President Obama has presented a series of proposals for new programs that he says will help restart the economy. The president may be absolutely right, but he knows that odds that the legislation that will grow from the ideas will not pass before the midterm elections. There may be members of his own party who do not want to espouse more government expenditures in a year in which voters are leery about the federal deficit.
At the heart of the new proposals are $200 billion in tax write-offs for businesses, $50 billion in infrastructure expenditures, and programs to increase and permanently extend a tax credit for business R&D that would cost nearly $100 billion over the next decade
The plans may work perfectly or have more modest results the way that the earlier $787 billion stimulus did.
The new proposals are something of a head fake meant to pit the president’s plan against what the public may view as a Congress that will not do more to help the American people and American business. That does not square with the fears of more deficit expenditures, so it is hard to see how the Administration believes that it can convince voters that it is in the right by pushing more stimulus while opponents are in the wrong.
Many well-regard economists have made the point that the first stimulus was too small and ineffectively run to not just slow the recession but substantially increase GDP. There is nothing new in the argument that the money marshaled to create a real turnaround in the economy should have been closer to $1 trillion or better. The Administration will not come out and admit to that, which is too bad. It might have a better chance to convince voters if it acknowledged that what it thought would work did not.
Voters are more likely to accept an admission of fault followed by a way to rectify that fault than a new set of programs that are presented as solutions that have nothing to do with the faltering of earlier plans.
Douglas A. McIntyre
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