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Bulls & Bears
On Saturday February 20, Brenda Buttner was joined by Gary B. Smith, Tobin Smith, Pat Dorsey, Dr. Bob Froehlich, and David Goodfriend.
68 Percent of $862B Stimulus Still Not Spent; Give It Back Now?
Gary B. Smith, TheChartman.com: This is simple. We've only spent a bit over $200 billion dollars of the stimulus so far. It sounds like a lot of money, but almost no real jobs have been created as a result of it. Only about 10 percent of the stimulus that has gone out has actually gone to shovel-ready projects. And time and time again, so many of the so-called jobs that have been created are bogus. If the government can't spend the money efficiently, then give the money back to the people and stop causing more harm than good.
David Goodfriend, radio talk show host: Let's talk facts here. 2.4 million jobs have been created from the stimulus. That's the number Moody's and the Congressional Budget Office say have been saved or created. This money has gone to states, to cop, to firefighters and teachers. Look at Recovery.gov. We should feel safer and better about where the economy is headed. About 1/3 of the stimulus is going to come in the form tax cuts. Would you not be willing to have over 90 percent of Americans receive these tax cuts? This stimulus package is helping the country.
Tobin Smith, NBT Media: This stimulus package has gone to help and protect union jobs. It's just bizarre. Isn't it interesting that many states in deep fiscal trouble like California, who couldn't afford to maintain these workers without the stimulus, got all this money? The stimulus has just delayed the days of reckoning for many states for another nine or 10 months. These state workers have pension plans that state governments can never hope to afford. And the stimulus cannot solve these problems.
Pat Dorsey, Morningstar.com: The government is never going to give this money back. It's not like the government is going to write a big check for everybody for several thousand dollars. One of the biggest benefits of the stimulus package a year ago was that it actually raised confidence; the government stepped in, put a floor under the economy and made sure demand didn't fall to zero. It helped take us back from the abyss. Now, I'm fairly indifferent as to what gets spent or doesn't. What matters is that private demand is finally starting to come back.
Dr. Bob Froehlich, The Hartford: I want this money back. It doesn't have to come as some check to taxpayers, but the government should give it back. Unfortunately, I don't think that's going to happen. If that's not the case, I'd rather spend it on something that will actually create jobs. Unfortunately that's not what we're doing. And so-called "saving" a job is different than creating a job. We were supposed to spend this money on infrastructure development, and it was supposed to have a tremendous ripple effect across the economy, and it hasn't.
President Creates Debt Commission; Is National Sales Tax Next?
Dr. Bob Froehlich: This may be a bi-partisan commission, but I think it's a cover up for a national sales tax. I think that's what's going to come up. A good number of people support the idea of a national sales tax. But this is the single worst thing we could have at this point. It'd be the final nail in the coffin for our economy. Unemployment is going to be high for the foreseeable future, the housing market is still in chaos, and consumer spending is still down significantly. We have to figure out a way to encourage the consumer to spend—not cut back. But unfortunately this tax could really be coming.
David Goodfriend: A national sales tax is not on the table. I challenge you to come up with any authoritative person or group that's saying a national sales tax is on the way of being adopted. I hate sales taxes. Why? Because they're regressive. They don't really affect people at the top, and they hurt people at the bottom of the economic ladder who need to most help. Continuation of progressive income taxes is the way to go, and it has worked fine for the last century.
Tobin Smith: About 60 percent of Americans over 18 pay almost zero federal income tax. And those same 60 percent receive about 90 percent of all government benefits. What on earth is wrong with having people pay into that if they're getting that level of benefits? It's like a co-payment. Too many people get too many benefits and don't pay-in. If you eliminated the income tax, and implemented a national sales tax instead, you'd actually have a fair distribution of people paying-in for the government services they receive. What's wrong with that?
Pat Dorsey: A national sales tax would be highly regressive. At the end of the day, the purpose of any taxation is to get the deficit down. If you want to do that, you either raises taxes, by sales or income, and you can seriously begin cutting at least one of the three major government programs that are affecting our negative deficits—defense spending, social security, or Medicare. That's the harsh truth of the matter.
Gary B. Smith: This actually would be a good idea if Democrats proposed it. Unfortunately, Democrats aren't prepared to start cutting any major government programs. Their plan is to put more and more of the tax burden on the rich on small businesses. But a sales tax is actually the fairest way to implement taxes. Yes, it's regressive, but the vast majority of people in the U.S. pay little to no federal income tax, and actually get credits. Too many people get government benefits, and yet pay nothing to receive them. A national sales tax captures income across the board. Playing the class warfare card just hurts everyone in the long-term.
Which Is Doing More For U.S.: Walmart or Washington?
Gary B. Smith: Look at what Walmart does. It has enabled retail to have very low prices. You can go into Walmart and buy almost anything you want for dirt cheap. You had much more restricted ability to do that before Walmart was around. Not to mention, Walmart globally employs a few million people, and they take all the risk themselves. If they mess up, they fail. Contrast this with government. What does it do? Take money in, create red tape, and they can never go out of business. Just look at teacher unions for a prime example. The government operates in a completely different fashion, and fails miserably at it, without ever having to pay the consequences.
David Goodfriend: Last year, Walmart was lobbying Congress to raise the minimum wage. Why? Because Walmart caters to lower and middle income folks. Walmart has cut prices to stimulate demand at that level of the economy to help those being hurt most by the recession. It's not a bad idea. For now, Walmart has taken a temporary hit, but they're smart and catering to their customer base.
Tobin Smith: Let's use Walmart as an example on health care. As opposed to trying to take over health care, Walmart lowered pharmaceutical costs to their customers by about 80 percent. If Walmart ran the health care system, we'd actually be able to afford expanding coverage to 30 million people. I give Walmart all the credit in the world because they run a business and make the country better off at the same time.