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Wednesday, January 14, 2009

Analyzing the Republican Stimulus Alternative

Almost on cue, the Republicans have produced a stimulus alternative like the one I suggested yesterday. This plan does everything I said needed to be done yesterday in order to position themselves as the fiscally conservative, tax cutters if and when Obama's stimulus plan falls short. While there are differences from what I asked for yesterday, the plan is nearly in line with what I called for not 24 hours ago. Here are some of the details... 1) a permanent 5% tax cut in all marginal income tax levels 2) cut the corporate tax rate from 35% to 25% 3) no extra spending and no earmarks 4) make the dividend and capital gains tax of 15% permanent 5) repeal the AMT permanently 6) repeal mandatory withdrawals from IRA's at 70 years of age 7) make all withdrawals from IRA's tax free in 2009.

Largely, I like most of these. I would have called for a mandatory freeze on all non essential government spending. This sends a much stronger message that the Republicans are serious about fiscal restraint. Also, I am not terribly comfortable with making all withdrawals from IRA's tax free. Such a move would put far too much stress on investment firms, many of which are already under stress. IRA management is a lucrative business and most of these firms aren't counting on such withdrawals since they currently come with serious taxes and penalties. If such withdrawals are only allowed for the purchase of a property, it would help stabilize the housing market while also not putting far too much stress on investment firms.

Still, this plan does exactly what I said yesterday such a plan would do. There's of course no way any but a few of these ideas will be law. That actually works in the favor of the Republicans. Come 2010, their hypothetical plan can be matched up against the reality of Obama's stimulus. As I said yesterday, even if his plan works eventually, it is nearly impossible that it will work by 2010. By then though, our deficit will balloon to as much as 2 trillion Dollars. The Republicans can hold out their alternative as a plan that would have maintained fiscal restraint while giving plenty of stimulus. Such rhetoric has a very good chance of working since there is no way to test their statements. Everything they say will be hypothetical. How can anyone say their plan wouldn't have worked? It wasn't tried.

As such, the Republicans have now set themselves up perfectly as the fiscally conservative, tax cutting alternative to the tax and spend liberalism of Obama. While Obama's plan polls well now, that's because it hasn't been tried yet. Once implemented, it will only be favored if it works. It will certainly balloon the deficit, and that gives the Republicans a ready made attack point. If we are still mired in any sort of economic upheavel, the Republicans can attack, attack, attack and hold up their own plan as the alternative that would have worked if tried. It will be hard to argue since it wasn't tried. This plan positions the Republicans perfectly for serious Legislative gains in 2010. Watch for this plan to become a major part of the 2010 campaign.


Gail said...

Minority Leader John Boehner had proposed the Rapid Economic Recovery Plan BEFORE the first bail out even occurred. There was a complete media blackout on it.

Here is a the url to his website:

Here is a link to his Leader Alert introducing it:

And, here is the alert:

"The Boehner Rapid Economic Recovery Plan

Washington, Oct 28, 2008 - As an alternative to the massive “stimulus” spending plan Democrats are threatening to pass in January, House Republican Leader John Boehner (R-OH) has put forth a plan for economic growth, jobs, and rapid recovery that relies on tax relief for working families and small businesses instead of higher taxes and increased spending on government programs.

The Boehner rapid economic recovery plan would:

* Give Working Families Tax Relief: Make the tax code fairer and friendlier for the middle-class by doubling the child tax credit from $1,000 to $2,000 per child to put more money back in the pockets of working families.

* Rebuild 401(k)s and Spur Investment through a Zero Capital Gains Tax: Immediately suspend the capital gains tax on newly acquired assets for the next two years. This will encourage investment and boost the value of sagging 401(k) accounts on behalf of workers and retirees.

* Provide Tax Relief So American
Businesses Create More Jobs: Increase the Section 179 limits that allow small businesses to expense new equipment, and extend bonus depreciation for an additional year and increase its value so that 75% of equipment costs can be deducted in the first year. Provide net operating loss relief for all employers by allowing all employers to “carry-back” losses for three years (five years for small businesses).

* Keep American Jobs at Home: At 35%, the American corporate tax rate is the second highest such rate in the industrialized world -– a cost passed on to consumers in the form of higher prices for goods and services. The Boehner plan would immediately reduce the rate to 25% to reduce prices for U.S. consumers and give employers additional incentive to keep good-paying jobs in America

* Create Jobs through an “All of the Above” Energy Plan: Accelerate exploration of new sources of American-made energy and begin implementing the “all of the above” energy strategy House Republicans introduced last summer in the American Energy Act (H.R. 6566). The GOP plan, which would create up to 1 million new jobs in the United States once implemented, calls for increased production of American energy, accelerated development and use of alternative and renewable fuels, and greater conservation and efficiency to reduce energy prices."

These guys have been doing their jobs. They have not only been censored by the MSM, but they have been sidelined by the conservative blogosphere.

You are the first person to post on this issue and Leader Boehner first proposed it over 2 months ago.

Best regards,
Gail S

mike volpe said...

I have heard this excuse before that the Reps have proposals but they don't get heard. I don't accept. I don't doubt the MSM won't give them a fair hearing. So what. I heard about this on Fox News and then found the link through Red State. They can go on Rush, Hannity and any number of talk show outlets. They can speak to the Weekly Standard and any number of blogs. There are plenty of ways for Reps to get the bully pulpit.

Furthermore, they need to make themselves available when there is talking heads about Obama's stimulus plan. Given what I have seen so far, I think you will see the reps sell this much harder. That will make a huge difference in 2010.

Gail said...

I surely hope so. Did you follow the Republican protest to the House vacation in August?

A number of Reps stayed in session throughout August filibustering on the American Energy Act. It had sufficient bi-partisan support to pass in July, but Speaker Pelosi refused to bring it to the floor and adjourned the House.

She ordered the lights and microphones off, and after some of the Reps figured out how to turn the mics back on, had them turned off again. She ordered the MSM to not report on the protest and they obeyed. There was nary a mention of it in the blogosphere.

It was followed on Twitter throughout the month, but I didn't hear a word about it anywhere else, well there was an occasional MSM mention of how childish the Reps were being for forfeiting their vacations to do their jobs.

Go read Minority Leader Boehner's website and see for yourself. They gave numerous press conferences, there are videos of them on his site, but they never make to the news, to conservative talk shows or the blogs.

These guys have been very active doing what they are supposed to do.

I recently wrote to all of the Republican Reps about the media blackout. Hopefully they will get very aggressive. But their job is to legislate. They have been doing that. I would like to see the RNC get behind them a little more.

I wrote earlier this month to numerous conservative bloggers, websites and columnists. Only two replied and none of them acted.

Had I not put forth so much effort to get this news out, I would agree with you about the "excuse" factor. But from personal experience, I can tell you this info is being sidelined. It's probably because the conservative Reps don't have enough celebrity status, pizzazz and offensiveness to attract an audience.

Anyway, thank you for posting on this solution. You are the first.