FacebookTwitterGoogle+RedditEmail

The Slippery Slope of Stimulus

by PETER MORICI

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.

Weekend Edition
February 23, 2018
Friday - Sunday
Richard D. Wolff
Capitalism as Obstacle to Equality and Democracy: the US Story
Paul Street
Where’s the Beef Stroganoff? Eight Sacrilegious Reflections on Russiagate
Jeffrey St. Clair
They Came, They Saw, They Tweeted
Andrew Levine
Their Meddlers and Ours
Charles Pierson
Nuclear Nonproliferation, American Style
Joseph Essertier
Why Japan’s Ultranationalists Hate the Olympic Truce
W. T. Whitney
US and Allies Look to Military Intervention in Venezuela
John Laforge
Maybe All Threats of Mass Destruction are “Mentally Deranged”
Matthew Stevenson
Why Vietnam Still Matters: an American Reckoning
David Rosen
For Some Reason, Being White Still Matters
Robert Fantina
Nikki Haley: the U.S. Embarrassment at the United Nations
Joyce Nelson
Why Mueller’s Indictments Are Hugely Important
Joshua Frank
Pearl Jam, Will You Help Stop Sen. Tester From Destroying Montana’s Public Lands?
Dana E. Abizaid
The Attack on Historical Perspective
Conn Hallinan
Immigration and the Italian Elections
George Ochenski
The Great Danger of Anthropocentricity
Pete Dolack
China Can’t Save Capitalism from Environmental Destruction
Joseph Natoli
Broken Lives
Manuel García, Jr.
Why Did Russia Vote For Trump?
Geoff Dutton
One Regime to Rule Them All
Torkil Lauesen – Gabriel Kuhn
Radical Theory and Academia: a Thorny Relationship
Wilfred Burchett
Vietnam Will Win: The Work of Persuasion
Thomas Klikauer
Umberto Eco and Germany’s New Fascism
George Burchett
La Folie Des Grandeurs
Howard Lisnoff
Minister of War
Eileen Appelbaum
Why Trump’s Plan Won’t Solve the Problems of America’s Crumbling Infrastructure
Ramzy Baroud
More Than a Fight over Couscous: Why the Palestinian Narrative Must Be Embraced
Jill Richardson
Mass Shootings Shouldn’t Be the Only Time We Talk About Mental Illness
Jessicah Pierre
Racism is Killing African American Mothers
Steve Horn
Wyoming Now Third State to Propose ALEC Bill Cracking Down on Pipeline Protests
David Griscom
When ‘Fake News’ is Good For Business
Barton Kunstler
Brainwashed Nation
Griffin Bird
I’m an Eagle Scout and I Don’t Want Pipelines in My Wilderness
Edward Curtin
The Coming Wars to End All Wars
Missy Comley Beattie
Message To New Activists
Jonah Raskin
Literary Hubbub in Sonoma: Novel about Mrs. Jack London Roils the Faithful
Binoy Kampmark
Frontiersman of the Internet: John Perry Barlow
Chelli Stanley
The Mirrors of Palestine
James McEnteer
How Brexit Won World War Two
Ralph Nader
Absorbing the Irresistible Consumer Reports Magazine
Cesar Chelala
A Word I Shouldn’t Use
Louis Proyect
Marx at the Movies
Osha Neumann
A White Guy Watches “The Black Panther”
Stephen Cooper
Rebel Talk with Nattali Rize: the Interview
David Yearsley
Market Music
FacebookTwitterGoogle+RedditEmail