As I noted the other day, there is one serious problem with the Obama Economic Recovery Plan: apparently, it doesn’t exist. But if the soon-to-be President actually does have such a plan, I can think of at least five simple reasons that it will probably not work as desired.
The members of his own party in the House of Representatives and the Senate don’t like parts of his overall program
I have a hard time believing in a man who has promised to “lead America down the path of economic recovery” when it seems that he can’t get the unanimous support of Senators from the Democratic Party. I’m sure that you’ve seen news stories containing something like this (from the Associated Press):
“… major components of his [Obama’s] plan were not bold enough and urged more focus on creating jobs and rebuilding the nation’s energy infrastructure rather than cutting taxes.”
I guess that means that the promised “middle class tax cut” was just another hollow promise by President-elect Obama, a man who isn’t known for much of anything other than mouthing what someone else tells him to say (or hiring Hillary Clinton because he’s afraid of her husband).
Of course, all this is probably going to change soon. After all, it was only a week ago that Harry Reid was swearing that Roland Burris would never be seated among such titans of the morality as Ted Kennedy, John Kerry, and himself.
Historically, tax refunds and/or rebates have been spent repaying existing debt rather than on new spending
Per capita, the average American is just over $8,000 in debt (excluding mortgages). Since a sizeable portion of that 8 grand is high interest rate credit card debt, it would be absurd to spend any money that you get back from the Feds on personal purchases when you would come out ahead, over the next year or so, by getting rid of your expensive credit card debt. It’s like this: just because the government wastes its money, there’s nothing that says you have to do the same with your money!
Even if tax rebates did stimulate consumer purchasing, the money would more than likely be spent on imported products
The next time you’re at Wal-Mart, K-Mart, or any other retail outlet that hasn’t declared bankruptcy, take a look at the “Made In” tags. I can assure you that a significant percentage of those tags will say “China,” “South Korea,” “Hong Kong,” “India,” or some other former Third World country that’s gotten rich off its lower-priced exports to the United States. It doesn’t take a degree in economics to understand that at least 60% of your purchase price will wind up overseas, usually in some country that despises the United States but loves American dollars. Even a tag that says “Made In USA” is probably a lie.
Under the existing laws, as long as a completed product leaves a factory on US soil it is considered to have been made on the good old USA even if its components came from somewhere else. As an example, a $30 shirt that is sold as “Made In USA” probably was made from Indian or Egyptian cotton that was cut in Mexico before being shipped to a factory in Texas where it was sewn together into shirts (probably by Mexican laborers) with a “Made In USA” affixed as an afterthought.
Cuts in the personal Federal Income Tax don’t free up enough money to have any effect on the economy
In principle, tax cuts “for the middle class” are a good idea. Well at least they’re good in theory. The only problem is that you would need to cut taxes on the “middle class” by about 50% to have any measureable stimulus effect on the national economy.
Let’s assume that payroll withholding taxes on the middle class are cut by 30% across the board. This would result in an increase of about $30 dollars in weekly take home pay. This ‘windfall” in earnings is probably not enough for most people to say “Wow! I’ve got an extra 30 bucks! I think I’ll run out and buy a $3,000 home entertainment system that will cost me $120 a month for the next 36 months!”
A good portion of the money committed to “public spending” projects is never spent in public
If you doubt that I speak the truth with the above statement, please come up with an explanation as to why the FBI spends so much time (and a steadily dwindling amount of the taxpayers’ money) investigating kickbacks, “pay to play” schemes, or other some other form of state and/or local government corruption.
Like I’ve said before, the only thing more useless than a politician is someone who believes anything that a politician tells him.