Obama’s new stimulus plan

President Obama will soon propose a new economic stimulus plan, one that will combine tax cuts, lots of new spending, AND deficit reduction:

President Obama has decided to press Congress for a new round of stimulus spending and tax cuts as he seeks to address the great domestic policy quandary of his tenure: how to spur job growth in an age of austerity.

Obama will lay out a series of ideas in a major address right after Labor Day, when he and  a largely antagonistic Congress will return from vacation, the White House said Wednesday.

The president is thinking about proposing tax cuts for companies that hire workers, new spending for roads and construction, and other measures that would target the long-term unemployed, according to administration officials and other people familiar with the matter. Some ideas, such as providing mortgage relief for struggling homeowners, could come through executive action.

Obama also plans to announce a major push for new deficit reduction, urging the special congressional committee formed in the debt-ceiling deal this month to identify even more savings than the $1.5 trillion it has been tasked with finding.

In packaging the two, he will make the case that short-term spending can lead to long-term savings.

“We can’t afford to just do one or the other. We’ve got to do both,” Obama said Wednesday in this farming town in northwestern Illinois, population 671, the last stop of his three-day bus tour through the rural Midwest.

via Obama to issue new proposals on job creation, debt reduction – The Washington Post.

Notice how even Democrats see that tax breaks are necessary to improve the economy.  But consider the main approach:  Both more spending AND more cutting.  That should work.

About Gene Veith

Professor of Literature at Patrick Henry College, the Director of the Cranach Institute at Concordia Theological Seminary, a columnist for World Magazine and TableTalk, and the author of 18 books on different facets of Christianity & Culture.

  • http://necessaryroughness.org Dan at Necessary Roughness

    IIRC we tried stimulating the economy with road projects. That worked well…

  • http://necessaryroughness.org Dan at Necessary Roughness

    IIRC we tried stimulating the economy with road projects. That worked well…

  • Steve Billingsley

    Really? Are we going to actually see a plan this time? That would be a change.

  • Steve Billingsley

    Really? Are we going to actually see a plan this time? That would be a change.

  • Joe

    not hopeful.

  • Joe

    not hopeful.

  • Kirk

    “Both more spending AND more cutting. That should work.”

    Ronald Reagan would approve

  • Kirk

    “Both more spending AND more cutting. That should work.”

    Ronald Reagan would approve

  • Tom Hering

    I think I finally know what it is about Obama that bugs me. He’s a management type – the Manager In Chief – who proposes a little bit of this, and a little bit of that, adding up to a lot of “not much.” He believes America should be a team, and teamwork is the answer to everything, and what America needs most is the equivalent of an inspirational seminar (“Yes we can!”). Of course, his day-to-day style is to sit in his office (fondling a football or a basketball), call people in (from congress or the senate or the business community), and run down the list of ways they’re falling short (vaporizing morale).

    Most of us know the type, having worked for them. Completely lacking in spine and vision. He says he wants to stand up for the people under him, and he swears he’s tried to, but his hands are tied.

    The employees (citizens) who don’t like him, hate him. The employees who want to like him, and be liked by him, keep excusing him.

    God grant us an actual leader. Of the liberal persuasion. :-D

  • Tom Hering

    I think I finally know what it is about Obama that bugs me. He’s a management type – the Manager In Chief – who proposes a little bit of this, and a little bit of that, adding up to a lot of “not much.” He believes America should be a team, and teamwork is the answer to everything, and what America needs most is the equivalent of an inspirational seminar (“Yes we can!”). Of course, his day-to-day style is to sit in his office (fondling a football or a basketball), call people in (from congress or the senate or the business community), and run down the list of ways they’re falling short (vaporizing morale).

    Most of us know the type, having worked for them. Completely lacking in spine and vision. He says he wants to stand up for the people under him, and he swears he’s tried to, but his hands are tied.

    The employees (citizens) who don’t like him, hate him. The employees who want to like him, and be liked by him, keep excusing him.

    God grant us an actual leader. Of the liberal persuasion. :-D

  • Dennis Peskey

    What a wonderful fantasy – we can have our cake and eat it also. Unfortunately, even if Ronald would approve, it violates the Law of Noncontradiction. If we want to save – then save; if we choose to spend, then spend we will do; what we can not do is spend to save.
    Pax,
    Dennis

  • Dennis Peskey

    What a wonderful fantasy – we can have our cake and eat it also. Unfortunately, even if Ronald would approve, it violates the Law of Noncontradiction. If we want to save – then save; if we choose to spend, then spend we will do; what we can not do is spend to save.
    Pax,
    Dennis

  • Kirk

    @6 = yes

    Decreasing debt means decreasing spending while increasing revenue. It’s as simple as that.

  • Kirk

    @6 = yes

    Decreasing debt means decreasing spending while increasing revenue. It’s as simple as that.

  • http://jdueck.net Joel D.

    Ahead of most Republicans, Obama has realized that tax breaks and spending are the same thing. Looks like he’s all set to triangulate the heck out of this.

    By the way, your blog’s favicon looks like I squished a fruit fly on my monitor. That gothic ‘C’ in your header image would be a better choice.

  • http://jdueck.net Joel D.

    Ahead of most Republicans, Obama has realized that tax breaks and spending are the same thing. Looks like he’s all set to triangulate the heck out of this.

    By the way, your blog’s favicon looks like I squished a fruit fly on my monitor. That gothic ‘C’ in your header image would be a better choice.

  • WebMonk

    There’s the old joke about a sign in a store:

    Here -
    You can have it done quickly!
    You can have it done right!
    You can have it done cheaply!
    (Pick two.)

    The government can:

    Cut taxes!
    Spend more!
    Lower the deficit!

    You may only pick two though. Picking three is fantasy land. I have an idea how the fantasy can be spun as being plausible, but such a spinning is just smoke and mirrors.

    The theoretical BEST that could be done is to do all three options in different pairs at different times and hopefully everything will work out perfectly so that all three actually do get accomplished over a long stretch of time. I don’t think ANY government has EVER done that. That requires nigh perfect foresight and prediction and knowledge of all effects and, and, and. Fantasy land.

    Sometimes companies can do something like that, but that’s because they are producing a product or service which …. oh never mind. I was about to go off on a screed. Y’all can probably see where it was going. Consider yourselves screeded.

  • WebMonk

    There’s the old joke about a sign in a store:

    Here -
    You can have it done quickly!
    You can have it done right!
    You can have it done cheaply!
    (Pick two.)

    The government can:

    Cut taxes!
    Spend more!
    Lower the deficit!

    You may only pick two though. Picking three is fantasy land. I have an idea how the fantasy can be spun as being plausible, but such a spinning is just smoke and mirrors.

    The theoretical BEST that could be done is to do all three options in different pairs at different times and hopefully everything will work out perfectly so that all three actually do get accomplished over a long stretch of time. I don’t think ANY government has EVER done that. That requires nigh perfect foresight and prediction and knowledge of all effects and, and, and. Fantasy land.

    Sometimes companies can do something like that, but that’s because they are producing a product or service which …. oh never mind. I was about to go off on a screed. Y’all can probably see where it was going. Consider yourselves screeded.

  • WebMonk

    Joel D – no they aren’t the same thing by a long shot. They can be similar in some situations, but they are not anywhere near the same thing.

  • WebMonk

    Joel D – no they aren’t the same thing by a long shot. They can be similar in some situations, but they are not anywhere near the same thing.

  • http://steadfastlutherans.org/ SAL

    I think we’d all be better off if the President admitted to himself he’s had no idea what to do about the economy in 2009, 2010 or 2011. If he did that he might be a little more hesitant to blow trillions more of our wealth on actions unlikely to benefit the commonwealth.

    Stimulation is not what the economy needs. Stimulating the economy makes as much sense as giving a junkie more cocaine to handle withdrawal. Our economy eventually has to get by without stimulus (cocaine). The longer we put that off the greater our debt, the more distorted and weakened our private sector economy.

  • http://steadfastlutherans.org/ SAL

    I think we’d all be better off if the President admitted to himself he’s had no idea what to do about the economy in 2009, 2010 or 2011. If he did that he might be a little more hesitant to blow trillions more of our wealth on actions unlikely to benefit the commonwealth.

    Stimulation is not what the economy needs. Stimulating the economy makes as much sense as giving a junkie more cocaine to handle withdrawal. Our economy eventually has to get by without stimulus (cocaine). The longer we put that off the greater our debt, the more distorted and weakened our private sector economy.

  • steve

    Kirk, #7, how do you increase revenue? Increase taxes to the point that it makes more sense to do business or buy goods elsewhere thus reducing revenue? Lower taxes to the point that no matter how much more productivity there is there won’t be enough revenue coming in to pay for everything? Or somewhere in between? It’s getting that ‘somewhere in between’ right that Reagan would have approved of.

  • steve

    Kirk, #7, how do you increase revenue? Increase taxes to the point that it makes more sense to do business or buy goods elsewhere thus reducing revenue? Lower taxes to the point that no matter how much more productivity there is there won’t be enough revenue coming in to pay for everything? Or somewhere in between? It’s getting that ‘somewhere in between’ right that Reagan would have approved of.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “Lower taxes to the point that no matter how much more productivity there is there won’t be enough revenue coming in to pay for everything?”

    The lower tax types think that if folks can keep their own money and choose what to spend it on, then their spending will create jobs and the government won’t need to spend so much on handouts and make work bureaucracy. The problem with this is that it will create an extremely unequal society and our most beloved ideology is equality. So, there is a fundamental conflict between efficient market and American ideology. Since it is a conflict, it has an outcome, not a solution. The outcome is tax and redistribute to get to a level of equality that is tolerable to American sensibilities.

  • http://www.biblegateway.com/versions/Contemporary-English-Version-CEV-Bible/ sg

    “Lower taxes to the point that no matter how much more productivity there is there won’t be enough revenue coming in to pay for everything?”

    The lower tax types think that if folks can keep their own money and choose what to spend it on, then their spending will create jobs and the government won’t need to spend so much on handouts and make work bureaucracy. The problem with this is that it will create an extremely unequal society and our most beloved ideology is equality. So, there is a fundamental conflict between efficient market and American ideology. Since it is a conflict, it has an outcome, not a solution. The outcome is tax and redistribute to get to a level of equality that is tolerable to American sensibilities.

  • Kirk

    @ Steve

    Absolutely, but the problem is that you can’t have a reasonable discussion about tax increases without a bunch of conservatives running in and yelling “OMG LAFFER CURVE!!” Tax increases don’t automatically amount to the strangulation of business and the advent of socialism. This all or nothing approach that both parties are taking in the budget debate is childish and stupid.

  • Kirk

    @ Steve

    Absolutely, but the problem is that you can’t have a reasonable discussion about tax increases without a bunch of conservatives running in and yelling “OMG LAFFER CURVE!!” Tax increases don’t automatically amount to the strangulation of business and the advent of socialism. This all or nothing approach that both parties are taking in the budget debate is childish and stupid.

  • steve

    sg #13:

    “The lower tax types think that if folks can keep their own money and choose what to spend it on, then their spending will create jobs and the government won’t need to spend so much on handouts and make work bureaucracy.”

    That is true, to a point. Like I said, there’s a happy medium that would keep taxes just high enough to pay for government services while not so high as to inhibit spending and growth. The wild card, of course, is the level of government expenditures that outpaces that happy medium of taxation as a source of revenue. Unfortunately, there appears to be an overabundance of grasshoppers and not enough ants in government.

    “The problem with this is that it will create an extremely unequal society and our most beloved ideology is equality. So, there is a fundamental conflict between efficient market and American ideology. Since it is a conflict, it has an outcome, not a solution. The outcome is tax and redistribute to get to a level of equality that is tolerable to American sensibilities.”

    I don’t think economic egalitarianism is necessarily the form of equality that Americans have historically embraced.

  • steve

    sg #13:

    “The lower tax types think that if folks can keep their own money and choose what to spend it on, then their spending will create jobs and the government won’t need to spend so much on handouts and make work bureaucracy.”

    That is true, to a point. Like I said, there’s a happy medium that would keep taxes just high enough to pay for government services while not so high as to inhibit spending and growth. The wild card, of course, is the level of government expenditures that outpaces that happy medium of taxation as a source of revenue. Unfortunately, there appears to be an overabundance of grasshoppers and not enough ants in government.

    “The problem with this is that it will create an extremely unequal society and our most beloved ideology is equality. So, there is a fundamental conflict between efficient market and American ideology. Since it is a conflict, it has an outcome, not a solution. The outcome is tax and redistribute to get to a level of equality that is tolerable to American sensibilities.”

    I don’t think economic egalitarianism is necessarily the form of equality that Americans have historically embraced.

  • SKPeterson

    sg – Our most fundamental value is not equality, it is liberty. And the desire for equality is equality under the law, not equality of monetary income or social outcomes. What you are espousing is the French egalite which resulted in the exciting and thrilling times known as the Terror.

  • SKPeterson

    sg – Our most fundamental value is not equality, it is liberty. And the desire for equality is equality under the law, not equality of monetary income or social outcomes. What you are espousing is the French egalite which resulted in the exciting and thrilling times known as the Terror.

  • Lou

    Sal, #11 – Yes! It is so frustrating to watch Obama and his people (Geitner, etc) fumble the economy over and over again. He needs to fess up to himself and admit he doesn’t know what he’s doing. A leader who discovers a serious area of weakeness will bring in people who know how to solve the problem. Instead, Obama continues to listen to the very people who got us into the situation we are in today. (George Bush was guilty of the same.)

    “Our economy eventually has to get by without stimulus (cocaine). ” So true. If you keep giving drugs to an addict, eventually they will die or turn into a vegetable. But this is the best Obama can come up with? Maybe he should stay on vacation.

  • Lou

    Sal, #11 – Yes! It is so frustrating to watch Obama and his people (Geitner, etc) fumble the economy over and over again. He needs to fess up to himself and admit he doesn’t know what he’s doing. A leader who discovers a serious area of weakeness will bring in people who know how to solve the problem. Instead, Obama continues to listen to the very people who got us into the situation we are in today. (George Bush was guilty of the same.)

    “Our economy eventually has to get by without stimulus (cocaine). ” So true. If you keep giving drugs to an addict, eventually they will die or turn into a vegetable. But this is the best Obama can come up with? Maybe he should stay on vacation.

  • DonS

    sg — As has been said above by Steve and SKP, America has NOT historically embraced equality of outcomes, or egalitarianism. It has embraced equality of opportunity — a huge difference.

    Taxation for the primary purpose of wealth re-distribution, rather than to fund the essential purposes of government (societal management, public infrastructure, law and order, and defense) is a recent (20th Century) phenomenon in the U.S. And a lousy one that has resolved nothing while putting us on the path to financial ruin through debt — fueled entitlements programs.

    As for the issue of the post, Obama’s plan does NOT involve tax cuts. Yes, he wants a one year extension of the current temporary payroll tax cut, and some silly, useless, and complex “targeted” tax cuts for companies that hire certain types of workers for certain types of jobs (these kinds of social engineering efforts are why are tax code is such a complicated mess) but he also wants an immediate and permanent end to the so-called “Bush” tax cuts — this is a net permanent tax increase.

    We still have never, in our history (at least since WWII), tried an actual government spending cut. We trim the rate of increase and call it a cut, but we have never actually cut overall government spending year over year. NEVER.

    That would be something that would truly stimulate the country, by evidencing that we are taking this ridiculous spending problem seriously.

  • DonS

    sg — As has been said above by Steve and SKP, America has NOT historically embraced equality of outcomes, or egalitarianism. It has embraced equality of opportunity — a huge difference.

    Taxation for the primary purpose of wealth re-distribution, rather than to fund the essential purposes of government (societal management, public infrastructure, law and order, and defense) is a recent (20th Century) phenomenon in the U.S. And a lousy one that has resolved nothing while putting us on the path to financial ruin through debt — fueled entitlements programs.

    As for the issue of the post, Obama’s plan does NOT involve tax cuts. Yes, he wants a one year extension of the current temporary payroll tax cut, and some silly, useless, and complex “targeted” tax cuts for companies that hire certain types of workers for certain types of jobs (these kinds of social engineering efforts are why are tax code is such a complicated mess) but he also wants an immediate and permanent end to the so-called “Bush” tax cuts — this is a net permanent tax increase.

    We still have never, in our history (at least since WWII), tried an actual government spending cut. We trim the rate of increase and call it a cut, but we have never actually cut overall government spending year over year. NEVER.

    That would be something that would truly stimulate the country, by evidencing that we are taking this ridiculous spending problem seriously.

  • Lou

    DonS: “complex “targeted” tax cuts for companies that hire certain types of workers for certain types of jobs (these kinds of social engineering efforts are why are tax code is such a complicated mess)”
    Yes, the tax code is a complicated mess over this type of targeted cut — And, if I may add, this is a part of why the vocation of job seeking is such a horrendus right now. The screening process for whose resume even gets looked at is based on a labrynth of jargon and terminology (and who you know). Only a handful of people who have figured out the magic handshake to get past the application gatekeeper ever even get an interview nowadays. Experience, education and competence have very little to do with finding a job anymore. (I know that was a bit of a side track, but it has to do with “targeting” credits for hiring certain demographics).

  • Lou

    DonS: “complex “targeted” tax cuts for companies that hire certain types of workers for certain types of jobs (these kinds of social engineering efforts are why are tax code is such a complicated mess)”
    Yes, the tax code is a complicated mess over this type of targeted cut — And, if I may add, this is a part of why the vocation of job seeking is such a horrendus right now. The screening process for whose resume even gets looked at is based on a labrynth of jargon and terminology (and who you know). Only a handful of people who have figured out the magic handshake to get past the application gatekeeper ever even get an interview nowadays. Experience, education and competence have very little to do with finding a job anymore. (I know that was a bit of a side track, but it has to do with “targeting” credits for hiring certain demographics).

  • Bob

    It’s all Obama’s fault.

    There –that should satisfy most folks on here.

  • Bob

    It’s all Obama’s fault.

    There –that should satisfy most folks on here.


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