Difficult to Administer and Prone to Abuse

According to The Washington Post, this was the reaction of House leaders to President Obama’s proposal to use tax credits to expand employment:

The administration also wants to put an additional $100 billion toward an immediate jobs bill. One of the most significant ideas would award tax credits worth as much as $5,000 per new hire to employers that expand their payrolls this year. By the administration’s calculations, the tax credit would create 600,000 jobs at a cost to the government of about $33 billion.

That is my reaction as well. If the Federal government could administer a problem this intricate, I doubt we would be in the shape we are in. We are over two years into these discussions of stimulus and bailouts, and it is disappointing to continue to see these gimmicks being discussed. What are we going to have next, “Cash for Coworkers?” The basic lesson does not seem to have sunk in — when you are relatively poor, you must be more careful with your money, not less. You should be spending your money only on what you need and not spending it on what you don’t.

So what do we need that we typically entrust the government to provide? Infrastructure — repair of the old and expansion of the new. We need trillions of dollars of it, more than enough spending to replace the reduction in private sector demand that has occurred during this downturn. Two years, over a trillion dollars of wasted spending, and counting.

About Andrew Samwick 89 Articles

Affiliation: Dartmouth College

Andrew Samwick is a professor of economics and Director of the Nelson A. Rockefeller Center at Dartmouth College in Hanover, New Hampshire.

He is most widely known for his work on the economics of retirement, and his scholarly work has covered a range of topics, including pensions, saving, taxation, portfolio choice, and executive compensation.

In July 2003, Samwick joined the staff of the President's Council of Economic Advisers, serving for a year as its chief economist and helping to direct the work of about 20 economists in support of the three Presidential appointees on the Council.

Visit: Andrew Samwick's Page

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