My Congressman, Baron Hill, today wrote his consituents, asking "I would like to hear your thoughts about the overall recovery package, particular provisions you are concerned with or support, and any ideas you have about how best to stimulate our economy. While I cannot promise a prompt response, I will certainly take your thoughts and suggestions into account while considering my next vote on this legislation." The letter also opened by saying "As you know all too well, we currently find ourselves in a very grave situation. The national economic climate is dismal." Here is my response.
Dear Congressman Hill,
My feeling is that whatever money is spent should be viewed as an investment that produces a return beyond just putting it out there into somebody's hands to "stimulate" the economy. Ideally, it would be calculated to be "revenue neutral". That is to say, it would produce at least as much revenue for the government as it costs, so as not to increase the deficit and the national debt to the point where the "stimulus" would eventually be the cause of another crisis for the American people. Politically, this would be accomplished most easily by stimulating the economy to the point where it produced additional tax revenues to compensate for the outlay, without raising tax rates. Some types of stimuli that might produce this result and/or have other beneficial results:
1. Infrastructure improvements. E.g. better roads would increase taxable commerce, while also providing jobs (which will also result in a partial rebate to the government of their stimulus dollars by way of tax revenues).
2. National healthcare would produce a return in healthier, more productive workers, who, again, pay taxes.
3. Environmental expenditures and tax incentives. Again, healthier environment, healthier workers. Green industries also pay taxes.
4. Loans to stimulate business - will theoretically get paid back, with interest, and create a taxpaying business.
5. More efficient use of bailout moneys. Here are some suggestions I posted earlier on my blog at ravingmoderate.com to that effect:
I would suggest that rather than giving industries direct bailouts, we increase the incentives for Americans to patronize their companies while also benefiting society, the economy, and/or the environment. Case in point: the auto industry. If we gave a truly sizable tax exemption to anyone who buys a particularly environmentally friendly automobile that is made in the U.S.A., the industry would be forced to build the cars to meet the increased demand, and the money would still wind up in their pockets, while people could drive newer cars while cutting down on emissions. We would get a lot more for our tax dollar this way.
Similarly we should have bailed out mortgagees, not loan companies. The money would still have wound up in the companies' coffers, enabling them to stay in business, but at the same time more people could have stayed in their homes - for the same buck.
Again, fewer homeless people, more people likely to go back to work - and pay taxes. More tax revenues from the auto industry…
6. I also suggested on Raving Moderate that there is a psychological component to this crisis. No doubt there is a strong, fiscal component as well. But everyone is being told we're in a crisis that is made to sound so bad that everyone is afraid to try anything, so they are just staying home and hoarding their money, if they have any. So I suggest that we try not to wallow in too much "dismal"-ness. It's also worth noting that Jimmy Carter's "malaise" speech is widely considered to be one of the pivotal reasons, along with the hostage crisis in Iran, for his defeat by Ronald Reagan in 1980. I think we need a little more "Yes We Can" -- Obama himself needs to be reminded of this as well!
7. Businesses receiving stimulus money must keep their jobs in America in order to return the stimulus to the American economy. I don't believe in protectionism, and I want all people everywhere to have good jobs in a global economy; but we are also first responsible for keeping our own house in order.
8. At the same time as all of this, for the sake of our resources and our environment, both national and global, we should consider the virtues of living with somewhat less. A bigger economy isn't always the best economy.
Sincerely,
Tom Marshalek
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