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Scott Gurvey's Public Offering - The More Things Change...

posted by Scott Gurvey, New York Bureau Chief at 4:25 PM on 02/04/09

Photo of Scott GurveyYou can always hope people will change but it’s an uphill climb. Main Street wants to see change. That was the story of the election. It seems President Obama wants change. That’s why he made a point of going up to the Hill and adding to the stimulus package some distinctly Republican policies like tax cuts. But if change is in the air in the hallowed halls of Congress it’s not making much of a breeze.

Let’s start with the Democrats. They are flush with power, knowing that they can get just about anything they want. So what do the Democrats do? They dust off spending schemes which have been gathering mold since they lost control of Congress during the Clinton administration. The irony is that it really doesn’t matter where we spend government money. With consumers too shell shocked to spend, anything the government buys helps. But so much of the Democrats’ spending is on pork it begs for the squealing which is coming from the other side of the aisle. This bill is a lobbyist’s dream.

As for the Republicans, all they seem to know is, “No!” Now the Republicans have decided that deficits are bad? After letting deficits pile up during their years in control? The Republican solution to the current economic crisis is the same solution they propose for everything, tax cuts. Tax cuts and, “I’ll do whatever it takes to keep Rush Limbaugh from yelling at me.” Been there. Done that. The legacy of the Bush years was more money in the pockets of the top 5%, who used it to bid up the price of real estate and invest in unregulated hedge funds, which in turn invested in unregulated derivative instruments backed by illiquid assets. The only thing that trickled down was the deluge.

What we need is a stimulus package that stimulates. Stimulates as much as it can and as fast as it can. But we also have to be careful about unintended consequences. I’ve got two problems with things as they currently stand.

Here’s one. The stimulus plan should not make long term commitments. That’s not to say new long term commitments should not be made. The Democrats have been frustrated for years and believe they were elected in part to pursue a wider social agenda. But agenda items which carry an annual cost that will continue long after the economy has recovered need to be analyzed, debated, and funded. A stimulus plan designed to give the economy a swift kick to shake it out of its lethargy is not the place to carve new expenses in stone.

Second, the stimulus should not reward bad behavior. I’m looking in particular at the nearly one trillion dollars allocated to state and local governments. As part of a short term stimulus and to provide some income security, this is a good idea. States have been announcing draconian cuts as well as oppressive tax increases as they struggle to balance their books.

But state and local governments have added jobs in record numbers in recent years. And most offer benefits far more generous than those available to private sector employees doing equivalent work. In making loans to the Detroit auto companies Congress demanded the companies and their employee unions bring wages and benefits into line with peers at other auto firms. State and local governments need to bring their employee wages and benefits into line with comparable positions in the private sector. And yes, this includes schools.

It is amazing and frustrating that the members of Congress doen't seem to get the message that business as usual is no longer acceptable. The more things change, the more they stay the same.

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The point on taxes is what kind of income will be taxed at what rate. Will it be 15% or 20% or 30% and so on. This could be wages, investment income or business interest holding. The investors holding these interest have a grave responsibility in making a fair return and not have their effort hindered by government tax regulations. The individual as the producer and the chance player in bring his investment plan to make a fair return instead of ending with little or nothing for his work. The government of the people by the people and for the people to have,keep in creating a better life is rightfull.

Support the president skeptic!

Support the president skeptic!

I think it's terrible to give companies money and they don't use it as it was intended to be used. People are still being layed off and the companies
are using the money for themselves. Give the people money that they so much need so they can pay their mortgages and bills. That might give them an extra month or so. People are now living pay check to pay check and one check missed they loose everything. There is no way to catch up. I hope the President will use the money wisely so the country will once again stand proud.

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