This week, the left-leaning Economic Policy Institute (EPI) offered its solution for jumpstarting the lagging economy -- more government spending. EPI's President, Lawrence Mishel advocated a new tax-and-spend plan to the tune of "$500 billion or more in government spending, employment tax credits and jobless benefits."
The WSJ reports:
"All would be paid for with a new levy on Wall Street financial transactions.
Specifically, EPI is proposing $150 billion in revenue-sharing for beleaguered states; $40 billion for public infrastructure, mainly school construction; $40 billion for new local-government jobs programs; employment tax credits of $80 billion or so for both private- and public-sector employers; and renewal of the extended jobless benefits from last February’s recovery act, at a price tag of about $100 billion."
The EPI plan is to impose yet another tax on the investor class. Never mind that investments are already doubly taxed by capital gains taxes. Also, it seems Mishel has no regard for the effect this would have on markets in a political climate where potential investors are already sitting on the sidelines, afraid of the next punitive policy coming down the pipeline.
However, even if we put aside all the problems that accompany draining the investor class and further deterring investments, on its face, this plan is flawed, redundant and unnecessary because it has already failed. Implementing massive spending for states, infrastructure and schools to stimulate the economy...where have we heard this before? Ah yes, that was what the massive $787 billion stimulus bill was supposed to accomplish. Here we are eight months later, and the stimulus has failed to produce any conspicuous gains. And, there is certainly nothing to believe that this new proposal will be any less of a failure.
Obviously, the lessons of the failed stimulus have not been grasped by all yet. And, in the midst of the health care debate, with people concerned and upset with this administration's spending record so much so that they have managed to halt the Democrats from implementing their health care vision, the left would be wise to avoid taking up stimulus 2.0 right now.