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.
Please check out my new books, "Prosecutors Gone Wild: The Inside Story of the Trial of Chuck Panici, John Gliottoni, and Louise Marshall" and also, "The Definitive Dossier of PTSD in Whistleblowers"