Stimulus Quote of the Day

“Has any story beginning with the phrase ‘a bipartisan group of senators’ ever been good news?” — Jacob Sullum

It occurs to me that I’ve been relatively silent on the stimulus package, both on this blog and elsewhere. The primary reason for that is that, frankly, I think the debate is well-covered here and elsewhere. However, because being a blogger implies that one must put in one’s two cents on everything, I think it’s worth pointing out that I think that both Democrats and Republicans have shown that they’re incapable of running the country during this process.

First, the Democrats for plowing in money to a bunch of “infrastructure” projects that probably shouldn’t have money put into them in the first place. I’m all for infrastructure improvements–the United States desperately needs it–but infrastructure requires some serious planning, not a mish-mash proposal to fund “shovel-ready” projects without considering their merits.

Second, most of the “stimulative” tax-cut proposals that the Republicans have put forth are anything but, as far as I can tell. A $15,000 tax credit on new homebuying seems to me to be an excellent way for people to engage in dubious real estate transactions to score a $15,000 tax credit. A credit giveaway for new cars only helps people who can afford to buy new cars, who aren’t really the people who need distribution right now. Most of the other business tax cuts are of equally dubious merit.

From everything pouring out in this debate right now, it seems to me, in my decidedly unexpert opinion, that the most prudent forms of stimulus are extension of unemployment benefits and related assistance, as well as various proposals floating around for a reasonable payroll tax holiday. If I were to throw something in the ring to stimulate the economy, I’d personally suggest the legalization of marijuana. Vice industries tend to do well in times of economic recession, plus legalizing marijuana would stimulate the growth of new businesses and infrastructure for same. It would allow for the reallocation of local government resources to something more productive than the circus trial of an Olympic athlete while at the same time providing a new source of tax revenue. It’s win-win, really.

Photo by Flickr user ES under Creative Commons license.

FILED UNDER: Economics and Business, US Politics, ,
Alex Knapp
About Alex Knapp
Alex Knapp is Associate Editor at Forbes for science and games. He was a longtime blogger elsewhere before joining the OTB team in June 2005 and contributed some 700 posts through January 2013. Follow him on Twitter @TheAlexKnapp.

Comments

  1. Dave Schuler says:

    that the most prudent forms of stimulus are extension of unemployment benefits and related assistance, as well as various proposals floating around for a reasonable payroll tax holiday

    Largely in agreement. Greg Mankiw proposed what sounded like a reasonable approach to the latter suggestion on his blog.

  2. sam says:

    “Has any story beginning with the phrase ‘a bipartisan group of senators’ ever been good news?”

    Typical glibertarian BS–he’s no doubt too young to remember the passage of the Civil Rights Act of 1964:

    After 54 days of filibuster [by Southern senators], Senators Everett Dirksen (R-IL), Thomas Kuchel (R-CA), Hubert Humphrey (D-MN), and Mike Mansfield (D-MT) introduced a substitute bill that they hoped would attract enough Republican votes to end the filibuster. The compromise bill was weaker than the House version in regard to government power to regulate the conduct of private business, but it was not so weak as to cause the House to reconsider the legislation.

    The act would never have been passed but for bipartisanship.

  3. Bystander says:

    Awesome dewd! Like, you’ve got the best ideas ever! Sceews me – I’ve got to go find something to munch on. Later dewd!

  4. Drew says:

    Well, then while we are at it. Let’s legalize prostitution. Repatriating all those lost tax dollars from cash transactions, you know.

  5. odograph says:

    Second, most of the “stimulative” tax-cut proposals that the Republicans have put forth are anything but, as far as I can tell. A $15,000 tax credit on new homebuying seems to me to be an excellent way for people to engage in dubious real estate transactions to score a $15,000 tax credit.

    I agree. It is a transfer to existing owners of course. If I own my house, I can expect my value to jump $15K as soon as buyers can use that to compete in the purchase.

  6. Drew says:

    Lemmee see if I’ve got this right.

    We are told that a basic driver of the current economic slump is the decline in home values. Wealth effect an such.

    Then I read that the the Republican tax credit isn’t stimulative because it is just a transfer to current home owners………raising their home values by $15K.

    Let’s see. Current homeowners, up $15K. Good. Buyers, net of tax credit, cash neutral….good. Taxpayer, hosed. But that’s a given under all stimulus scenarios. So how is that not stimulative, and directly so?

    Alex has the better argument, weak as it is, that it might result in “dubious” real estate transactions, although I don’t know why he jumps to that dark conclusion. Hell, that’s a predicate for mother government taxing away all our money to prevent us stupid idiots from making “dubious” spending and investment decisions.

    Meanwhile, back in the real world, as we see the composition of “stimulus” spending in the light of day, there is little question: Congress’ stimulus package is dubious on steroids.

  7. Alex Knapp says:

    Drew,

    I have no issues with legalizating prostitution, either. I agree with you that it would be a net economic benefit.

    As far as what I mean by “dubious” transactions, I mean something along the lines of:

    My brother and I both own homes. On December 31, we agree to sell each other our homes for the same price. On January 1, we sell them back.

    Voila! Instant $15,000 tax credit for both of us!

  8. Drew says:

    Alex –

    The prostitution thing was tongue in cheek…..uh, maybe not the best choice of words.

    On your example,….fair enough. But that example is just a case of fraud. I’m not sure we can construct the nation’s tax policy assuming fraudulent activity will ensue from every tax action.

    In any event, a time gap (no rebuy within 3 years) or maybe a “no relatives” provision is needed.

    But there will always be charlatans and questionable real estate deals, you know, say, Tony Rezko and future Presidents………….but I digress.

  9. G.A.Phillips says:

    Alex you really don’t know crap about drugs or their effects on society, or what prostitution does to it, do you?

  10. bystander says:

    Take a chill pill G.A.P. man. Marijuana isn’t a drug dewd – it’s an herb. It’s natural. God gave us all of the green plants – you know? If it’s good for the economy, let’s everyone go fire up the hookah for prosperity. Par-ty on!!!

  11. Joe R. says:

    Alex you really don’t know crap about drugs or their effects on society, or what prostitution does to it, do you?

    Subtext: “I disagree with you, therefore you must be stupid.”

    When you think about drug legalization, remember that the choices are not between a drug-free world and a drug-using world. The current world is far from drug-free, and the legalized world would not automatically be a drug-using world. People who really want to try heroin pretty much already have.

    The fiscally conservative question is, as with any decision, “Do the benefits justify the cost?” I have yet to see a convincing “yes” argument in answer to that question re: The War On (Some) Drugs. Most of them involve outright falsehoods about drug effects (especially on marijuana), or ignore the mammoth costs in both dollars and lives that the war imposes.

    The libertarian question is, “Do you own your own body?” I think you do.

  12. […] over at Outside the Beltway: [B]oth Democrats and Republicans have shown that they’re incapable of running the country during […]

  13. Brian says:

    Alex you really don’t know crap about drugs or their effects on society, or what prostitution does to it, do you?

    G.A. – What kind of a contribution to the discussion is that? A pointless rhetorical question that can’t even be answered? Do you have any of your own thoughts that may add to a relavent discussion or a rebuttal to Alex’s proposals? No. Oh, I get it. You just want attention. You want to be the one who interjects “wisdom” into a conversation but doesn’t actually succeed. Why bother commenting at all?

    The fiscally conservative question is, as with any decision, “Do the benefits justify the cost?” I have yet to see a convincing “yes” argument in answer to that question re: The War On (Some) Drugs. Most of them involve outright falsehoods about drug effects (especially on marijuana), or ignore the mammoth costs in both dollars and lives that the war imposes.

    I agree. There has been an enormous amount of dollars spent on anti-drug advertising, especially those ads that target pot, as well as untold judicial and law enforcement costs on drugs, again, especially marijuana. This includes enormous incarceration dollars.

    Are these costs justified? Hardly.