The Progress Report wrote:
The Return To Bushonomics
From: The Progress Report [progress@americanprogressaction.org]
Sent: Thursday, January 29, 2009 9:13 AM
To: tomc2322
Subject: The Return To Bushonomics
TAX CUTS ARE INEFFECTIVE STIMULUS: The underlying folly of the conservative push for an all-tax cuts approach is the simple fact that tax cuts are ineffective stimulus. Mark Zandi, a former adviser to Sen. John McCain’s (R-AZ) presidential campaign and the chief economist of Moody’s Economy.com, has argued for months that the “fiscal bang for the buck” of tax cuts is significantly inferior to spending increases. According to Zandi’s research, a corporate tax cut delivers $0.30 in real GDP growth for every $1 invested. In comparison, infrastructure spending delivers $1.59 in GDP for every $1 spent. Zandi isn’t alone in this belief: the Congressional Budget Office “deemed last year that corporate tax cuts are ‘not a particularly cost-effective method of stimulating business spending.’” Despite these economic facts, conservatives like Sen. John Ensign (R-NV) continue promoting corporate tax cuts as the solution. “If we could lower the corporate tax rate, that would be one of the best things that we could do to make American business more competitive in the world and actually help stimulate the economy,”Ensign claimed this week.
The corporations don’t need more tax breaks, they need sales. Let me explain how this works: The government gets new funding for grounds improvement around the Capitol Mall. Next, the CIVILIAN contractor performing the maintenance gets notified of the increase in demand by the National Park Service. Next, the CIVILIAN contractor immediately ORDERS the necessary TOOLS, SUPPLIES, and whatever various and sundry RESOURCES it may need to complete the work. Next, the grounds-keeping company immediately HIRES the NEW EMPLOYEES it needs to fulfill the contractual obligations. Next, the NEW EMPLOYEES who now have JOBS start spending their new PAYCHECKS on stuff like RENT, CLOTHES, FOOD, GASOLINE, TAXES, and maybe even a NEW CAR.
Can you see how things like this might STIMULATE THE ECONOMY?
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