Trickle Down vs. Seep Up economics

Republicans trying to help the economy have pushed for “trickle down economics.” That is, help businesses, who, in turn, will hire more people, which will increase prosperity for all. Democrats tend to favor what we might term “seep up economics.” (Hey, maybe there is my contribution of a new term. I couldn’t find it on google.) The idea is to help individual workers, who, in turn, will have money to spend that will help businesses.

The cornerstone of Barack Obama’s stimulus plan is massive spending to repair the nation’s roads and bridges. Also money to weatherproof buildings, build new school buildings, etc. In other words, much of the money and the job creation will go to construction companies.

I worked construction putting myself through college, and I honor those workers. That industry requires highly-skilled and specialized experts–not just anyone can work steel or operate a crane or survey gradients–as well as lower-skilled laborers like I was. Those latter jobs, though, are taken up largely today by not-always-legal immigrants. Contractors say that Americans often don’t want those jobs, not finding hauling lumber, digging ditches, and pouring concrete all that fulfulling. (I did all of those jobs, to the great benefit of my character!) Will massive government spending to create these kinds of jobs actually employ 4 million Americans, as planned, or just create an even bigger market for illegal immigrants?

How would a huge infusion of cash into road construction help the typical laid off factory worker or the downsized company executive or the busted Wall Street investor? I suppose the theory is that a construction boom would help the factories that make the equipment and raise the stock of the companies that own the factories, which, in turn, would help other businesses. But
do you think seep up economics like this will really give the economy the help it needs?

All roads lead to Washington

The new urbanist scholar Joel Kotkin points out that Washington, D.C. is rapidly becoming the center of all American power. Used to, America had many different centers of power: Each state had its governmental capital. In business, the financial industry had New York City; automobiles had Detroit; oil had Dallas; the entertainment industry had Hollywood; computers had Silicon Valley. But now, Kotkin writes, each sector of American government, economics, and culture is becoming more and more dependent on an increasingly all-powerful governmental bureaucracy located in Washington, D.C. Thus, Washington is changing from its old limited function into a centralized national city on the order of London, Paris, and Moscow. Kotkin’s reflections on the role of cities is fascinating, but the political implications of what he says and his figures of speech are rather ominous:

No longer a jumped-up Canberra or, worse, Sacramento, it seems about to emerge as Pyongyang on the Potomac, the undisputed center of national power and influence. As a new president takes over the White House, the United States’ capacity for centralization has arguably never been greater. But it’s neither Barack Obama’s charm nor his intentions that are driving the centrifugal process that’s concentrating authority in the capital city. It’s the unprecedented collapse of rival centers of power.

This is most obvious in economic affairs, an area in which the nation’s great regions have previously enjoyed significant autonomy. But already the dukes of Wall Street and Detroit have submitted their papers to Washington for vassalage. Soon many other industries, from high-tech to agriculture and energy, will become subject to a Kremlin full of special czars. Even the most haughty boyar may have to genuflect to official orthodoxy on everything from social equity to sanctioned science.

At the same time, the notion of decentralized political power — the linchpin of federalism — is unraveling. Today, once proudly independent — even defiant — states, counties and cities sit on the verge of insolvency. New York and California, two megastates, face record deficits. From California to the Carolinas, local potentates with no power to print their own money will be forced to kiss Washington’s ring.

“Family planning” as economic stimulus

Speaker of the House Nancy Pelosi wants hundreds of millions of dollars in the economic stimulus bill to expand the use of contraceptives and family planning services. So she said to George Stephanopolis on the ABC interview show “This Week.”

Advice for Obama on the economy

What do YOU think the new president and his administration should do about the country’s economic woes?

Madoff debacle hurts Planned Parenthood

According to this report, the Picower Foundation, a $1 billion Florida foundation devoted to supporting “reproductive rights,” has gone under, shutting down completely because its investments were in Bernard Madoff’s ponzi scheme. The foundation was a prime funder of Planned Parenthood. So now Planned Parenthood, the nation’s largest abortion provider, is having to lay off 20% of its employees!

Obama as tax-cutter

Reports indicate that part of Barack Obama’s economic stimulus plan will be a whopping is$300 Billion Tax Cut. That’s bigger than the Bush tax cuts:

President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion of tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.

The size of the proposed tax cuts — which would account for about 40% of a stimulus package that could reach $775 billion over two years — is greater than many on both sides of the aisle in Congress had anticipated. It may make it easier to win over Republicans who have stressed that any initiative should rely more heavily on tax cuts rather than spending.

President-elect Barack Obama and congressional Democrats are crafting a plan to offer as much as $310 billion of tax cuts.

The Obama tax-cut proposals, if enacted, could pack more punch in two years than either of President George W. Bush’s tax cuts did in their first two years. Mr. Bush’s 10-year, $1.35 trillion tax cut of 2001, considered the largest in history, contained $174 billion of cuts during its first two full years, according to Congress’s Joint Committee on Taxation. The second-largest tax cut — the 10-year, $350 billion package engineered by Mr. Bush in 2003 — contained $231 billion in 2004 and 2005.

OK, they will have an income cap and will include credits to people who do not pay taxes. But still. Isn’t this a good thing? Will this make conservatives rally around the new president?