Due to the structural issues in the economy ‘stimuli’ is now becoming an annual event. We started with the Bush rebate checks of 2008. Of course we had the mega stimulus ($900Bish) launched in spring 2009 that generally covered 2 years (apprx $450B a year). That was topped off with a 2% payroll tax cut (I believe roughly $120B) beginning in Jan 2011. Not to mention the extension of the Bush tax cuts late last year. All put together, this has generated pretty flaccid GDP over the past few years. But it’s time to inject the patient with more steroids since the hollowed out economy no longer has the ability to function on its own. (We won’t even discuss never seen before monetary policy)
Reuters reports we’ll be getting a $300B plan, with a resumption of the 2% payroll tax cut, along with more infrastructure plans (remember when all those companies surged in late 2008 and early 2009 on ‘shovel ready projects’?) and more state aid similar to what we saw in the 09 plan. At first I thought it sounded like ’2009lite’ in regards to the 2009 plan but that one was set to run over 2 years, and considering this is all supposed to go into 2012, its not that much less on an annual basis than the 09 mega stimulus. Election year after all …
“Of course” in the current environment this new spending will be offset by ‘proposed’ revenue measures – which I am sure the GOP will gladly go along with. So in summary it will be more spending without any funding ;) Or some far off (think 2019) ‘cost neutral’ nonsense offset.
- President Barack Obama plans to propose some $300 billion in tax cuts and government spending, U.S. media reported. The price tag of the proposed jobs package, to be announced by Obama in a nationally televised speech to Congress on Thursday, would be offset by other cuts that the president would outline, CNN reported, citing Democratic sources
- Bloomberg News said the plan would inject more than $300 billion into the economy next year through tax cuts, spending on infrastructure, and aid to state and local governments.
- Obama would offset those short-term costs by calling on Congress to raise tax revenues (this is where you laugh) in a deficit-cutting proposal he will lay out next week, the news agency reported, without citing sources.
- Bloomberg said nearly half the stimulus in Obama’s plan would come from tax cuts, including an extension of a payroll tax cut paid by workers and a new decrease in the amount paid by employers. (and as we saw yesterday, the temporary payroll tax cut for employers will do nearly nothing…by the way arent these 6.2% payroll taxes supposed to be filling the [empty] social security lockbox??)
- Direct aid to local governments will focus on stopping layoffs of teachers and first responders, Bloomberg said.
Let the circus begin:
- “I have no doubt the president will propose many things on Thursday that, when looked at individually, sound pretty good, or that he’ll call them all bipartisan. I’m equally certain that, taken as whole, they’ll represent more of the same failed approach,” said the top Senate Republican, Mitch McConnell.