Friday, February 6, 2009

LESS BANG FOR THE BUCK ...

Less bang for your buck. This is what republicans want to get out of the stimulus package. They claim that they want to eliminate government transfer and spending programs because, according to them, they don't generate enough bang for the buck. The republican proposal? More tax cuts.

Let's consider the general contours of 3 options, and what their impact would be on the economy:

1. GOVERNMENT SPENDING ON INFRASTRUCTURE: The federal government spends $1.00 on infrastructure and other goods & services, and generates between $1.00 and $2.50 in economic stimulus.


2. GOVERNMENT TRANSFERS MONEY TO YOU & ME: The federal government transfers $1.00 to you and me and generates between eighty cents to $2.20 worth of economic stimulus.


3. TAX CUTS FOR THE RICH: The federal government continues to do what it's been doing under George W. Bush. We grant more tax cuts for the rich. But for every dollar we spend we only generate between ten cents and fifty cents in economic stimulus.

How do we know this is what we get for every dollar the U.S. government spends? Because the Congressional Budget Office has been crunching the numbers and this is what they've told us we get in return for every dollar spent.


It's really pretty simple. What President Obama and the democrats want to do - transfer and spend money - will generate more bang for the buck. The republicans, however, have been holding out for more tax cuts, claiming government spending and transfers are a waste.

I have confidence that President Obama knows what he's doing, but at some point he needs to understand that the republican plan at this point is to stonewall and dilute the impact of his policies. They understand that if President Obama succeeds they will be banished to the political swamplands for a generation.

It's almost as if they want want Obama to fail. Oh, yeah. They do.

- Mark