Dear Rod,
I hope you'll take a moment to review RNC Chairman Michael Steele's weekly Republican address. Thank you for your continued support.
Click here to download the mp3 audio.Click here to watch the video.
Transcript:
"This is Michael Steele, Chairman of the Republican National Committee. Democrats have controlled both branches of government for less than a month. And you have to wonder if all that power has gone to their heads.
"For the last two weeks, they've been trying to force a massive spending bill through Congress under the guise of economic relief.
"All of us -- Republicans and Democrats -- agree the government must act to kick-start the American economy. American families are doing their best to balance their own budgets and pay their mortgages.
"The fastest way to help those families is by letting them keep more of the money they earn. Individual empowerment: that's how you stimulate the economy.
"But the Democrats have a different philosophy. Instead of leaving money in the family checkbook, they want to send it to Washington, run it through a slow and inefficient government, and hope that does some good.
"When families keep the money, they spend it, save it, or invest it. And the private sector economy benefits when families and businesses buy consumer goods or invest it for the future. But when Washington spends the money, some of it may flow into the economy, but all too often, much gets wasted.
"Democrats in Congress want a one-trillion dollar spending bill. You've heard about the pork-barrel programs they want to fund... 45 million dollars for ATV trails and removal of fish passage barriers is one that caught my eye. Exactly what is a fish passage barrier and why does it cost 45 million dollars to stimulate the economy with it?
"That's why Republicans in the House voted against uncontrolled spending. This is not a bragging point, but rather a statement that at least Republicans would stand with the American taxpayer.
"But voting 'no' is not enough... and Republicans have offered innovative ideas to help struggling families and small businesses. We've offered plans to spark job creation and investment through lower taxes, to stop the taxation of unemployment benefits, and to help Americans keep their jobs and their homes.
"The comprehensive Republican plan would lower taxes for all working American families. If you're married, the first 16,750 dollars you make this year will be taxed at ten percent. Why don't we cut that rate in half to give instant buying power to every working American family?
"Good ideas... lots of them... all left out of this plan by the Democrats in Congress.
"Republicans stand ready to work with reasonable Democrats to do what is right for America.
"But it will take more than bipartisan words from the President. It will require fair-minded action from Democrats in Congress.
"Thanks for listening."
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On the surface, what Mr. Steele says seems to make a lot of sense. Individual empowerment is a corner stone of our country and our economy. The question is, which individuals do you empower and how do you empower them?
ReplyDeleteRecently, I've been reading a bit of Mark Zandi's work. Mark is the Chief Economist for Moody's Economy.com and was an adviser to Sen. McCain's campaign.
He talks a lot about the multipler effect. For every dollar spent on stimulus, how much of it actually ends up stimulating the economy. The numbers he comes up with are very interesting. For example, for every dollar in accelerated depreciation tax benefits, .27 comes back into the economy.
However, for every dollar spent on temporary increases in food stamps, 1.73 comes stimulates the economy.
To a certain extent, this makes sense. People needing food stamps spend the money right away and they spend it ways that have the most effect. The money goes to local businesses which in turn spend their earnings in the local economy.
Accelerated depreciation just doesn't have the same effect.
Of course, spending money on food stamps, while good for short term stimulation of the economy isn't a good long term goal.
In terms of long term goals, increased infrastructure spending makes our country strong and has a great multipler effect than any tax cuts. The multipler for infrastructure spending is 1.59.
The closest we get for tax cuts is a payroll tax holiday which provides a multiplier of 1.29.
For more information, check out this paper by Mr. Zandi
Reply to Orient Lodge,
ReplyDeleteThanks for commenting. I will follow the Economy link and read Mark Zandi’s commentary.
I think there are three important factors in judging the stimulus plan: one, the multiplier effect; two, the speed with which the money can enter the economy; and three, it should not award or create incentives for mismanagement or create dependency.