Tax increases, more 'stimulus' won't work

Tax increases, more 'stimulus' won't work

September 6th, 2011 in Opinion Free Press

It's odd to hear President Barack Obama and his Democrat allies in Congress continue calling for tax increases as the way out of the United States' economic crisis.

For one thing, raising taxes during bad economic times is dangerous at best, because it further suppresses whatever limited private investment is taking place.

But the other issue is, what exactly does Washington plan to do with any new tax revenue that it gets? Supporters of tax increases say the money could stimulate the economy and create jobs if it were spent by Congress on road, bridge and other infrastructure projects around the country.

But we tried that with the first "stimulus," and it failed. Nationwide, the counties that got the most road work money per capita from the $862 billion stimulus created no more jobs for construction workers than counties that got no stimulus money.

Other spending from the stimulus has been equally non-stimulating.

But even if you think additional stimulus spending is a good idea, it's just not likely to happen. Even if somehow the Republican-run U.S. House of Representatives went along with the Democrat-controlled Senate and approved tax increases, the failure of the last stimulus makes it almost impossible that the House would approve yet another stimulus to eat up the new tax revenue.

That's not to say Congress wouldn't find some way to spend extra money. It always does -- and then some. But if the stimulus -- whose direct purpose was to create jobs -- didn't boost employment, how likely is it that more government spending on other things is going to get Americans working again?

The thing that small businesses -- which provide most of our nation's jobs -- need right now is some economic certainty. They need assurance that Congress is not about to raise their taxes and undercut whatever investment they make in expanding operations and hiring workers.

They also need relief from the increasing regulations and coming penalties of ObamaCare. Unfortunately, whether businesses will get relief from ObamaCare's rules is unclear. Even if a repeal of the law made it through Congress, the president would veto it. A majority of the states have sued to have ObamaCare overturned. But it could take years before the lawsuits work their way through the federal courts, and a favorable ruling is far from guaranteed.

So one of the few things that Washington can do in the short term to enhance prospects for economic growth is to declare firmly that it will not raise taxes.

Ironically, and sadly, that is the very thing that the president and Democrats in Congress are most unwilling to promise.