HOUSE Republican Leader John Boehner

Stimulus Spending Skeptics Speak Out

Since putting out the call for outside economists’ opinions on President-elect Obama’s proposed $1 trillion economic “stimulus” spending plan, we’ve been contacted by dozens of economists and academics eager to add their name to the list of stimulus spending skeptics. Below you will find selected entries from experts that agree that tax relief for families and small businesses, not more government spending, will help to get America’s economy moving again:

Jeffrey Miron
Senior Lecturer and Director of Undergraduate Studies
Department of Economics, Harvard University
http://www.economics.harvard.edu/faculty/miron

Any stimulus package should consist of permanent tax cuts rather than spending increases. The (limited) available evidence suggests that tax cuts are at least as effective as spending increases in stimulating the economy. Tax cuts help reduce the adverse incentives caused by high tax rates. And spending increases are likely to include numerous projects that do not pass normal cost-benefit criteria and are instead merely pork (e.g., repairing bridges to nowhere).

John Seater
Professor of Economics
Economics Dept., NC State Univ.
http://www4.ncsu.edu/~jjseater/

I worked 7 years as a Federal Reserve staff economist and have done research in and taught macroeconomics for 27 more years. There is no convincing evidence that stimulative fiscal policy is either feasible or effective. The recognition and action lags (ancient terms from the bygone Keynesian era) alone virtually always mean that the stimulus arrives after the recession is over, thus causing an undesirable distortion that impedes recovery…These aspects of fiscal policy have been known for more than a quarter century. However, if one does not like old evidence, Greg Mankiw on his blog recently cited more recent scholarship showing that Keynesian theory is inconsistent with the data. This I am strongly skeptical of President-elect Obama’s plans. Both theory and evidence are against them. What else do we require to reject them?

Michael Keran
Retired, Former Sr. VP & Director of Research
Federal Reserve Bank of San Francisco

Japan in the early and mid 1990s engaged in major fiscal stimulus focused on infrastructure projects with deficits equal to 7-8% of GDP and a cumulative Debt/GDP of almost 150%. None of this led to economic recovery until the late 1990s when the Bank of Japan engaged in quantitative easing of monetary policy and the Government of Japan finally introduced a taxpayer bailout of the banks. The Fed and Treasury in the US have already taken such actions. The Japanese experience suggests that additional fiscal stimulus will only add to the Debt without helping the economy.

Daniel J. Mitchell
Senior Fellow, CATO Institute
http://www.cato.org/people/daniel-mitchell

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Rep. Bachmann: Democrat AMT Bill “Will Hurt the Middle Class Exactly When We Shouldn’t”

Originally posted on GOP.gov:

This morning, Rep. Michele Bachmann (R-MN) debated Ways and Means Chairman Charlie Rangel (D-NY) on CNBC’s “Squawk Box.” Their topic: the Democrat AMT bill on the House floor today.  

Rep. Bachmann on the Democrat AMT Bill: “This bill is a permanent tax increase to give a one-year tax cut. That’s a really a bad deal for the American people.”  

“This is super-sizing American government growth. That’s not the direction the American people want us to go. They want us to cut taxes, not increase taxes.”

Rep. Bachmann on How The Democrat AMT Bill Will Raise Gas Prices: “The bill we are going to see today from Chairman Rangel will hurt the middle class exactly when we shouldn’t. … It has a tax increase on American energy production. That’s the last thing we should do right now when Americans are paying over $4 a gallon.”

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Walberg Blog on the Tax Increase Prevention Act

From “Tim’s Blog”:

“My legislation, H.R. 2734, the Tax Increase Prevention Act, would stop the massive tax increase in the Democrats budget, a tax increase that amounts to $3,000 per taxpayer. Specifically, my bill would make permanent the tax relief of 2001 and 2003, and stop tax increases on raising children, earning money, saving and investing, operating a small business, adopting a child, paying off college loans, and even dying.

“In my state of Michigan, families and businesses have unfortunately felt first-hand the powerful, negative impact of tax increases, as Michigan has experienced job losses, declining personal incomes, diminishing home values, and the highest unemployment rate in the nation. By proposing a massive $3,000 per taxpayer tax increase, Democrats in this Congress are following the same failed blueprint that Michigan Governor Jennifer Granholm used to drive our state economy into a ditch and to destroy Michigan jobs.

“In these turbulent economic times, Congress needs to encourage job creation, hard work, investment, and innovation. With Americans facing rising health care costs, high energy prices, and economic instability, the absolute last thing families need is to be hit with a massive job-killing tax increase.”

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How Much Will the Democrats’ Budget Raise Your Taxes?

From the Office of the Budget Committee Republicans:

The House Democrats’ Budget, expected to be on the floor next week, will impose on American workers and businesses a $683 billion tax hike – the largest in history. The table below illustrates how much more the average taxpayer will be paying on an annual basis under this budget:

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