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What did we get? Well, pretend you're a New Deal Democrat

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jpgray Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 08:35 PM
Original message
What did we get? Well, pretend you're a New Deal Democrat
Edited on Sun Dec-12-10 08:43 PM by jpgray
You believe short term deficits are a price worth paying for job creation. All stimulus, however, is not created equal. You want the most bang for your buck. The multiplier effect of the best stimulus provides for the greatest short term growth. This multiplier is what makes short term deficits pay off. As the economy grows, debt-to-GDP shrinks, inflation aids borrowers, revenue goes up, demand increases, etc. So let's have a look at stimulative programs:



What you'll notice is that the benefit of tax cuts and credits is dwarfed by the benefit of spending in almost all cases. There is a chart from WaPo making the rounds, arguing we get "more" than the GOP in the tax cut deal. But you'll notice that absent the very necessary and worthwhile UI funding ($56 billion), which really is important and very stimulative, what we get is tax cuts and credits.

These are stimulative, but hardly our best option. Worse, tax cuts are the can that always gets kicked down the road, often in order to threaten us with a fatal stumble during election season. We lacked the political will to end tax cuts with majorities in Congress and a president in office, and in fact we seek to add to them with a ~1000% increase in the estate tax exclusion, a 20% cut in the top rate, etc. What are our chances without the House, and perhaps without the Senate in '13?

So in exchange for the hyper-partisan recklessness of the GOP policy, we get the least partisan and most meager stimulative measures for ourselves. Other than UI, these are going to be extremely difficult to drop in favor of more stimulative spending, and are fodder for the whole tax cut ethos that is blowing long-term holes in the budget. We want the best stimulative measures, to be paid for by short-term deficit spending. We are receiving some of the worst. Is it for the "short-term?" As we've seen with the Bush tax cuts, that is uncertain to say the least.

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yurbud Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 08:43 PM
Response to Original message
1. I would put the payroll tax holiday in the GOP column--it's setting up an excuse to cut benefits.
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Enthusiast Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-13-10 06:41 AM
Response to Reply #1
11. Me too. nt
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ProSense Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 08:44 PM
Response to Original message
2. Job tax credit, that's this
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jpgray Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 08:59 PM
Response to Reply #2
4. Compare it, though, to state aid and infrastructure spending
A tax cut will increase demand, and it is stimulative. But states are jacking up fees, firing workers and cutting services. Demand for Chinese goods and service workers is better than nothing, but not better than infrastructure spending.

It is good to put more money in the pockets of consumers. But other types of spending are both more stimulative -and- address problems that a simple tax cut cannot.
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ProSense Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 09:46 PM
Response to Reply #4
8. It's still effective stimulus.
There is no way to claim otherwise.

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jpgray Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 09:51 PM
Response to Reply #8
9. But why go for the less-effective?
And where do you see me claiming otherwise?
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Go2Peace Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 08:50 PM
Response to Original message
3. And we are reinforcing this Republican view in the process
Making it harder for the public to understand next time around. We gain a small compromise at the cost of our future in multiple ways....
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midnight Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 09:00 PM
Response to Original message
5. Howard Dean explained that holiday payroll tax is a move to empty out


our social security funds. He says at a time when republicans are complaining it is going bankrupt. I find it maddening that the safety net,social security, for the middle class is being destroyed and being used as a win for us. Look at those measly energy tax credits. Equipment expensing? Not sure how that will work for the small business people who are cash poor and not getting access to credit banks are hoarding? This condenses down to a little over a year of unemployment during a jobless recovery.... and big cash keepings for the rich who will not make jobs....



"What piqued Dean in particular, however, was a provision in the "framework" that provides a one-year, two-percent payroll tax holiday that, critics say, could end up siphoning money from the Social Security Trust Fund. The nation's largest senior-issues lobbying organization, the AARP, said it was comfortable with the provision -- confident that it won't be extended down the road."http://www.huffingtonpost.com/2010/12/12/howard-dean-ta...
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jillan Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 09:23 PM
Response to Original message
6. The payroll tax holiday should be in red not blue.
226B = republicans

126B = Dems
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jpgray Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 10:12 PM
Response to Reply #6
10. Red or blue, the point is that it is not anywhere near our best option
And it has several drawbacks apart from its lesser stimulative effect.
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niceypoo Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Dec-12-10 09:43 PM
Response to Original message
7. Democratic supply siders
The Neocrats

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Cherchez la Femme Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-13-10 07:46 AM
Response to Reply #7
12. Yup
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