Stimulus II? No. Bush tax cuts? Yes. Oxymoron? You betcha!
My buddy Joe Weisenthal picked up on some recent comments from Robert Rubin (Clinton's Treasury Secretary and Handmaiden to the Gods of Banking Deregulation) and Paul O'Neill (a short-lived Bush Treasury Secretary). The gentlemen have come out against more stimulus yet both are in favor of extending the Bush tax cuts.
This is the logical equivalent of being against chocolate but endorsing Godiva.
Rubin told CNN that although the economy was “going to have slow and bumpy growth, a major second stimulus” might create uncertainty and undermine confidence. This while recommending the White House leave tax cuts (that he calls middle class tax cuts) in place.
The problem here is that the Bush tax cuts are a stimulus in-and-of themselves, and an ongoing one at that. And they have not done anyone any favors, taking a view from 30,000 feet. I'm all for low taxes as stimulus, but only if targeted to where they will be shown to benefit the economy. Business spending, hiring, innovation, expansion, etc - not just a "here ya go, thanks for supporting my campaign!"
The Rubins and O'Neills of the world aren't against stimulus and deficit spending per se, they are just against the type of stimulus and deficit spending that they disagree with:
Unemployment benefit extensions (so people can eat and live indoors) = no good.
Lowered taxes on households earning a quarter of a million bucks a year = perfectly acceptable (regardless of the fact that these are deficit-negative as well).
My own position here is a non-political one: Low taxes are great...IF THEY'RE PAID FOR BY INCREASED ECONOMIC ACTIVITY OR INVESTMENT. I'm also all for more stimulus...ONLY IF IT'S APPLIED IN AN ACCOUNTABLE, TARGETED AND PROPITIOUS FASHION.
Obama and Bush each created and presided over atrocious stimulus plans, nothing they've attempted has yielded any lasting tangible effects. They've both managed to spend a ton of money and please absolutely no one except the most crisis-culpable segment of the economy - the financial industry.
Stimulus is fine, but let's actually stimulate something. And the newly-minted Deficit Chickenhawks, many of whom were instrumental in the inflation of our debt balloon, need not comment. We've all had just about enough of their "insights".
Sources:
Robert Rubin Warns Against Destabilizing Effects of Another Stimulus (Clusterstock)
US Economy Improving, More Stimulus Isn't the Answer (Bloomberg)
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