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Book of Matthew: Just when you thought Republicans had caused enough damage…

Published: February 6, 2009
Section: Opinions

I have a bone to pick with Congressional Republicans (please try to contain your shock). It goes a little something like this:

Last year, America’s gross domestic product (GDP) shrank at an annual rate of 3.8 percent, a rate that is expected to increase this year. It has become increasingly apparent that we need a massive stimulus package to give our failing economy the fiscal equivalent of a kick in the pants.

And yet, as Congress debates President Obama’s proposed recovery package—which will most likely amount to over $800 billion, possibly even $900 billion when both Houses agree on its contents—the Republican minority has tried its best to get in the way. In the House, Republicans voted unanimously against the bill, and in the Senate, Republican leaders promised to act similarly, and have even threatened to filibuster.

Their main argument is essentially a reiteration of one of Senator McCain’s more ridiculous campaign talking points: that excessive government spending is wasteful and responsible for our economic woes. To their credit, Republicans have waged an excellent PR campaign. They have utilized every medium they could get their hands on—television, radio, newspapers—in order to convince the average American that the spending projects, which make up the majority of the stimulus, are little more than liberal giveaways to the undeserving. Some Republicans have also offered a plan of their own, one comprised almost entirely of tax cuts (which already make up about 40% of the current plan), claiming that it is the only way to truly stimulate the economy.

It’s rather typical of them, and as usual, the Republicans’ argument is faulty on several counts.

First, let’s talk about spending. As any basic economics textbook will tell you, the equation used to calculate GDP is: Personal consumption + Government expenditures + Investment spending + Net exports.

Now let’s recap. Personal consumption has gone down the tubes, as unemployment has risen and millions of Americans have either lost their sources of income or are afraid of doing so. Investment spending has also fallen, due to the collapse of the housing and financial markets. And since the US is currently running a nearly $70 billion trade deficit, net exports are not doing to well either. The only variable left is government expenditure.

Luckily, government spending is, despite Republicans claims to the contrary, a highly effective method of stimulating the economy. For example, spending money to repair roads and bridges will put thousands of jobless construction workers to work all across America, with the added benefit of making driving safer (remember the bridges that collapsed last year?) Furthermore, spending money to expand the food stamp program and to extend unemployment benefits, although derided by Republicans as welfare, will put money in the pockets of those who need it most, and who will therefore spend it the quickest. To put it numerically, economists have estimated that for every dollar the government spends on programs such as these, the returns will be high, possibly $1.50 or more.

Compare that to tax cuts. Although it is certainly true that tax cuts put money in people’s pockets and can be stimulative, they are not as effective as government spending. This is especially true with the kinds of tax cuts that are being pushed by Republicans, namely, capital gains tax cuts and corporate tax cuts. These cuts primarily benefit wealthy Americans, who do not need the extra money and do not necessarily spend it. Economists have estimated that every dollar of capital gains or corporate tax cuts result in approximately 30 cents worth of return, a far cry from the high returns generates by government spending.

Of course, I can argue my side all I want, but Republicans are not listening to the data. They remain as stubborn as always, their opposition flying in the face of President Obama and Congressional Democrats, who have tried to reach across the aisle.

It’s a tad bothersome. Because as I said before, I believe that we need a stimulus package, and according to opinion polls, about two-thirds of Americans agree with me. But if Republicans continue to insist on putting ideology before the needs of Americans, how can they be counted on to govern effectively? How can we see them as anything more than whining two-year-olds huddling in corners at the Capitol?

And above all else, how can we expect to live in the era of “bipartisanship” that President Obama promised?