Here’s my bit of pro bono work for the Democratic party: Ladies and Gentlemen (and all the rest of you): Spending money–even other people’s money–is not necessarily the same as undertaking a stimulus of the economy.
I am sorry you weren’t in class when this was explained. But think about it. Sometimes–often, in fact–spending is just that: an expense. You had X, now you have X minus whatever you spent. (Shakespeare touched on some of the more recherché aspects of this in his ditty about “The expense of spirit in a waste of shame”–“Savage, extreme, rude, cruel, not to trust; Enjoy’d no sooner but despised straight,” etc.)
A stimulus, on the contrary, is an expense that yields economic activity: investment, growth, jobs, confidence, i.e., the happy side of spending money.
Do you want to stimulate the economy, I mean right now, today?
1.) Cut payroll taxes by 10 percent.
2.) Eliminate the capital gains tax (not that there are a lot of capital gains to be had, but it will make people feel better, a necessary condition of the stimulation the stimulus is supposed to provide).
3.) Cut corporate taxes by 10 percent.
4.) Cut the marginal rate on personal income taxes by 10 percent.
5.) Finally, since no Democratic Congress can make it to the toilet without wanting to raise taxes, I also suggest imposing some tax on the more 43 percent who file but do not currently pay any income tax. It needn’t be much. But like the Metropolitan Museum here in New York, we should insist that partners in the social contract that is America pay something, just to give them a stake in the enterprise.
If the President of the United States could convince his colleagues in Congress to do this, he would unleash the mighty power of American capitalism. He would show that he was a political leader, not a grubby spoilsport who threatens to foul the play pen and go home (“Catastrophe!”) if you don’t give him what he wants. “If.” Little word. Big gap.