Modified Version of Stimulus Bill Passes House

If this was to the be dawn of a new era of bipartisanship, it didn’t look like it today. President Obama’s stimulus package, a modified version of the original $825 billion plan, shaved off a few billion and still did not manage to get one Republican “yes” vote in the House. The final vote was 244 to 188.

The bill now moves to the Senate, where it will need to garner at least two “yes” votes from Republicans to pass.

Republicans cited weak tax cuts in the plan as a major factor for the “no” vote. House Minority Leader John Boehner (R-OH) summarized the objections by saying, “We have to act — we have to heal the ailing economy. The question is how to do it best; we think that fast-acting tax relief is the way to get it done.” Despite their beliefs, a Republican amendment to expand the amount of tax cuts in the bill failed in the House.

Tax cuts are not the answer. I hate paying taxes just as much as anyone but individual income taxes are not what is killing our economy… In much the same way that the tax rebate scheme in 2008 did not kick start the economy in any meaningful way, handing a few dollars back to taxpayers is not going to swiftly and significantly revitalize the economy.

Yeah, that’s not what a lot of folks want to hear, but it’s true. The package, as proposed, would put back about $9 into an individual taxpayer’s pocket per week. Would that $9 have kept Starbucks from laying off 6,700 jobs today? Or Caterpillar from making cuts of 20,000 jobs on yesterday? You and I both know the answer is no.

Do I have the solution? Of course not. If I did, I would totally have been the nominee for Treasury Secretary.

But I do know that when you’re bleeding profusely, you don’t suggest just taking an aspirin or two. It may make you think you feel better immediately but it really just thins your blood and slows down the chance that you’re actually going to heal.

We need some significant relief. Some parts of the proposed package make sense: credits for building and maintaining businesses; emphasis on research and development of energy alternatives; and commitment to improving our infrastructure. And let’s face it, the latter needs to happen, crappy economy or not. I know it sounds very “New Deal” and that freaks some folks out but we have crumbling roads and unsafe bridges. Why not kill two birds with one stone and pay someone – or a lot of someones – to fix it? Keep my silly $9 per week and pay someone to work.

Not convinced? Here’s some quick math for you. The proposed tax cuts for individuals – the $9 per taxpayer – worked out to about $168 billion. Billion. That’s the equivalent of paying 388,313 people a full time salary at $10/hour for a year. More than three times the massive layoffs announced this week.

It’s not permanent. It’s not flawless. And it’s not immediate. But neither is the silly $9/week to taxpayers. And even if you make it $10/week? Still not happening.

In business, we always say to think of the highest and best use of an asset. Is this package the highest and best use of our dollars?

Comments

  1. dom

    hi im a 33/m from pa im disabled father of 3 1 did work a little in 2008 i was woundering if the 500 tax brake will affect my return or not when i file my w-2 this year my earned income for 2008 was lil under $1300.00 only tax’s takein out was state but no fed becouse i didnt work enofe i you can please w/b and let me know if the new plane will affect my return in anyways
    thanks
    Dominic

  2. Kelvin Kao

    I actually don’t agree with the stimulus check from the previous administration. I think the money will be more useful collectively than as individual checks in people’s hands. Of course, this is assuming that the government will do a wise job spending that money.

    I really don’t think cutting tax is a good idea. Unemployment is rising, and people are getting laid off. That means the country as a whole is contributing less to the budget already. How that’s going to support all these government spendings, I do not know.

  3. Bruce Ahrendt

    I’m not a supporter of big government… but money spent on infrastructure almost always has a strong positive, long term benefit for the economy… and if spending that money now helps with the immediate economic problems… it seems to be the soundest course of action to me.

    BHA

  4. A Stone

    Here is some more quick math for you – $1 trillion (the real cost of the bill according the Congressional Budget Office) and 4 million jobs created equals a cost to taxpayers of $250,000 per job.

  5. Author
    Kelly

    A Stone, interesting stat. The makeup of the bill makes things complicated, though. You can’t do a straight division of jobs and spending because the bill includes tax cuts, unemployment benefits, Medicaid benefits, tax credits for businesses, etc. The actual infrastructure spending, as proposed, is $322 billion.

  6. A Stone

    Kelly, if only $322 billion is to create the 4 million jobs, what is the other $500 billion supposed to do?

  7. G. Cass

    Its all based on smoke and mirrors any way. Our money is not backed up by anything,so print what we need, lets get out of our hole. No one wants to say that, but this is where we are. As long as we all agree to accept US currency as legal tender. We just have to hope the rest of the world goes along with our little game.

  8. Skip McQuaid

    A lot of years ago, if you wanted to cross a particular river, there was usually a barge that would take you across the river for a fee. The current term for that is “toll road”. There is absolutely no possible way that we can keep our roads and bridges up to date now or in the future – so why not toll roads, toll bridges, etc.? Folks pay for the use of the roads that they travel on. Don’t want to pay the toll? Use the back roads.

    Government cannot bail us out, folks. Only the consumer can do that. And the consumer isn’t going to do it with an extra $9 a week. They didn’t do it with the 300,600,900 or whatever they got last year – most of our clients so far this year cannot remember how much they got which shows how much it affected their lives.

    Tax cuts won’t do it, you say? Well I know of at least one case where it helped. I am one of those really terrible rotten people who benefited from President Bush’s tax cuts. And what did I do with those tax savings? I added a little money of my own and hired two more people. And because those two people have increased my production ability we are actively seeking another employee. And a few of my clients who also benefited from President Bush’s tax cuts invested a little more in the market which is a good thing also.

    But the problem lies with the attitude of folks like those who work here – I’m not buying anything and I mean “ANYTHING” until the market place comes back to earth is what I hear – unfortunately the market place cannot come back to earth until we start buying things…..Econ 101. General Motors (or somebody) decided not to take delivery of their new plane and everyone was happy about the money saved – everyone, that is, except the airplane builder and their employees, that is. They should have bought the stupid plane.

    I am not sure what the answer is – bail outs are not, of that I am absolutely positive, and whatever it will take to get the consumer active again simply ain’t happening – but I believe it is something that will happen when the leadership in this country starts exhibiting a little leadership instead of running around like Chicken Little

  9. pmac

    I think our biggest problem in solving any problem is getting Congress up off thier individual behinds and doing their job.

  10. julie

    I believe that tax payers deserve another rebate check this year . When a middle class person pays in 8,000 in federal taxes & only gets back 1,000 ,they deserve something in return!!!!!

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