With the economy still reeling from unemployment at 10.2 percent , Democrats and progressives are battling a barrage of GOP-driven misinformation about the first $787 billion stimulus plan as they look to create a new, targeted, fast-acting jobs program, possibly before Christmas. Aiming to cash in - literally - on growing public anger over joblessness, Sarah Palin and Newt Gingrich separately returned last week to the Republican nostrum of wide-ranging tax cuts, mostly for the rich, as the answer to every problem under the sun - in this case, unemployment. Yet as economist Lawrence Mishel, the director of the progressive Economic Policy Institute, observed, "These are tried and failed policies. We already lowered the capital gains tax, lowered corporate tax rates, lowered inheritance taxes under George W. and it's absurd to believe that somehow this would stimulate jobs. They're not even related to jobs."
The new GOP mantra that the first Obama stimulus package was a waste of money comes against a growing consensus among centrist economists and analysts that the $787 billion package has had a positive effect, saving or creating about a million jobs. That's been the impact - although it is not large enough to satisfy progressives, since only a third of the stimulus money funded direct job creation. On Saturday, The New York Times reported:
New Consensus Sees Stimulus Package as Worthy StepNow that unemployment has topped 10 percent, some liberal-leaning economists see confirmation of their warnings that the $787 billion stimulus package President Obama signed into law last February was way too small. The economy needs a second big infusion, they say.No, some conservative-leaning economists counter, we were right: The package has been wasteful, ineffectual and even harmful to the extent that it adds to the nation's debt and crowds out private-sector borrowing.These long-running arguments have flared now that the White House and Congressional leaders are talking about a new "jobs bill." But with roughly a quarter of the stimulus money out the door after nine months, the accumulation of hard data and real-life experience has allowed more dispassionate analysts to reach a consensus that the stimulus package, messy as it is, is working.The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama's promise to "save or create" about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers."It was worth doing -- it's made a difference," said Nigel Gault, chief economist at IHS Global Insight, a financial forecasting and analysis group based in Lexington, Mass.Mr. Gault added: "I don't think it's right to look at it by saying, 'Well, the economy is still doing extremely badly, therefore the stimulus didn't work.' I'm afraid the answer is, yes, we did badly but we would have done even worse without the stimulus."
Yet all that hasn't stopped Newt Gingrich's front group for billionaires, American Solutions for Winning the Future, from issuing a dramatic appeal for donations in an email alert enclosing his bold new jobs plan. Offering his would-be donors the illusion of being inside policy-makers, Gingrich's sweeping cure for what ails us was billed as an "internal jobs memo":
To: American Solutions Staff
From: Newt Gingrich
Date: 11/17/09
Subject: The Way Ahead
In the email alert accompanying this memo, Gingrich's true goals - raising money and keeping himself in the public spotlight - are also revealed. The email offers links to download his tax cuts uber alles memo, in which all recommendations connect back to opportunities to donate. "Please help us kick-off our campaign to implement a REAL jobs plan by donation today," it reads. "You can find out more about our efforts by reading the memo from Newt Gingrich to American Solutions staff by clicking here" - or even just writing a check, possibly because, for some of his followers, making online donations is too scary. They're worried that Obama's storm troopers or menacing black helicopters may come after them.
The jobs crisis is real, but, to progressive critics of right-wing "voodoo economics," as George H.W. Bush put it, it's not at all clear that Gingrich's solutions are meant to be taken seriously:
The road to economic recovery starts with job creation.
Today, unemployment stands at 10.2% and shows no sign of decreasing. The Obama Administration and the job killing Congress fail to understand we are in a crisis situation. Their efforts to create American jobs failed while spending $787 billion on stimulus that they claimed would cap unemployment at 8%. Taxpayers have only higher unemployment and larger budget deficits to show as a result of our big spending administration and Congress.
Fortunately, we can do something about it.
We've seen dozens of Democrats defect from their party's leadership on key job killing votes like the Energy Tax and ObamaCare. This is a sign that a "Commonsense Majority" is starting to build within Congress. Through continued pressure by citizens concerned about the direction our nation is headed, I believe we can build a majority in Congress that will bring the current job killing agenda of Speaker Nancy Pelosi, Senate Majority Leader Harry Reid and President Barack Obama to a screeching halt.We can pass meaningful job creation measures like an immediate payroll tax cut, incentives for small business, the elimination of taxes on capital gains, a reduction in the corporate tax rate, the abolition of the death tax, and steps to balance the federal budget.
I strongly encourage you to read this memo and join our cause. There are many different ways to get involved in the coming months, but we would greatly appreciate your financial support to help us kick-off this effort. You can make a donation by clicking here.
Sarah Palin added her voice to the rising GOP chorus by telling Rush Limbaugh that America should return to the good old days of tax-cutting under Ronald Reagan. "We need to cuts taxes on the job creators," she said. "This is the only solution that will be successful... We need to stay committed to the common-sense, free-market principles that work."
(Of course, as Paul Krugman and other experts have noted, any short-term boost in economic recovery that occurred early in the Reagan administration wasn't due to tax cuts, and it quickly fell apart as income growth slowed and deficits ballooned.)
To make these tax-cutting "solutions" even remotely plausible to those who don't remember the Bush years, it's been essential that the GOP distort, exaggerate and fabricate what Obama originally promised, so he can be portrayed as a smooth-talking con man who aims to destroy the American economy. The Democrats face a legitimate challenge in improving a desperate jobs situation. However, as Media Matters pointed out in skewering GOP talking points on the economy, simply lying about what the Obama administration claimed its stimulus package would do doesn't provide any real answers:
Fox & Friends hosts Brian Kilmeade, Steve Doocy, and Gretchen Carlson parroted a House Republican press release and repeated its claim that the stimulus impact is "6 million jobs shy of what the administration promised us" since the administration stated "that 3.5 million jobs would be created. And, in fact, the United States has lost 2.7 million since the stimulus plan." However, the administration estimated that by 2011 - not September 2009, when the 2.7 million job losses since February were recorded - 3.5 million jobs would be created or saved by the stimulus compared to the number of jobs that would have existed at the end of 2010 had the government not passed the legislation....
That may all seem like liberal nit-picking when the unemployment problem is so high - as bad as 17.5 percent if you include those who are underemployed. Yet it certainly cannot be resolved, progressive economists say, by ending all government spending to promote jobs and granting huge tax cuts to the wealthy; the essential elements of the Gingrich plan. The only proposal of his that economists concede could make a difference economically is reducing payroll taxes, but a similar measure has already been included in the president's stimulus package as part of the Make Work Pay tax credit that offers up to $400 for individuals on their income taxes, as Mishel observes. But unlike Gingrich's proposed 50 percent cut in Social Security payroll taxes, it doesn't threaten to rob Social Security of tax revenues or wipe out much-needed domestic spending initiatives.
Gingrich's other proposed solutions are viewed as so preposterous that Mishel could barely contain his outrage. When asked about Gingrich's proposal to end the already lowered "death tax" - or inheritance tax - leveled on the top 2 percent of millionaire inheritances, Mishel burst out, "How the fuck does that create jobs?"
As Heather Boushey of Center for American Progress commented, "Abolishing the estate tax, the tax on the very wealthiest Americans who leave large inheritances, will not create jobs. It only calcifies heightened inequality and means that the Paris Hiltons of the world inherit a bit more; it does not help the vast majority of American families."
What are some of Gingrich's other brilliant ideas? Take a look, as summarized on his organization's web site:
2. Incentives for Small Business Investment. Allow small businesses to expense 100 percent of new equipment purchases each year to help them invest in new, more productive technologies.
3. Abolish Taxes on Capital Gains. If we want to compete with China and have most productive factories in the world, the best jobs, and the highest take home pay, we should match China's capital gains rate of zero. This would dramatically increase investment in America.
4. Reduce the Corporate Tax Rate. When you combine state and federal taxes, America has the highest corporate tax structure in the world. We believe that by matching the Irish corporate tax rate of 12.5 percent, America would be the most desirable economy in the world to open a factory, create a new job, and develop a new product.
Mishel says, "They're the very weakest approaches, totally useless. They don't create demand for goods and services," the key underlying problem in the current crisis.
Boushey sums up, "Items two to four are basically corporate giveaways. The problem is not that the firms are paying too much in taxes, it's that there are no consumers. We need to focus on direct job creation, not corporate subsidies."
On top of all that, Gingrich wants to freeze the remaining original money in the stimulus package and use it to help pay for cutting payroll taxes. He also calls for basically ending additional government spending for jobs creation, in order to "balance the budget." Boushey notes, "We should focus on balancing the deficit once we see strong economic growth and unemployment come back down. Until then, these efforts are likely to hamper the nascent recovery, pushing us in the wrong direction.
So, ultimately, what would be the real-world impact if the Gingrich-Palin-GOP tax cuts and drastic spending cuts actually became law?
"It would cost us at least two million jobs in the first year," Mishel says. "They want to take us backwards to what's already failed."
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