Will Another $50 Billion Stimulus Kick-Start Our Economy?

Jobs.  Jobs.  Jobs.  It’s at the top of all the headlines this week.  It’s the number one story and it’s being debated coast-to-coast.  President Obama is proposing another $50 Billion stimulus package for roads, runways, and railways to boost our economy - in other words – to create jobs by building our transportation infrastructure.  The president is also proposing a $200 Billion tax credit for business in the form of a short-term research and experimentation tax credit that lasts through 2011.  That’s a temporary boost to business.  Will such a short-term business tax credit boost our economy?  Will another $50 Billion stimulus package kick-start our economy?  Let’s talk about it now …

As The Wall Street Journal reports, we have about 14.9 million people unemployed.  There are 8.9 million involuntary part-time workers.  Right now, the unemployment rate is 9.6%.  If we include other people such as discouraged workers and part-time workers who can’t find full-time jobs, it jumps to almost 17%.  

Just imagine, one in seven Americans can’t find a full-time job!!!  That’s terrible for those suffering without a job and it’s awful for the economy as a whole.

The big question this week is will another tax credit plus another $50 Billion stimulus package change all this.  The answer from studying economics is NO!!!

The Wall Street Journal recounts some of the data …

Stimulus Package #1 increased Federal spending and offered temporary tax breaks.  The cost was $168 Billion.  Did it work?  The answer is NO!!!

Stimulus Package #2 was a combination of spending on social programs and one-time tax rebates for an incredible cost of about $800 Billion.  Did it work?  The answer is NO!!!

Stimulus Programs #3, #4, #5, #6, etc. including Cash-for-Clunkers, Home Buyer’s Tax Credits, Mortgage Payment Relief, Unemployment Benefits Extensions (now up to an astounding 99 weeks), etc.  Did they work?  It’s true that in places, they had some positive effects, but typically they were very minor or temporary effects.  Overall, did they work?  The answer is NO!!!

Keynesian economics has proven itself not to work year after year, in case after case, in country after country.  Why do we keep trying the failed policies of Keynesian economics?

The real answer to boost our economy rapidly and to dramatically increase the number of new jobs comes from pro-growth economics.  We need to cut taxes on economic growth.  We need to cut personal income taxes.  We need to cut corporate income taxes.  Plus, we need to cut capital gains taxes.  All tax cuts should be on a permanent basis.  Everyone needs to feel secure about the future.  We need to create a pro-growth economy based on economic freedom, not command-and-control and capricious big government policies.

By the way, allowing the Bush tax cuts to expire next year will tend to increase unemployment further.  It’s a recipe for further economic hardship. 

Choosing the Good Life Blog by Gerard Francis Lameiro, Ph.D.