IP: Just what we need: more handouts for the rich: Dan Gillmor on Technology Mon Oct 29 13:15:16 EST 2001

[David Farber <dave () farber net>]

> Just what we need: more handouts for the rich
>
>
>
> Tax cuts for wealthy, corporations proposed
>
> BY <mailto:dgillmor () sjmercury com>DAN G<mailto:dgillmor () sjmercury com>ILLMOR
> Mercury News Technology Columnist
>
> Today's economic snake-oil salesmen have an infallible elixir. Whatever 
> ails us, they say, can be cured by tax cuts that benefit wealthy 
> individuals and corporations.
>
> So it came as no surprise Wednesday when the House of Representatives 
> passed just such an ``economic-stimulus'' plan. Under the guise of 
> fighting terrorism and its pernicious effects, the lawmakers were pushing 
> nothing more than old-time fiscal ideology.
>
> It's trickle-down economics -- the wrong medicine at the wrong time for 
> the nation, and for Silicon Valley.
>
> And it's the worst kind of opportunism -- a cynical use of a genuine 
> emergency to do things that otherwise wouldn't pass the smell test.
>
> The bill's $99 billion worth of tax cuts -- about $70 billion for 
> companies and the rest for individuals -- dwarfs the few billion aimed at 
> the unemployed. The Congressional Research Service says IBM alone will 
> collect $1.4 billion and General Motors more than $800 million.
>
> No one suggests that the basic idea behind trickle-down is completely 
> false. Over time, wealthy individuals and institutions do invest in things 
> that provide jobs.
>
> But does trickle-down economics produce a better long-range result than 
> other policies? Public investments -- including social programs, 
> infrastructure and tax cuts for people at the lower end of the scale -- 
> are at least as valuable. Among other things, they help maintain the vital 
> middle class and provide a safety net for the less fortunate.
>
> Even if you believe that trickle-down is ultimately better than other 
> kinds of fiscal policies, it is almost useless for short-term stimulus. 
> Yet hefty, temporary economic stimulus is what we need to counter the 
> immediate damage from the Sept. 11 attacks and their ongoing aftermath.
>
> The House bill does almost nothing for the hundreds of thousands, perhaps 
> soon to be millions, of people who have been or will be laid off as 
> companies protect bottom lines.
>
> It would guarantee big budget deficits, and/or large cuts in federal 
> spending, in years to come. It wouldn't begin to restore consumer 
> confidence or spending.
>
> There's no doubt that we rely too much on consumer spending to fuel the 
> economy. A spendthrift nation is not thinking for the long term. Surely, 
> we'd be better off in the long run if we increased wealth through saving 
> and investing rather than shopping sprees.
>
> But the loss of consumer confidence is one of the main reasons we're in a 
> recession, or about to be. In normal times, a mild recession would be a 
> necessary part of the business cycle. In today's emergency, it could turn 
> much, much worse in a hurry without stimulus.
>
> Worse, the House bill would rekindle the worst kind of cynicism among the 
> vast majority of Americans -- telling them that their needs come second to 
> the wish lists of IBM, Ford and the people in the top income brackets.
>
> We need two kinds of federal fiscal policy right now. The first is a 
> short-term economic boost, through temporary help for middle- and 
> low-income people, and more assistance for the newly laid-off as well as 
> those who are about to lose welfare and have no alternatives.
>
> Then we need to invest for the long term.
>
> Investments in our key infrastructure -- in things like public health, 
> transportation, communications and other things that are essential to our 
> overall security -- seem eminently sensible. To some people, however, such 
> investments are an outrage, on the principle that if the private sector 
> can't supply them they're not needed.
>
> Both approaches have merit, especially if we are to wean ourselves from 
> pure consumerism. Let's at least have a genuine debate, and not pretend 
> that gifts to the rich are the only or even best way to fight terrorists 
> or deal with economic emergencies.
>
> We have to hope that the Senate will modify the House's unbalanced 
> approach. But if the Bush administration starts insisting that it would be 
> unpatriotic to resist, who knows what the senators will do?
>
> Let's hope Congress remembers who's taking the biggest economic hit in 
> this crisis -- the people who are losing jobs and those who fear they may 
> soon lose their jobs. Telling them to get lost, while writing 
> billion-dollar checks to companies and cutting taxes for the wealthy, is 
> exactly the wrong approach.
>
> We're all in this together. What an old-fashioned notion.
>
>
> Dan Gillmor's column appears each Sunday, Wednesday and Friday. Visit 
> Dan's online column, eJournal ( 
> http://web.siliconvalley.com/content/sv/opinion/dgillmor/weblog/). E-mail 
> <mailto:dgillmor () sjmercury com>dgillmor () sjmercury com; phone (408) 
> 920-5016; fax (408) 920-5917. PGP fingerprint: FE68 46C9 80C9 BC6E 3DD0 
> BE57 AD49 1487 CEDC 5C14.


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