Obama stimulus bears a closer look
President-elect Barack Obama emphasized infrastructure when he spoke of his stimulus plan last week. But when it comes to such spending, Commentator Will Wilkinson worries about the risk of oversight failure.
Commentator Will Wilkinson (The Cato Institute)
More on Commentaries, America's Financial Crisis
TEXT OF COMMENTARY
Bill Radke: Building highways and infrastructure are key parts of President-elect Obama's plan to stimulate the weak economy. Obama was on Capitol Hill yesterday lobbying lawmakers to act quickly on the massive economic stimulus measure. Details of the entire package are still being hammered out, but according to commentator Will Wilkinson, some of those details bear a closer look.
Will Wilkinson: Last week in his big economic stimulus speech, President-elect Barack Obama promised less waste and a sunny new climate of transparency. Obama says, "We'll invest in what works." This week, we're asking, "So, what works?"
The simplest stimulus plan is a temporary cut in the Social Security payroll tax. This would leave workers with more take-home pay and reduce employments costs, at once boosting consumer spending and encouraging jobs. It can be enacted with a stroke of the pen, and just as swiftly reversed. This kind of targeted tax cut works better than an influx of government spending to lift an economy from recession.
While he did call for some tax cuts, Obama pushed even harder for massive new public infrastructure spending, which is very complicated, and not at all quick. Maybe it's a good idea in the longer run, but it's just too slow to work as stimulus.
And it's worse than "won't work." New roads, bridges, and electric grids requires the government to sign thousands of contracts and cut thousands of checks. Now think about the missing billions in Iraq. Big-ticket government contracting is just the kind of process where political corruption thrives, where regulatory oversight fails, especially if we're going for speed. If infrastructure is worth doing, it's worth doing smartly, deliberately, and with scrupulous oversight.
Lord knows we need more transparency and less graft. But some policies, like the payroll tax cut, are easily and transparently administered. Others, like blitzkrieg infrastructure spending, create the dark institutional mazes where Halliburtons scurry and thrive.
Maybe Obama does want to let the sunshine in, but little on his policy wish list really works as stimulus. Trying to push it all through under the cover of crisis threatens to leave already abused taxpayers holding another whopping bill.
Radke: Will Wilkinson is a fellow at the Cato Institute.
Comments
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From Neptune, NJ, 02/25/2009
Where do I get a mortgage with 3% down and credit score of 580. I have that and get turn down the banks say my scores are to low please tell me where I can go. I found a home I could afford I am a Paralegal with two children one whom is handicapp and we are in a one bedroom apt because we could not find a home . I can buy a home for 330,000 I do have 20,000 in savings working two jobs and one for bills and one for saving up the down payment we need our own home what bank do I apply to.
From Ventura, CA, 01/19/2009
Robert Reich has been advocating cuts in payroll taxes ever since the recession started about three years ago. Now we have the Cato "conservative" parroting the same message.
Given the fact that EVERY idea and theory that the Cato Institute had been advocating since it came into existence has been thoroughly discredited by now, Wilkinson's shameless plagiarism is understood.
Marketplace's reasons for airing such plagiarism, however, are NOT understood. The Cato Institute is not paying Marketplace enough money to buy the credibility that Marketplace brings it.
The Cato Institute, The Heritage Foundation and The American Enterprise Institute have all distinguished themselves with a singular record of total failure in economic and social analysis. If you eliminate these guys from Marketplace, nobdy will miss them.
It is the fact that you keep them on the air that annoys the hell out of your intelligent listeners. If you keep failed analysts on the air, Marketplace's credibility will suffer.
A propos of this fact was Warren Buffett's ringing endorsement of Obama's economic plan this morning on CNBC.
Payam Minoofar, Ph.D.
PS I wonder why nobody at the Cato Institute was demanding a closer look at Bush's failed economic policies? Oh, wait, that's because Cato was the biggest proponent of the said failed policies. PNM
From NH, 01/15/2009
Stimulus Package - Housing Crisis
There are numerous consumers who have good jobs; good credit and need to buy a home (have outgrown their existing housing). Unfortunately, many are not aware of the current FHA programs which offer the potential home buyer a fixed rate mortgage (currently 5%), down payment of 3.5% (which can be gifted and paid back through the $7500 tax credit), credit scores of 580>.
The media and so called "industry experts" continually state that "mortgage funds are difficult to obtain; you need a 10-20% down payment and 700+ credit scores."
If the correct message (not spin) was heard by the consumer and educated as to the opportunity to solve their housing need, we could jump start the market through first home purchases. This would filter up through the real estate economy and "move-up" buyers could buy/sell, builders could build, loan officers, lenders, Realtors, movers, etc. would all earn a paycheck.
The “talking point” for those in our industry and related should be – A buyer can purchase a home with 3.5% down, a credit score of >580 and obtain a fixed rate mortgage at 4 7/8%. No bailout, no additional tax payer money, no smoke and mirrors.
Blog
http://fdoleac.activerain.com/post/876568/call-to-action-we-can-change-the-message
From Palm Beach Gardens, FL, 01/15/2009
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From Bethel, CT, 01/14/2009
By official projections, the Social Security Trust Fund will be exhausted by 2041. This may not be just around the corner, but it hardly seems a good idea to widen the funding gap now, in the last working years of early baby boomers. Unless you want to bankrupt the system...
From IL, 01/14/2009
Finally someone makes some simplistic
sense!!!!!
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