Heritage economist testifies about recovery
January 22, 2009| By Nathaniel Ward
Heritage Foundation economist Bill Beach testified last week before the Economic Recovery Working Group on Capitol Hill about an alternative to the Left's big-government economic "stimulus" package.
Beach suggested an alternative to the Left's plan to spend $850 billion on economic recovery:
- Extend the 2001 and 2003 tax reductions for as long as possible -- at least through 2013 -- to prevent tax increases. Better yet, make the tax cuts permanent.
- Reduce tax rates on individuals, small businesses and corporations through 2013 by lowering the top rate by 10 percentage points and reducing rates by similar amounts for taxpayers with lower income levels.
This would give employers the incentive to invest money and create genuinely new jobs.
Heritage's Rob Bluey reports that "the hearing came a week after President-elect Barack Obama invited alternative suggestions for promoting economic growth."
Many on the Left see the proposed $850 billion spending package as the right medicine for an ailing economy. They say it would be a new New Deal that would restore the country's economic footing. But this gets the history wrong.
Writing with Heritage's Ken McIntyre, Beach explains that "the New Deal failed. Massive spending on public works programs didn't erase historic unemployment. It didn't produce a recovery. And neither will a 'new' New Deal."
A Heritage chart distributed to the news media makes this point very clear:
Many important questions about the stimulus bill remain unanswered. For example, why does it cost so much to "create" each new job? And if deficit spending really boosted the economy as the bill's proponents claim, why is recovery not now underway?
Furthermore, this massive new spending bill could end up serving special interests at taxpayer expense. "As Congress and President Barack Obama move closer to devising a federal fiscal stimulus package," Heritage's Ron Utt reports, "Washington's lobbyists and many of their benefactors in Congress have ramped up efforts to make sure that their clients and preferred constituents get a piece of the action."
Nathaniel Ward is the Editor of MyHeritage.org—a website for members and supporters of The Heritage Foundation.
