3) Presumably Merrill Lynch, Citi, et al. would have been happy to take capital from US-based investors, but where are they?

4) US Government, academia, and business always get upset when foreigners (Europe, Africa, China, Latin America) erect barriers to Direct Foreign Investment by US investors, saying, "Don't worry, foreign investment is good for you!! What's the problem?"

Jan. 16 2008 11:37 AM
JJ from NYC

IF there are tax cuts - it should be across the board with a focus on those who make 100K a yr or less. Spur from the bottom-up.

Jan. 16 2008 11:30 AM
Darrell from Queens

I think Clintons idea of freezing interest rates for 5 years is frightening. The whole reason we are in this crisis is because investors are struggling to value these mortgage securities. If you freeze rates it artificially tampers with market valuation. Inflation would almost be inevitable in a situation like that.
I'm hoping Baracks plan of putting $10B into the market is similar to the economic stimulus that Greenspan proposed of injecting money into the economy in the form of a cash rebate.

Jan. 16 2008 11:28 AM
J.C. from Minneapolis

Re: Mr. Keating's comments on Alternative Minimum Tax

I don't think Congress ignored the AMT until the very end, as Keating said. The two parties faced a fundamental disagreement over how to fix the AMT. The Democrats didn't think it was a good idea to pass the AMT fix and have the government lose $50 billion (someone correct me if that figure is wrong) in revenue ('cause, y'know, we have a war going on in Iraq and lots of needs here stateside). So the Democrats wanted to raise taxes elsewhere to fill that gap.

The Republicans, however, refused to raise any taxes to make up for the $50 billion loss and held up any AMT fix the Democrats proposed.

That's the full story. It's simply wrong to say that Congress was ignoring the problem until the very end.

I, personally, blame the Republicans for for the delay in the AMT fix because of their ridiculous zeal to oppose all tax increases, even at the expense of fiscal responsibility.

Jan. 16 2008 11:27 AM

The US needs to bring manufacturing back to the country, and attack agribusiness. Service industry jobs are easily scaled back, but an economy based on basic goods and services is more stable. The Republicans need it to get it through their thick skulls that if people don't have jobs, they don't have money, and they can't spend money. DUH.

The tax rate needs to be much more progressive.

Jan. 16 2008 11:27 AM
RC from queens

Corporations don't pay taxes. All of my friends who took the Masters in Taxation program at the Fordham Business school who now work for the big accounting firms can attest to this. So a corporate tax cut is meaningless.

What you do is cut taxes for those who are in the middle. The poor already get the earned income tax credit. There may not be a need to throw them a bone. But a tax cut for those who make less than 500,000 would be a stimulus because the rich have already met their consumption requirements. A tax cut for the middle class would immediately be pumped back into the economy towards consumer spending.

Also the middle class have already been given a tax hike. High gas and food prices cut into spending on other items. Perhaps a gasoline rebate would be needed. And some help towards health insurance premiums would be needed. Again, food, gas and health insurance premiums prevent consumers from spending money in other areas that could stimulate the economy.

The rich will take that tax cut and invest. But, if we are talking about equities, unless we are talking about an IPO or a new stock issue, this is not money that will be given to a company, it will be given to another holder of securities. Again if there is some spectacular return that can be earned from an investment, do you really think a tax cut by 5-10% will make any difference?

Jan. 16 2008 11:02 AM

You're going to have a guest that advocates small government in the context of economic stimulous to avert a recession? That is ridiculous. Back to school for BL & staff to learn some economics.

Jan. 16 2008 09:51 AM

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