Sources from Business Week to the Wall Street Journal have verified what has long been suspected: The terrorist attacks on America has had a devastating effect on an already faltering economy. The U.S. government has recognized the need to bolster the economy, but has unfortunately failed the American populace. In an extreme case of partisanship, the House Republicans pushed through, with a vote of 216-214, an economic stimulus package that will stimulate nothing.
Using the “we need to stand united” rhetoric to defeat strong opposition from the Democrats, they argued that this package is the most effective solution to the economic recession that America suffered in the aftermath of terrorist attacks. In fact, this bill is just another sizable donation to the rich and to big corporations.
The $100 billion bill, authored by representative Bill Thomas (R-Calif.) focuses its efforts on amending the capital gains tax laws of 1986. Relaxing the capital gains tax may provide some stimulus to the economy. However, as Paul Krugman of The New York Times points out, this bill is focused specifically toward specific businesses businesses that President George W. Bush and Vice President Dick Cheney have vested interests in.
While the theory of reducing capital gains taxes and alternative minimum taxes rests on economic theories that suggest that the interests of businesses and wealthy individuals will eventually be good for everyone else. Arguing the validity of “trickle down” economics is irrelevant right now, because even proponents of such theories agree that “trickle down” economics only work in the long term.
That same “trickle down economy” rationale guided Bush”s passage of the $1.3 trillion tax cut earlier this year, but according to Chairman Alan Greenspan, only 18 percent of those rebates went into spending. Consumer spending boosts the economy in the short run which is what an economic stimulus package must guarantee.
The big corporations are not the ones who most need the tax breaks. It is the nearly 500,000 workers that lost their jobs in the aftermath of the terrorist attacks who are most desperate for extra funds.
Low income Americans are the consumers who will actually spend the money they receive in tax breaks. After all, isn”t the government”s primary goal in boosting the economy to increase consumer spending? Giving the money to the corporations just won”t do it.
Fortunately, the Democrats in the Senate are providing strong dissent on this bill. The Senate as a whole must keep in mind the actual goal of a stimulus package to ameliorate a struggling economy. Those at the lowest end of the income spectrum in this nation are the ones that not only require an economic relief, but are also the ones with a greater propensity to consume.
By giving tax breaks to low income earners, Congress will provide a successful short term economic stimulus. By giving tax breaks to corporations and high income earners, Congress will do nothing to improve the dire U.S. economic situation.