Let’s Invest In America (UPDATED X3)

Our economy is suffering. We are facing the worst economic downturn since the Great Depression. We lost more than 500,000 jobs in December alone, while the unemployment rate has climbed to 7.2%, the highest it’s been in 15 years.

We need to grow our economy and create jobs. We need to invest in America. The job creation bill being debated by the Senate will do just that. You and I can’t create jobs on our own, but by pooling our resources together we can create jobs and we can grow our economy again.

Democrats want to invest in America. Republicans don’t. Republicans disagree with just 2% of the jobs bill, yet they’re going to obstruct it anyway. You wouldn’t fail a student for getting just 2% of the questions on an exam wrong, so why would you kill a bill you dislike only 2% of? I thought this legislation was supposed to be a bipartisan compromise—if the GOP isn’t willing to give up 2%, how can anyone claim they’re being reasonable and acting in good faith?

The truth is, Republicans dislike the idea of investing in America because it can’t be accomplished through tax cuts. Republicans are ideologically wedded to tax cuts—they pushed tax cuts when the economy was good, they pushed tax cuts when the economy started getting bad, and now they’re pushing tax cuts when the economy is worse. Just like anyone, they don’t want to be proven wrong; they don’t want people to have faith in government spending because it undermines their economic philosophy.

But numbers don’t lie, and the numbers show that tax cuts are not as cost-effective for economic growth as federal spending. The money we spend on tax cuts will give us less bang for our buck, something we just can’t afford in an economy like ours.

And let’s not forget that the Democrats are in power because the Republican Party failed—they were not good stewards of the economy and they landed us in this mess in the first place. If Republicans have new and good ideas, we should listen to them and incorporate them into the bill. But if the GOP is devoted to pushing the same policies that got us into this mess then they’re going to be sorely—and rightly—disappointed.

It’s pretty unreasonable that Republicans aren’t willing to accept the 2% of this bill they don’t like to get the 98% they support, but that’s how things are. Democrats want to invest in America; Republicans don’t. It really is that simple.

UPDATE: This is disappointing:

Senate Democratic leaders conceded yesterday that they do not have the votes to pass the stimulus bill as currently written and said that to gain bipartisan support, they will seek to cut provisions that would not provide an immediate boost to the economy.

But, as always, I have a solution: let’s cut out the 2% of the bill the GOP flagged as “wasteful spending” and nothing more. Let’s take out the list of the programs the Republicans said they had a problem with and then refuse to cede another penny to them.

If the Republicans are not willing to compromise–if they get everything they’ve demanded and then start demanding more–that will show just how unserious they are about solving this economic crisis. Like I said, the Democrats are trying to invest in America while the Republicans are pushing the same policies that caused this crisis in the first place.

UPDATE II: The CBO just released an analysis outlining what the job bill currently making it’s way through the Senate will accomplish. Behold:

CBO has developed a range of estimates of the effects of the Senate legislation on GDP and employment that encompasses a majority of economists’ views.
According to these estimates, implementing the Senate legislation would increase GDP relative to the agency’s baseline forecast by between 1.2 percent and 3.6 percent by the fourth quarter of 2010. It would also increase employment at that point in time by 1.3 million to 3.9 million jobs, as shown in Table 1. In that quarter, the unemployment rate would be 0.7 percentage points to 2.1 percentage points lower than the baseline forecast of 8.7 percent.

So there are three important things the jobs bill will accomplish:

  • Raise GDP between 1.2% and 3.6%
  • Create 1.3 million to 3.9 million jobs
  • Reduce unemployment by 0.7% to 2.1%

That’s what we call “stimulus.” Despite the Republican sound and the fury, this bill’s economics are sound as stone–it will raise GDP, create jobs and lower unemployment, which is exactly what it’s intended to do and exactly what America needs to do.

UPDATE III: More from the CBO:

[D]irect purchases of goods and services by governments, including investment in infrastructure, tend to have relatively large effects on GDP. Because infrastructure spending takes time to occur, increased funding for that purpose would not boost outlays or GDP much this year, but it would probably provide significant stimulus from 2010 through 2012.

In other words, all of that complaining by Republicans over all of the spending in the bill is wrong–government spending has “relatively large effects on GDP” and would provide “significant stimulus” through at least 2012.

And for all those Republicans still agitating for more tax cuts:

A dollar’s worth of a temporary tax cut would have a smaller effect on GDP than
a dollar’s worth of direct purchases or transfers, because a significant share of the
tax cut would probably be saved.

That corroborates the economic analyses I linked to above–tax cuts just aren’t cost-effective.  Government spending is a more cost-effective form of economic stimulus than tax cuts.