Posted on 12/20/2008 3:09:04 PM PST by SeekAndFind
What is Washington waiting for? The inauguration is less than five weeks away: At the rate we’ve been going, another 500,000 jobs will be lost by then. The downward spiral is deepening and accelerating: Congress and the president must act now.
American families have lost about $11 trillion in net worth as securities and home values have plummeted. This translates into about $400 billion less annual consumer spending, net of government safety-net funding. Exports won’t grow to make this up, as the dollar has strengthened with investors worldwide clamoring for its relative security. Investments won’t make up the gap either, as bank loans and secondary-market financing have shrunk and as fresh equity is virtually non-existent.
So this is surely the time for economic stimulus. But — and this is the crucial point — the government can’t just make itself bigger and more oppressive in the guise of stimulating the economy. That would make matters worse. Nor should we forget that fiscal stimulus is but one part of the solution. As Christina Romer, Barack Obama’s designee as chairperson of the Council of Economic Advisors concluded from her study of the Great Depression, bad monetary policy was its greatest cause and good monetary policy was its most effective cure. The Fed should continue to expand the money supply. And, it should confirm that it will not tolerate deflation — the pain of inflation pales in comparison.
That being said, a stimulus plan is needed without further delay, and there are some things that Republicans should insist on.
The first is that tax cuts are part of the solution. Harvard professor and economist Greg Mankiw points out that recent research confirms that tax cuts have a greater multiplier effect than new spending — more economic bang for the federal buck. We should lower tax rates for middle-income families and eliminate their tax on savings altogether — no tax on interest, dividends or capital gains. Let’s also align our corporate tax rate with those of competing nations. These actions will rapidly expand consumption and investment, and right now, time is of the essence.
On the spending front, infrastructure projects should be a high priority. But because infrastructure projects involve engineering, environmental studies, permitting and contracting, they can take a long time to actually boost the economy. Spending to refurbish and modernize our military equipment is urgently needed, and it has a more immediate impact on the economy. A great deal of our armament was damaged or lost in the Middle East, and the rest is long overdue for maintenance.
We should also invest to free us from our dependence on foreign oil, not by playing venture capitalist, but by funding basic research in renewables, material science, combustion, nuclear reprocessing, and the like. During the 2008 campaign, virtually every candidate agreed on the need for an “Apollo-like mission” to achieve energy independence. Now is the time to start.
Cities and states will clamor for government dollars. Like the Big Three automakers, states should first take advantage of the downturn to do some needed cost cutting and restructuring. State employee numbers, pensions, and health-insurance premium sharing — as well as duplicate and ineffective agencies and programs — should be high on the hit list. State budgets should be brought in line with those of the most efficient of their comparables. And the federal government should look to ease the burden of mandates on states, like Medicaid.
Republicans should also lay down a gauntlet: All new spending projects should be selected by the responsible federal agency according to published criteria, not by congresspersons and senators based upon favors and politics. Republicans should commit to vote no on any stimulus bill with earmarks that have not been voted upon by their entire body.
There is a danger that new spending and deficits will lead to runaway inflation, flight from the dollar, and another economic crisis. It is essential, therefore, that Congress and the president commit to reform entitlement spending as soon as the economy recovers. With the footing of our long term economy at risk, with entitlements already reaching 60 percent of federal spending and with baby boomers nearing retirement, this can be delayed no longer.
We must also be careful to avoid burdening the economy with excessive regulation in response to the need to reform regulatory oversight of the financial sector. Going too far could cripple the entire industry, further tightening the credit markets. And we should make it clear that Washington will not act to virtually impose unions on small business by eliminating the right of workers to vote by secret ballot in the workplace. This “card check” payback for the AFL-CIO’s support of the Democrats would devastate business formation and employment.
The Democrats may want to wait for Obama, but the country needs action now. Republicans can — and must — play an important role in shaping a stimulus bill that makes sense for America and lays a foundation for future prosperity and growth.
--— Mitt Romney is the former governor of Massachusetts.
bump
Thats the former governor of massachusetts that left the state with socialized mandatory health care, a GOP that basically does not exist and gay marriage.
Here's an idea.
Why don't you comment on what he said.
If Romney can continue to put forth his ideas, he will be the nominee of the GOP in 2012 & become President!
Get over it. Romney at least understands economics and has a business head unlike the vast majority of those in Congress.
I will. This is Romney pushing me-too Republican socialism, with a phony veneer of "conservative" talk.
So this is surely the time for economic stimulus.
Like all statists, Romney thinks government is the solution, when in fact it is the problem.
Bleh.
Get ready for the mother of all spending plans in ‘09 by the government. Frankly, I am not very optimistic that the U.S. can recover from this current financial calamity and become a free market system again. The political class is hell bent on economic suicide.
I hope I’m wrong.
Ping!
Wow. A "Republican" Obama.
Well, he would have one thing on Barack...he's a much more accomplished socialist, having given Massachusetts "gay" marriage, homosexualized public schools, an "assault" weapons ban, socialized medicine and $50 taxpayer-subsidized abortions.
Bump!
Wish Mitt was our President ... he makes SENSE.
The other Republicans running for President were LOSERS.
There is a reason why Obama wants Rick Warren as his “religious” guy for his address .... they're pitiful HUMANISTS; not Christians ... .
“B: Wearing magic underpants”
What does this mean? I understand A but not B.
Without reservation.
Please make this loser, socialist, phony, "I'm not sure if I own a gun or not" Romney joker go away for all of 2009. I promise to be really good next year, I really, really do.
>>Thats the former governor of massachusetts that left the state with socialized mandatory health care, a GOP that basically does not exist and gay marriage.
>Here’s an idea.
>Why don’t you comment on what he said.
Amen. I’m not a huge Mitt fan, but I welcome his move to make our party the one with the ideas.
I’ve been saddened by the Blago frenzy and the focus on spitballing the Dims instead of using this as an opportunity to show how we are different, that we have ideas that can work.
In case we hadn’t noticed, this country is in a heap of trouble and we could use some positive action rather than bellyaching about how unfair everything is.
The Democrats WANT an economic crisis, which will give them the excuse they need to implement yet more socialist policies.
I’d prefer someone else. I’d vote for Sanford or Pence over Romney. And it has nothing to do with Romney’s religion.
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