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| Thursday, January 31, 2008 |
| Fiscal Stimpidity |
Michael Kinsley gets it exactly right on the last page of last Friday's issue of TIME on how stupid the fiscal stimulus package is. Read the article.
The stimulus plan agreed upon by Bush and the House Democrats is all wrong for the economy. Kinsley likens the plan to curing a hangover by having another drink: we've been borrowing from foreigners to finance out of control consumption, and now because the economy is softening we should borrow even more to keep domestic consumption up? If we do this we just kick the problem down the road.
The ultimate problem that we must face - now or later, and the later we let it slip the worse the recession will be - is that we are operating with an unsustainable budget deficit combined with runaway consumer spending.
My solution: We need to raise taxes on many people but especially the wealthy; raise and impose taxes (and reduce tax breaks) on adverse behaviors like carbon pollution, driving, oil refining; shift the tax structure from taxing labor to taxing consumption (adding a small progressively-structured VAT would work wonders); and have government invest in infrastructure (Mike Huckabee is right on this point). These things will get us on the path to solving the twin problems - reduce our borrowing from foreign governments and individuals, and reign in consumer spending - while relying on good old government spending to create new jobs in infrastructure and green technology. |
posted by CB @ 10:26 AM   |
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