An Update On Your Disappearing Tax Dollars

The Washington Post reports that the massive new economic stimulus plan being proposed by the incoming Obama administration will only be available for study for a handful of days before the vote is expected to come up:

Obama and Pelosi will discuss the scope and timing of the economic recovery package, which Obama has said will be his first priority upon being sworn into office. Pelosi has said her goal is to have the legislation on the new president's desk and ready to be signed on Jan. 20.

But that schedule appears increasingly likely to slip, as Republicans and conservative Democrats are raising concerns about the impact on the federal deficit of spending hundreds of billions on an array of projects with little vetting by Congress. Lawmakers now expect a spending package of between $675 billion and $775 billion.

And a top congressional aide said yesterday that Democratic leaders in the House are still waiting for a detailed proposal to be delivered by Obama's economic advisers before lawmakers can begin the process of turning it into legislation.

Even so, congressional Democrats are anxious to get the process started so that a vote can take place in the House as early as the week of Jan. 12. Pelosi announced yesterday that the first hearing on the plan will take place Wednesday.

Now, please keep in mind the demonstrable fact that our Congress can't even get things right when they have plenty of time to do fact-finding, debate, and full vetting of a simple issue...is anyone else more than just a bit concerned that they're going to throw around almost $1 trillion of taxpayer money on just a few days' worth of arguments?  I take it as a bad sign that few are even bothering to complain about the sheer size of this stimulus package, too.  It brings us back to the question of who exactly is going to bailout the American taxpayer when our government is required to pony up on all its financial obligations?

Guess what?  You will!  Get ready for higher taxes, because they're a'comin'!

But hey, don't worry, the Treasure Department has issued a report that says their actions on the first $700 billion bailout have averted a crisis:

Massive rescue efforts by the US government and central bank in recent months helped avert a "financial collapse" and are working to stabilize the economy, a Treasury report said Wednesday.

The Treasury report to a congressional panel overseeing the 700-billion-dollar rescue plan passed in early October said the extraordinary actions probably averted deeper problems.

"Treasury, working with the Federal Reserve, the FDIC (Federal Deposit Insurance Corp.) and other regulators, has taken the necessary steps to prevent a financial collapse," the report said.

"The most important evidence that our strategy is working is that Treasury's actions, in combination with other actions, stemmed a series of financial institution failures. The financial system is fundamentally more stable than it was when Congress passed the legislation."

This reminds me of when the Obama camp said that its own investigation of itself on the Blagojevich mess found no wrongdoing.  I'm sure we all feel better now, since one cannot possibly find a more objective source.  Still, isn't it reassuring to know that Paulson and Co. know what they're doing and are committed to full transparency and oversight?  If not, we might have some real reasons to worry.  Oh, um...wait...never...mind...

Nevertheless, the madness is moving ahead full steam.  Fortunately, there are at least a handful of people with a sense of fiscal responsibility, like Lawrence Kudlow:

Republican Senate leader Mitch McConnell is absolutely right to warn against Obama's gigantic stimulus-spending package. McConnell says it "will be the largest spending bill in the history of our country at a time when our national debt is already the largest in history." As a result, he says the bill "will require tough scrutiny and oversight."

According to McConnell, scrutiny should include this simple test: "Will the yet unwritten, reportedly trillion-dollar spending bill really create jobs and grow the economy -- or will it simply create more government spending, more bureaucrats and deeper deficits?"

The Republican leader is drawing a clear line in the sand. OK, good. But the GOP has got to do more. It must start talking about tax cuts to grow the economy. And it must get back to the supply-side by talking about lower marginal tax rates on individuals, businesses and investors.

We don't need bailout nation. Nor do we need the government picking winners and losers in a massive Keynesian new-New Deal spending extravaganza. And it's not Obama's middle-class tax cut that's going to get us out of this economic jam. At best, his vision is incomplete. But at worst, his aversion to successful earners and investors is a real obstacle to full economic recovery.

Common sense -- as well as history and those pesky facts -- tell us that it is the wealthy who cause economic growth.  They run the companies and small businesses that make the things and provide the services that people buy, thus providing jobs and real economic stimulus.  That's why low taxes are beneficial - they allow the wealthy to put more of their wealth into their businesses rather than into the government.  To that end, the GOP has a golden opportunity:

[T]he GOP has a great opportunity to challenge Obama's Keynesian pump-priming by insisting there be a major tax-cut component in any new fiscal package. Republicans shouldn't merely push for somewhat less government spending. They have to make a bold case that tax rates matter for economic growth and job creation. They must insist that any recovery package includes this key element. Shift the debate. Say clearly that a re-energized economy cannot occur without lower marginal tax rates.

In particular, the GOP position should include lower tax rates on large and small businesses. Right now, the top federal tax rate for C-corps is 35 percent. Small businesses, which pay the individual rate, also are taxed at 35 percent. These rates should be 20 percent for both C-corps and S-corps (including LLCs).

This would make a huge difference. It would be a boon for our global competitiveness, since companies in the United States (as well as Japan) are taxed way above the rates of other advanced countries. It also would attract job-creating investment flows to the United States at a time when capital is on strike in our financial markets and economy. And while businesses collect corporate taxes, it's really consumers who pay the final cost.

Republicans also could promote a middle-class tax cut that would reduce the 28 percent and 25 percent brackets down to 15 percent. And of course, the GOP should work hard to maintain the Bush tax cuts on capital gains, dividends, inheritance and top individual rates.

[L]ower capital-gains tax rates will raise revenues, since this is the single most sensitive tax on the Laffer curve. Indeed, many economists -- including Alan Reynolds at the Cato Institute -- argue that the growth and simplification effects of reducing the corporate tax rate would be revenue positive.

The GOP needs to hammer away at this idea RIGHT NOW.  We have the entire weight and authority of history and fact, as well as political successes of the past, so it can certainly be done.  The question is whether or not they have the spine to do it, and the ability to communicate those ideas effectively.  It's a deliberate choice to stand for fiscal responsibility, but the current climate seems to favor bailouts and rampant government spending.  As Kudlow says, it is time for a choice rather than an echo.

The choices that our elected leaders make in the next few weeks and months will drastically affect you and me, as well as our children in very powerful ways.  Since you've got a lot at stake, let them know your thoughts.

There's my two cents.