USATODAY.com reports that the stimulus plan has swelled to $850 billion but lacks the bold ideas that are needed for the economy to truly recover. As USA Today reports:
Obama had proposed an economic stimulus package that aides, including adviser David Axelrod, estimated at $775 billion, nearly 40% of which would be taken up by tax cuts, including a $3,000 job-creation tax credit.
The tax cuts are a good start, but that leaves 60% of the proposal composed of spending programs. The spending programs are a mixed bag, but many of the suggested programs set a high price on job creation. A program to modernize Social Security sets the price of job creation at $1 million per job. Other programs attack the employment issue by hundreds of thousands of dollars to create just one job. These aren’t the kinds of “shovel-ready” programs that we heard were designed to help the middle class.
When you compare these high-dollar program to other proposed expenditures, like highway projects, you see that the bill isn’t really focused on getting the most bang for our buck. The highway projects included in the bill would create jobs at roughly $35,000 a piece. If Mr. Obama and Democratic leaders in Congress want to achieve their goal of job creation, they ought to be focusing on creating the most jobs per dollar and cut the fat from this proposal.
Meanwhile, Republicans on the Hill are proposing that the tax cut portion of the bill be expanded. As USA Today’s coverage also reports:
The Republican Study Committee, a group of fiscally conservative GOP House members, released a proposal Wednesday that includes trimming individual tax rates by 5% and cutting the top corporate tax rate from 35% to 25%.
While this is a better proposal than a multi-billion-dollar spending spree, it lacks the boldness needed during this crisis.
Granted, politicians are comprise-seeking creatures, but this proposal seems particularly meek when the US is staring at the worst financial crisis since Herbert Hoover was in office. Someone needs to let the economy out of the chains that Washington has put on it and let America start working again.
Cutting the corporate tax rate to 0% would be the ideal as it would usher in an era of jobs flooding into America, rather than crossing our border to the south and fleeing toward cheaper labor in Asia. This is likely to be politically untenable, but perhaps a cut down to 15% would be possible now. It would put the United States on equal ground with Ireland, Europe’s fastest growing economy, and still reverse the trend of job flight.
Perhaps the most overlooked and most important thing we could do to help the economy would be to engage in a systematic program of deregulation. Mr. Obama could defy political expectations by creating a BRAC Commission for regulations.
BRAC, Base Closure and Realignment Commission was designed to take the politics out of closing military bases. Because local economies grow around military bases, it became political suicide for Congressmen to vote for base closings in their district or State. This stalled progress in shutting down any bases, creating incredible headaches for our nation’s military, which needs to be able to shift its resources when needed. BRAC was created to decided what bases would be closed and then to present the bill to Congress, which it would then have to vote either up or down, with no amendments.
The same local interests are often involved in regulations. One state might benefit from a regulation on steel makers because it produces aluminum. Similarly, mountains of compliance paperwork can often benefit large companies because it prevents small competitors from ever getting started—the little guys don’t have the lawyers and accountants needed to comply with Washington’s regulatory nightmares. Representatives and Senators know that businesses benefit from regulations, and they’ll work to see that other regulation get repealed before those that help their constituents.
We can get around this political reality by creating a deregulatory commission that would pour through the federal register and would then recommend large slates of regulations to be cut. Just like BRAC, this comission could force Congress to vote Yes or No.
Deregulation wouldn’t result in income loss for the federal government, it would clear the books of many dead-weight, no-gain rules, and would get the economy chugging along more efficiently. This is exactly what America needs. This, combined with lower income taxes and a much lower corporate tax rates, would be a far greater stimulus—and less open to corruption and playing favorites—than the spending boondoggle now before law makers in Washington.