Thread title to get attention. Obviously he's not stupid, by ANY measure... but his speech last night was about as partisan as you can get... and I'm REALLY pissed of... I thought we were moving past this, and while pointing the finger at Republicans (or just about anyone who is for reducing taxes) for being partisan, he exhibits the most partisan and misleading traits himself.
Is spending stimulus?? Yes. Is stimulus spending? Not necessarily.
Let me give you an easy example where tax incentives are better than government spending. This can be applied to dozens of instances, but this one is easy.
Part of the spending bill I saw was for the government to spend $250mm to buy new vehicles. Is that stimulative?? Absolutely. However, since they buy in bulk, no salesmen make money. They negotiate for the lowest cost, and generally buy the cars with the fewest options. No GPS, no custom wheels, no tinting, basic radio. What if, instead, they gave the public $250mm to spend on new vehicles. Chances are we'd add options and use salesmen. The auto companies would still sell cars, but more industries would be helped... GPS, Radio, wheel and tire... alarms... salesmen etc.
WHAT IF, and I know this has been put out there... we instead provided tax incentives to buy cars. As an example, make the interest tax deductible... provide rebates for trading in less efficient models... and even if we added grants/handouts/cash back incentives.. our $250mm in public monies would go MUCH farther and do MUCH more... because it would be added to monies voluntarily spent by people. Further, because of the deductibility of the interest, banks would be encouraged to loan (isn't that the whole purpose??) because now they can charge 8% when before they could only get 6%, yet the consumer is still better off because of the deduction... you could even make the deduction a rebate for the poor if you wanted... an interest free loan for a new car.
Imagine this... a working poor person needs a car and owns a 72 Buick that runs on leaded gas and gets 2MPG. By trading it in and buying a new $15,000 30mpg Chevy Malibu, he gets blue book for the car... let's say $1,000... plus a $1,000 government "incentive" for trading in an old car... plus a check in hand as he walks out for $2,000 in a government incentive... $2,000 in his pocket and a bank loan for $14,000 at 10%. He makes payments of $199/month and gets a rebate check from the government for the interest of $25/month for 48 months. If he doesn't make his payments, the car gets "put" back to the government at let's say 1/2 of cost. What does this cost the government? $3,000 instead of $15,000 if they simply bought the car themselves... PLUS perhaps they end up paying $7,500 for the car in the next year or two... or perhaps an additional $1200 in interest subsidy if the guy pays it off. WORST CASE, they have added roughly 1/3 to the tax money while stimulating MANY more industries than if they bought it themselves... BEST case, they stimulate the economy more AND clean the environment for perhaps 1/4 the cost of the "spending" plan
If people can't understand this, then I've done a poor job explaining it.
Spending IS stimulative, but it isn't necessarily the best way to stimulate... and Obama is absolutely wrong, and completely misleading the American public to claim that "the other side" is the only one engaging in politics of the past.
I'm mad because I was PROMISED this was over... and in a speech chastising opponents of his plan, he proves he is no better.