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![]() Posted: Post subject: A BETTER WAY THEN GOVERNMENT SPENDING |
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"We are spending more than we have ever spent before, and it does not work," said Henry Morgenthau, FDR's Treasury Secretary and architect of the New Deal. The reason spending didn't work then – and won't now – is because government spending does not help the economy out of a recession. To insist that it will, like so many liberals in Washington do, is to be oblivious to commonsense economic principles.
The gargantuan economic stimulus bill proffered by President Barack Obama, Speaker Nancy Pelosi, and Senate Majority Leader Harry Reid is expected to go to the floor of the House tomorrow.
The Heritage Foundation is in the thick of this debate promoting the best ways to help our economy out of recession. A Senate staff member recently told our policy experts that "Heritage stuff has been rapid fire, ahead of the curve, and a great resource for staffers on the stimulus!"
On Townhall.com, Heritage President Ed Feulner cites the parallels between when President Reagan took office and the position that President Obama is in today. "Our leaders are pouring on the spending," writes Feulner, "but the economy refuses to be stimulated."
Reagan understood that, in the United States, the people rule. And that means we need to recognize that economic growth isn't generated by government giving us things. The government's job is to create a climate that makes the good things we work for possible.
The financial crises across the globe hinge on the success or failure of our actions, says Feulner, and the only quick and effective remedy is to cut tax rates.
He points to a plan laid out by Heritage experts Bill Beach and J.D. Foster.
The centerpiece of an effective stimulus policy should involve two elements:
1. Extend the 2001 and 2003 tax reductions for as long as possible--certainly through at least 2013 to prevent a tax increase. Better yet, make the tax reductions permanent; and
2. Reduce tax rates on individuals, small businesses, and corporations through 2013 by lowering the top rate by 10 percentage points and reducing rates by similar amounts for lower income level taxpayers.
These policies would:
1. Soften the recession in 2009 and speed the economic recovery through 2010 and beyond;
2. Increase employment by a half million jobs in 2009 and by 1.3 million jobs in 2010 and create 4.8 million jobs from 2009 through 2012; and
3. Reduce federal tax receipts during the critical fiscal years of 2009 and 2011 by $636 billion.
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