Click amount to donate direct to CounterPunch
  • $25
  • $50
  • $100
  • $500
  • $other
  • use PayPal
Please Support CounterPunch’s Annual Fund Drive
We don’t run corporate ads. We don’t shake our readers down for money every month or every quarter like some other sites out there. We only ask you once a year, but when we ask we mean it. So, please, help as much as you can. We provide our site for free to all, but the bandwidth we pay to do so doesn’t come cheap. All contributions are tax-deductible.
FacebookTwitterGoogle+RedditEmail

The Slippery Slope of Stimulus

As Congress has added to the stimulus package, members have become ever more elastic in defining various kinds of spending and tax programs as GDP boosting and jobs creating. Expanded welfare payments, unemployment benefits for part-time workers and more generous tax write offs for past corporate losses to name just a few.

Economists know that real infrastructure improvements–roads, schools, internet upgrades, clean water projects, and a smarter energy grid–return more than a dollar in additional GDP for every federal dollar spent, if substantial amounts of the needed materials and components are not imported.

Unfortunately, too many imported components may deflate the benefits of financing windmills to generate electricity, for example, yet windmills are in the package.

Tax rebates that yielded no more than 50 cents of GDP for every dollar spent last May and June are now worth 98 cents according to Obama Administration economists Christina Romer and Jared Bernstein. It’s amazing how a change in political party at the White House can alter the math for tax breaks to constituents as quickly as it did the Democrat’s view of tax evasion among Treasury and Health and Human Services nominees.

But the prizes for philandering don’t go to the Democrats alone. The ever skillful drug industry is in the process of convincing the nation’s elders–leaders of both parties in the Senate–that giving the pharmaceutical industry a tax break to bring home profits on foreign operations is jobs creation. That’s right; a special subsidy for outsourcing is jobs creation.

If subsidies on foreign operations are jobs creation in the United States, then I will be playing point guard for the Detroit Pistons next season, and I am five foot six tall and sixty years old!

I admit, the stimulus package will have some positive effects on employment but it won’t create nearly as many jobs as advertised. Simply, too much is wasted on political agendas, special interests and good old fashion political payoffs.

After the money is spent, rebated and squandered, the economy will slip back into recession, because President Obama’s economists don’t counsel him to fix what is really broke–the ownership structures and compensation schemes at U.S. banks in the post-Glass Steagall era, and the huge trade deficit on oil and with China that sap demand for American made goods and services and put workers on the unemployment line. In any case, the leadership in Congress does not want to genuinely tackle banking and trade issues—that would upset too many powerful contributors in Wall Street banks, the Silicon Valley and Hollywood.

Senators representing those constituencies are all too happy to rail against Wall Street bonuses and Chinese currency manipulation, and extol the virtues of fuel efficient vehicles on Sunday morning talk shows and in town meetings, but nothing truly meaningful to fix the structure and compensation policies of the banks, the energy efficiency of America’s fleet of automobiles, or the ruinous trade deficit with China will likley pass the Senate this year.

Sophistry, nay hypocrisy, reigns supreme on Mount Olympus, as the nation’s economy falls into tatters.

PETER MORICI is a professor at the University of Maryland School of Business and former chief economist at the United States International Trade Commission.

More articles by:

PETER MORICI is a professor at the Smith School of Business, University of Maryland School, and the former Chief Economist at the U.S. International Trade Commission.

October 17, 2018
Mel Gurtov
Getting Away with Murder
W. T. Whitney
Colombian Lawyer Diego Martinez Needs Solidarity Now
Dean Baker
Nothing to Brag About: Scott Walker’s Economic Record in Wisconsin:
October 16, 2018
Gregory Elich
Diplomatic Deadlock: Can U.S.-North Korea Diplomacy Survive Maximum Pressure?
Rob Seimetz
Talking About Death While In Decadence
Kent Paterson
Fifty Years of Mexican October
Robert Fantina
Trump, Iran and Sanctions
Greg Macdougall
Indigenous Suicide in Canada
Kenneth Surin
On Reading the Diaries of Tony Benn, Britain’s Greatest Labour Politician
Andrew Bacevich
Unsolicited Advice for an Undeclared Presidential Candidate: a Letter to Elizabeth Warren
Thomas Knapp
Facebook Meddles in the 2018 Midterm Elections
Muhammad Othman
Khashoggi and Demetracopoulos
Gerry Brown
Lies, Damn Lies & Statistics: How the US Weaponizes Them to Accuse  China of Debt Trap Diplomacy
Christian Ingo Lenz Dunker – Peter Lehman
The Brazilian Presidential Elections and “The Rules of The Game”
Robert Fisk
What a Forgotten Shipwreck in the Irish Sea Can Tell Us About Brexit
Martin Billheimer
Here Cochise Everywhere
David Swanson
Humanitarian Bombs
Dean Baker
The Federal Reserve is Not a Church
October 15, 2018
Rob Urie
Climate Crisis is Upon Us
Conn Hallinan
Syria’s Chessboard
Patrick Cockburn
The Saudi Atrocities in Yemen are a Worse Story Than the Disappearance of Jamal Khashoggi
Sheldon Richman
Trump’s Middle East Delusions Persist
Justin T. McPhee
Uberrima Fides? Witness K, East Timor and the Economy of Espionage
Tom Gill
Spain’s Left Turn?
Jeff Cohen
Few Democrats Offer Alternatives to War-Weary Voters
Dean Baker
Corporate Debt Scares
Gary Leupp
The Khashoggi Affair and and the Anti-Iran Axis
Russell Mokhiber
Sarah Chayes Calls on West Virginians to Write In No More Manchins
Clark T. Scott
Acclimated Behaviorisms
Kary Love
Evolution of Religion
Colin Todhunter
From GM Potatoes to Glyphosate: Regulatory Delinquency and Toxic Agriculture
Binoy Kampmark
Evacuating Nauru: Médecins Sans Frontières and Australia’s Refugee Dilemma
Marvin Kitman
The Kitman Plan for Peace in the Middle East: Two Proposals
Weekend Edition
October 12, 2018
Friday - Sunday
Becky Grant
My History with Alexander Cockburn and The Financial Future of CounterPunch
Paul Street
For Popular Sovereignty, Beyond Absurdity
Nick Pemberton
The Colonial Pantsuit: What We Didn’t Want to Know About Africa
Jeffrey St. Clair
The Summer of No Return
Jeff Halper
Choices Made: From Zionist Settler Colonialism to Decolonization
Gary Leupp
The Khashoggi Incident: Trump’s Special Relationship With the Saudi Monarchy
Andrew Levine
Democrats: Boost, Knock, Enthuse
Barbara Kantz
The Deportation Crisis: Report From Long Island
Doug Johnson
Nate Silver and 538’s Measurable 3.5% Democratic Bias and the 2018 House Race
Gwen Carr
This Stops Today: Seeking Justice for My Son Eric Garner
Robert Hunziker
Peak Carbon Emissions By 2020, or Else!
Arshad Khan
Is There Hope on a World Warming at 1.5 Degrees Celsius?
FacebookTwitterGoogle+RedditEmail