Morning Bell: No Tax And Spend Stimulus, Please

Conn Carroll / January 08, 2008

As Iraq has stabilized in recent months and job creation has slowed, many voters are turning their attention to economic concerns. Now that both parties are beginning to outline the principles of their preferred stimulus package, it is important conservatives prevent the left’s ‘tax and spend’ instincts from making the problem worse. So far MSM coverage of developing policy has one major flaw: it fails to put any proposed temporary tax cuts into the larger context of each party’s fiscal policy.

For example, the Los Angeles Times reports that, “the Bush administration and congressional Democrats are considering new measures, including a fresh round of tax cuts, designed to stave off recession.” By itself, this is true the Democrats are considering some temporary tax cuts, but it leaves out two important pieces of the puzzle. First, the LAT does mention but buries late in their story: “Democrats … are likely to increase unemployment benefits and other programs assisting those facing economic hardship.” And there you have the ‘spend’ half of liberals trademark instinct. But the LAT also said they favored tax cuts right? Wrong. This is the other context the LAT leaves out. Any new temporary tax cuts the Democrats propose for stimulus will be dwarfed by the increases in taxes included in their new budget. The Weekly Standard’s Brian Faughnan summarizes:

The Democratic budget calls for higher marginal rates on single middle-income Americans, higher taxes on capital gains and dividends, elimination of state and local sales tax deduction, reduction of the child tax credit, a return of the marriage penalty, reimposition of the death tax, and numerous other tax increases. Ways and Means Committee Chairman Rangel–who probably speaks for a majority of House Democrats–wants to raise taxes by another trillion or so.

Besides this return to tax and spend politics, any Democrat stimulus plan would also probably force them to break their promise to the American people to pay for any proposal to cut taxes or increase spending on the most expensive federal programs by raising taxes or cutting spending elsewhere. Although this may not be a huge obstacle for Democrats, since they already broke this promise, the first opportunity they had when they tried to fix the Alternative Minimum Tax.

A far better solution would be to make the 2001 and 2003 tax cuts permanent, offer broad based tax rebates to spur consumer spending, and lower the corporate tax rate.

Quick Hits:

• Chamber of Commerce President Tom Donohue promised to spend millions of dollars to defeat “anti-business” candidates who are running on populist themes. The Los Angeles Times article mentions Democrats and Mike Huckabee specifically reporting: “Reacting to what it sees as a potentially hostile political climate, Donohue said, the chamber will seek to punish candidates who target business interests with their rhetoric or policy proposals, including congressional and state-level candidates.”

• Iranian Revolutionary Guard boats threatened to blow up three US Warships in the Strait of Hormuz over the weekend. The Pentagon reported that five Iranian speedboats approached a US cruiser, destroyer, and frigate at the same time a radio call threatened to explode the US vessels.

• Mexico’s Foreign Minister Patricia Espinosa Cantellano promised US presidential candiates she would redouble her efforts to make sure Mexican migrants in the US are treated “the same way whether they are in Mexico or outside of the country.” The Washington Post reports later quotes historian Lorenzo Mayer: “In the past, when Mexico’s foreign policy was based on a principle of nonintervention, it was a taboo for Mexican leaders to talk about internal affairs of other countries, especially the United States.” More from WaPo: “Mexicans are particularly concerned that a change in administration in the United States could lead to even tougher border enforcement, preventing millions of Mexicans who cannot find work at home from migrating to the United States, Meyer said.”

• Asia Times cites a Hong Kong newpaper noting that “that no one in the Western media has detected concerning a Jane’s Defence Weekly article which reported that China has plans to develop three-carrier battle groups over the next decade.” More from Asia Times: “Taiwanese news sources highlighted Gordon Jacobs, a Chinese military analyst based in the United States – whose report on the modernization of China’s navy in the Jane’s report was one of the sources for the report – as stating that if the Chinese government contracted for the construction of the carrier groups in 2006, then it is possible for the first battle carrier group to break water as early as 2011, be in service in 2014, and by 2016 be accompanied by a second service-ready aircraft carrier group.”

• Under the header ‘Born Again, Vegas Style’ the Los Angels Times tells the story of Heather Veitch who used to be a tripper in Las Vegas but now is a Christian activist trying to reach out to women in the Las Vegas adult industry.