Are Republicans Backing Another Stimulus?
It is the irony of ironies if you believe one leading economist's characterization of President Obama's tax cut deal. As Republicans prepare to take over the House next month -- having swept to power by railing against reckless spending in Congress -- they are now backing what Mark Zandi calls a second "stimulus."
Zandi, Moody's chief economist, told Fox News's Chris Wallace that even if others aren't using the word to refer to the tax cut agreement between Republicans and President Obama, he is calling it just that.
"It's stimulus in the sense we're providing some additional temporary tax cuts and some additional temporary spending increases, so I'm not sure what the difference is between what we're talking about here and what we did back in early '09," Zandi said on America's Election Headquarters Sunday.
In February 2009, a then-Democrat-controlled Congress passed a $787 billion stimulus package designed to thwart a recession. Many Republicans criticized -- and voted against -- the package as an example of Democrats' reckless spending in Congress.
"I'm not sure why ‘stimulus' is such a dirty word," Zandi added. "From my perspective, the stimulus did what it was precisely supposed to do, which was to end the recession and jumpstart a recovery."
But Republicans made it a dirty word when they ramped up their criticism of Democrats this year, using the idea of fiscal irresponsibility to bash Democrats in the November midterms, which House Republicans won handily.
The current version of the tax cut bill, expected to be taken up by the Senate on Monday, will keep the estate tax at 35 percent for estates over $5 million for the next two years. It will also extend unemployment benefits another 13 months.
Just don't call it a stimulus, says the next chairman of the House Budget Committee.
"I don't see this bill as a stimulus. I see this bill as preventing damage--further damage--from being done to the economy," Congressman Paul Ryan (R-WI) told Fox News.
But Zandi begs to differ. "We can debate this until the cows come home but at the end of the day," he said, "we're providing some additional support to the economy and, as it's designed right now, it's temporary support, so by my definition this is stimulus."
White House economic advisor Larry Summers warned last week that without a tax cut deal, the country faces a double-dip recession. Zandi, who's advised Democrats and Republicans alike, agrees the chances for a double-dip recession will drop from "one in four" to "one in 10" if the Obama-brokered plan is passed.
Zandi predicts a bill will increase GDP growth by one percentage point next year, adding it will also create 2.8 million new jobs next year.