By Isaac MacMillen
It appears the House Republican Conference has strongly countered the Obama-Reid-Pelosi $825 billion debt stimulus with a proposal of their own—in this case, a true economic stimulus package. It’s a plan that will could halt the current cascade to socialism, and reverse the rush down the road to serfdom.
As America heads into the new year, it is faced with a potential $1.2 trillion dollar deficit—and that’s one of the lower estimates, not accounting for the “stimulus” spending reportedly waiting in the wings. That would bring it up to over $2 trillion. As ALG News reported earlier, all the deficit-heavy spending that has occurred over time will invariably lead to massive inflation, further compounding America’s economic problems.
There are consequences for mounting debt. Real world consequences that go dangerously beyond much of the current whimsical theorizing. Saying the country can resolve its financial miasma by borrowing, spending, and printing more money may sound sublime. But it verges on the ridiculous. And history has shown that it is irresponsible.
Unfortunately, the leading Democrats to date have presented few other solutions than throwing money at the problem, hoping that stimulus checks and yet more government programs will translate into increased, vibrant economic growth. Unfortunately, the Obama-Reid-Pelosi “stimulus” package will lead only to further deficits, further debt, and rising inflation. And the Treasury Department’s printing presses will continue to run on red ink.
Currently being debated in Congress, behind closed doors, the Democrats’ stimulus package is reported to be about $825 billion and will be unveiled later today, according to the AP—and one special interest proposal by OurFuture.org, upon which it may likely be modeled, rises up to $1 trillion over two years. All of which will be piled on top of already-projected trillion-dollar deficits. The Obama-Reid-Pelosi package, in short, is not a stimulus package; it’s a debt package. OurFuture.org—actually a consortium of 127 economists, 27 Big Union bosses, and 59 special interest groups—actually has the gall to say that $825 billion is not enough. They want even more money dished out from the government. And they want it now.
To make matters worse, it appears that the more Congress works on the proposal, the larger it gets. OurFuture’s proposal calls for $1 trillion over two years, while Congress’ version is already close to $1 trillion in the first year alone.
The hope behind the Democratic proposal is that it will create another asset bubble—or series of bubbles—to temporarily boost the economy so they can claim “recovery” by 2012. And in the process, they can enact their socialist agenda to nationalize health insurance, bury the energy industry, and transform America into a utopian nightmare.
The keystone of the Obama-Reid-Pelosi proposal is to fund multiple government infrastructure programs. And with some so-called “tax cuts” thrown in to lure Republicans, Congressional Democrats hope to spend their way out of this economic crisis. Unfortunately, those “tax cuts” are in actuality checks written out of thin air to individuals, 44 percent of whom do not even pay income taxes. So, in reality they are actually a spending increase.
So, the plan is to simply hand out money—akin to the $600 checks from the $150 billion stimulus package from 2008—in hopes that somehow, somewhere, someone will decide to invest it wisely.
That said, the Democratic proposals are nothing short of Keynesian, demand-side economics; short-term thinking, with long-term downsides. By ostensibly attempting to be “equitable” to all, they do the equivalent of distributing 500 dollars among 500 people—one dollar per person, an inefficient distribution scheme at best. The purchasing power of the 500 dollars would be greatly increased if it were given to the owner of the company at which the 500 people worked, where it could be used as capital—to create more capital. But that’s not the Democratic way.
Supply-side economics, on the other hand, has a proven track record of economic growth. James D. Gwartney, formerly the chief economist of the Joint Economic Committee of the U.S. Congress, notes that President Reagan’s supply-side economics massively cut the inflation rate—from 9 percent in 1976 to 3.3 percent in 1986. Additionally, for all the complaining that the Left does about “tax cuts for the rich,” application of supply-side economics actually increases the percentage of the tax burden that the “rich” pay—taxing them less gives them greater incentive to earn more, which, in turn, increases the government’s income.
The Republican Study Committee’s (RSC) proposal takes the above principles, and applies them to America’s current economic crisis.
The RSC, a group of over 100 conservative House Republicans, has put forth a counter stimulus package: H.R. 470, the Economic Recovery and Middle-Class Relief Act of 2009. The plan, endorsed by both Americans for Tax Reform and the National Taxpayers Union, rejects the Democrats’ near-sighted debt-based planning. House Republican Conference Chair Mike Pence (R-IN) has also endorsed the proposal, which employs future-looking, growth-based solutions.
The RSC highlights several of the plan’s proposals:
• Help individual Americans by a 5 percent across-the-board tax cut, increased child tax credits, fixing the capital gains tax at 15 percent, and freeing up money for seniors and educational expenses, and more.
• Help businesses by removing asset-purchasing limitations, cutting the top corporate income tax rate by 10 percent, reform the capital gains tax to give businesses greater freedom to grow, and more.
• Protect future Americans by adding “not one penny” of additional spending (unlike the Democrats’ bill), and cutting all non-military discretionary spending in 2009.
By cutting tax rates both for individual taxpayers and businesses while simultaneously reducing spending, the RSC’s plan will not only increase incentives to create wealth, it will decrease the inflation rate, as well, by reducing the nation’s debt.
The distinctions between the two plans could not be clearer. One seeks to solve the economic crisis by increased government spending, more government programs, and higher debt. The other makes it easier for individuals and businesses to use greater amounts of their own money to create wealth. The first proposal is nearsighted; the second, foresighted. The first relies upon a broad spectrum of new government programs and handouts; the second upon unleashing the entrepreneurial spirit of the American people.
As many Americans, spurred on by the liberal mainstream media, rush like lemmings down the road to serfdom, they would do well to pause and consider where the path is leading. Decades of rising entitlements, deficit spending, and foreign debt have led to a deepening economic abyss. The RSC recovery plan calls for reversing the descent by returning to the foundational principles of economic growth and financial freedom.
It may be the road less taken. But the other alternative could well be a one-way trip to oblivion.
Isaac MacMillen is a contributing editor of ALG News Bureau.
