Barack Obama is a surprise a minute, which is mostly good, as in his wish to cut business taxes along with individual taxes as part of a stimulus package that might otherwise be a spending sledgehammer demolishing our future.
The idea is politically apt, a bipartisan cuddle with Republicans rightly shuddering at a massive infrastructure plan that could well be ridden with pork, have minimal economic returns and diminish growth opportunities in the private sector. The tax-cut idea is also fiscally apt, a means of prompting that private sector growth.
Obama invited Republicans to help shape the recovery program that as of now would do what he earlier pledged, such as giving tax credits for job creation, and pick up on some tax breaks and investment incentives put into effect during the recession faced by the Bush administration. Brimming with anti-corporate rhetoric in his campaign, he now seems to see the light: Business can come to our rescue if only we let it.
The tax cuts — estimated at $300 billion over two years — would also extend tax credits to individuals and families, and we are halfway home. What’s also needed is for Obama to get past his desire to tax the rich more or impose carbon taxes or caps on businesses. The economy needs liquidity, and you don’t get there by taking back with one hand what you give with the other. These tax increases could be ruinous.
While Obama has hardly given up his infrastructure plan, he and congressional leaders have agreed to wait as long as another six weeks for a vote on the stimulus package, allowing time for debate, for reflection, for a chance to weed out at least some of the worst parts that advisers and others have come up with. You hope some attention may be paid to an idea from Mitch McConnell, the Republican leader in the Senate, who wants any bailout to the states to be loans, not freebie grants.
It’s a way of curbing their enthusiasm, which is now somewhere in the grossly unaffordable trillion-dollar range, even though most got in the messes they are in primarily through their own unconscionable devising.
Wise management is more than imagining that the economy will always keep up with your spending urges, and wise management is more likely if states learn any help they get now must be repaid.
Economists, who almost unanimously failed to see this financial crisis was coming, are now almost unanimous that we need to infuse enormous sums of money into the economy to buck it.
But the bill will come due, there will be a day of reckoning, and there is also this message from a Heritage Foundation analyst to consider — we owe our entitlement programs (Social Security, Medicare and Medicaid) more trillions in unfunded liabilities than all the taxes ever collected in this country’s history.
What that means for one thing is that any exceptional spending ought to be handled with care. It cannot be long-term and should be precisely aimed at fostering consumer and business confidence and returning other major economic dividends.
For another, it means some pet projects should be abandoned, such as Obama’s health insurance scheme. It is more likely to add to health costs than to reduce them and could lead to a system of socialized medicine much like the ones now forcing health care rationing in England and Canada. If you did not like relatively mild health maintenance organization strictures, you will abhor these.
Maybe Obama will reconsider this means of making a bad entitlement situation many times worse. Maybe he will surprise us again.
Examiner Columnist Jay Ambrose is a former Washington, D.C., opinion writer and editor of two dailies. He can be reached at [email protected].
