NoaIzumiThe Stamp of Disapproval, with the Smell of Deceit, from Investor's Business Daily
January 31st 2009 03:28
Investor’s Business Daily weighs in on the new stimulus package. Apparently they think less-than-truthful comments carry a lot of weight.
Stamp of Disapproval, by IBD
“’(F)ood stamps and unemployment insurance, which affect the people in the states, are necessary at this time when funds are short and the economy is down, (and) actually have the most stimulative effect on the economy,’ Pelosi said in a telephone press conference on Tuesday. Only if you can buy an American-made SUV with them”
According to Douglas Elmendorff, head of the Congressional Budget Office, increased money for programs like food stamps and unemployment insurance actually have a large effect on the GDP, because the money enters the economy relatively quickly, causing an immediate stimulus.
Really Long Link (PDF)
According to Mark Zandi, Chief Economist of Moody’s Economy.com, money spent on food stamps and unemployment insurance has a larger effect on GDP than any tax cut.
Really Long Link (PDF)
“For a proposal that's supposed to jump-start the economy, the proposal only spends one-seventh of the money in the first year, and what it does spend on actual job-creating activities will take years to trickle down throughout the economy”
Technically true, if you look at spending only (not at revenue reduction, i.e. tax cuts), and define the first year as the eight months until the end of the fiscal year (Sept. 30), but in the next fiscal year, 2010, over a third of the money ($225 billion) will be spent. Looking at the entire stimulus, over a fifth of the money goes into the economy before the end of the fiscal year, with another 44% added in fiscal year 2010.
Really Long Link (PDF)
“Among the things we need to do is cut corporate tax rates”
According to Mark Zandi, in the above link, cutting corporate tax rates is one of the least effective things you can do, yielding only thirty cents of GDP for every dollar of tax cut.
“We also need to cut taxes on small businesses.."
Unmentioned by IBD, the package does cut taxes on small businesses, to the tune of $50 billion.
Really Long Link
“In 1997, he (President Clinton) lowered the rate to 20% from 28%. By 1998, the first full year in which the lower capital gains rates were in effect, venture capital activity reached almost $28 billion, more than a threefold increase over 1995 levels, and by 1999, it had doubled yet again.”
Not saying they’re entirely wrong, but it’s just really irritating when they say it like that, as if the change in taxes was the only reason that venture capital increased. Did they forget the whole dot com revolution thing? Or are they saying that it never would have happened but for capital gains tax cuts?
And according to some economists, a capital gains tax cut isn’t the right thing for this situation.
Really Long Link
Stamp of Disapproval, by IBD
“’(F)ood stamps and unemployment insurance, which affect the people in the states, are necessary at this time when funds are short and the economy is down, (and) actually have the most stimulative effect on the economy,’ Pelosi said in a telephone press conference on Tuesday. Only if you can buy an American-made SUV with them”
According to Douglas Elmendorff, head of the Congressional Budget Office, increased money for programs like food stamps and unemployment insurance actually have a large effect on the GDP, because the money enters the economy relatively quickly, causing an immediate stimulus.
Really Long Link (PDF)
According to Mark Zandi, Chief Economist of Moody’s Economy.com, money spent on food stamps and unemployment insurance has a larger effect on GDP than any tax cut.
Really Long Link (PDF)
“For a proposal that's supposed to jump-start the economy, the proposal only spends one-seventh of the money in the first year, and what it does spend on actual job-creating activities will take years to trickle down throughout the economy”
Technically true, if you look at spending only (not at revenue reduction, i.e. tax cuts), and define the first year as the eight months until the end of the fiscal year (Sept. 30), but in the next fiscal year, 2010, over a third of the money ($225 billion) will be spent. Looking at the entire stimulus, over a fifth of the money goes into the economy before the end of the fiscal year, with another 44% added in fiscal year 2010.
Really Long Link (PDF)
“Among the things we need to do is cut corporate tax rates”
According to Mark Zandi, in the above link, cutting corporate tax rates is one of the least effective things you can do, yielding only thirty cents of GDP for every dollar of tax cut.
“We also need to cut taxes on small businesses.."
Unmentioned by IBD, the package does cut taxes on small businesses, to the tune of $50 billion.
Really Long Link
“In 1997, he (President Clinton) lowered the rate to 20% from 28%. By 1998, the first full year in which the lower capital gains rates were in effect, venture capital activity reached almost $28 billion, more than a threefold increase over 1995 levels, and by 1999, it had doubled yet again.”
Not saying they’re entirely wrong, but it’s just really irritating when they say it like that, as if the change in taxes was the only reason that venture capital increased. Did they forget the whole dot com revolution thing? Or are they saying that it never would have happened but for capital gains tax cuts?
And according to some economists, a capital gains tax cut isn’t the right thing for this situation.
Really Long Link
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