George Graham

Are Tax Cuts a Better Stimulus than Spending?


I once worked for a man in Toronto who had a plaque on his desk that read:

stimulus

The trouble with the world is that there are too many simple answers and not enough simple questions.

I would add that the trouble with polls is that there are too many simple questions.

Take the highly regarded Rasmussen Reports. That organization has done a national telephone survey that shows 58 per cent of American adults “are opposed to a government economic recovery plan that does not cut taxes.”

Really?

So if the government doesn’t cut their taxes,  58 per cent of America’s adults don’t want to repair the nation’s bridges or maintain its roads? They don’t want to weather-proof public buildings? They don’t want their children to get a decent education? They don’t want affordable health care? They don’t want to develop clean energy to end our dependence on foreign oil? I find that hard to believe.

Rasmussen goes on to report that adults are evenly divided over whether they would support an economic recovery package that includes tax cuts only – with no government spending. Thirty-seven per cent favor the idea, 38 per cent are opposed, and 25 per cent are not sure. Just 21 per cent would support a stimulus package with government spending but no tax cuts. That’s the silliest poll I’ve ever heard of. If the questions were phrased in a way to reflect the true complexity of the issue, I would expect 100 per cent of respondents to be “not sure.”

In this inextricably inter-related global economy, no one can be sure what – if anything – will work. That’s no one as in nobody, no economist, no financier, no blogger, no poll taker, no politician and no fortune teller.

The arguments I’ve heard – pro and con – are absurdly simple minded. Some believe if you cut taxes for rich individuals and businesses, they will expand their operations and hire the rest of us. As someone said in a letter to the editor in our local newspaper, “I never got a job from a poor man.” Others believe they will spend the money (or hoard it) without creating jobs. From what I know of the world, cutting taxes doesn’t necessarily create jobs in America. If you cut Wal-Mart’s corporation tax, I bet those guys will spend more of their extra money in China than in America.  But government spending can be woefully inefficient. I am old enough to recall scandals about the U.S. military paying something like $1,500 for a screwdriver. And I am well aware of the way bureaucratic red tape can slow down progress and drive up costs.

Another worry, of course, is the nation’s $1.2 trillion deficit. Whether the government cuts taxes or spends, the result in that area would be the same: more debt piled up for our children and grandchildren to deal with.

Bearing all of these considerations in mind, I guess I would have to put myself in Rasmussen’s “not sure” column. But of this I am sure: If bridges aren’t repaired, more motorists are likely to plunge to their deaths like those poor wretches in Minnesota. If roads aren’t maintained it will take a heavy toll on cars traveling over them. If children aren’t educated, the nation will sink farther into mindlessness and sloth. If an alternative is not developed to foreign oil, Americans will pay higher prices at the pump and one day run out of fuel.

In view of the above, I would say Americans are between Barack and a hard place.

About the author

gwgraeme

I am a Jamaican-born writer who has lived and worked in Canada and the United States. I live in Lakeland, Florida with my wife, Sandra, our three cats and two dogs. I like to play golf and enjoy our garden, even though it's a lot of work. Since retiring from newspaper reporting I've written a few books. I also write a monthly column for Jamaicans.com