One of the arguments behind massive government spending vs. across-the-board tax cuts to pull out of a recession is that our elected leaders will do a better job spending the money than the regular citizens of the country.
But, can you really trust these people to spend tax dollars wisely?
Here are two cases that show you cannot. One story involves a governor spending precious tax dollars to hire friends and supporters into high-paying hack jobs; the second involves a mayor who won't spend money to protect an event that will draw a million tourists into his city.
(Massachusetts) Gov. Deval Patrick has stashed four staffers in big-bucks jobs at several of the quasi-public agencies he is now vowing to reform - including one post worth a jaw-dropping $190,000 a year, the Herald has learned.These appointments come just days after the uber-Liberal Patrick tried to stuff a long-time supporter into a $175,000-a-year job that had been vacant for 12 years.
Outrage is sweeping Beacon Hill after Gov. Deval Patrick quietly slipped a $175,000 plum job to a political pal while squeezing taxpayers to pay more for less from the debt-ridden state government....(the state) while bracing for cuts of cops and teachers, Patrick awarded supporter Marian Walsh the pricey plum as assistant executive director of the state’s Health and Educational Facilities Authority.
MHEFA is an organization that 99.5% of Mass residents had never heard of until last week.
While we are talking Massachusetts hack-o-rama, consider the following:
Robert Rooney, a former $123,000-a-year deputy secretary of public works in the transportation office, is still working at the (Massachusetts Turnpike Authority) as a $122,000-a-year assistant chief engineer, Flagg confirmed last night. Rooney’s job was to help bring down the tolls on the Western Turnpike, a job that is no longer part of Gov. Deval Patrick’s transportation reform plans.
From this article, we can assume that Rooney is getting paid big bucks to engineer a project that won't happen?
On the other side of the tax coin is "esteemed" Boston Mayor Thomas M. Menino, who is apparently refusing to pay for any city services to support the visit by the Tall Ships, an event destined to attract more than a million visitors to his city.
Menino is the guy in the middle in this photo, in case you don't know him.
Sail Boston officials said Wednesday the event that attracts millions of visitors to see the windjammers parade through the harbor will go ahead, even though they missed a deadline to give the city $2 million.
That angered Mayor Tom Menino, who told The Boston Globe that holding the event without city services could cause a "public safety crisis." He says he may ask the Coast Guard to bar the 50 ships from the harbor.
The notion that the mayor would actively consider preventing an event that will attract tourist into his city in July is mind-boggling.
(Menino) said he would withhold all city services for the nautical extravaganza - no police officers, no cleanup crews - even though nearly 1 million people are projected to descend on the city...This (PDF) report indicates that Sail Boston 2000 would have a massive positive impact on revenues in Boston:
The results .... show that total economic activity in the Greater Boston region of the Sail Boston event will be $88.96 million (in year 2000 dollars). The majority of that activity - $64.66 million or 73% - will be in the city of Boston where the event takes place.This report indicates that the city might lose money, as the expenses outstrip the tax revenues. But, in 2000, the small investment by the city was worth the significant business in Boston and surrounding communities received.
Why not this year? This is a year when businesses need the help, and most experts believe that fewer people will be going away for vacation, leaving a huge pool of people looking for something to do on a July weekend.
The one question that remains is whether Menino will try to get Ol' Ironsides to protect Boston Harbor once again from an incursion by an enemy fleet.
These are the people who Barack Obama considers better guardians of YOUR money than YOU, and know better how to spend YOUR money to repair this economy.
Forgive me, Deval, if I am a skeptic.
5 comments:
I know a guy who blew his kid's entire college fund at the track in a weekend, and an old lady who spent her life's savings on what turned out to be one of those telephone lottery scams. Let's not even talk about the first generation iPod I spent $495 on six years ago. I'm not sure I'd use these as a basis to argue that government spending is always wise, though.
Also, I don't think Obama is the first president ever to propose that the government spend the taxpayers' money, is he? Are you saying all government spending would be better handled by private citizens?
I am saying that you know how to spend your money better than Washington or Beacon Hill. You spending your own money is more direct, comes with fewer or no political connections, and is a better gauge on what the American people want and need.
Government spending is almost always politically connected, goes to projects and goods that a handful of select people want, and is far less effective at fixing an economy.
The guy who spent his money at the track helped keep dozens of people employed, may have allowed the owner to make upgrades to the place which could attract more business, could have given out raises, or been a cheap bastard and kept the dough himself (but, even then, he will spend it somewhere and that cycle will repeat); The woman who lost her money to a scam is a victim of a crime and likely not a good candidate to include in a economics discussion. But, again, that crook will spend the dough somewhere...)
Say you and another guy each owns a mall that is doing poorly.
You decide to ask a couple of stores that you like to have a big sale. You think that sales in your preferred stores will bring people into those stores, and maybe trickle to the other shops.
You competitor asks all the stores in the mall to have a big sale. He thinks that by having all the stores reduce prices, it will bring people into all the stores, based on what they like.
Which of you will have more success, assuming that all your stores in both malls are the same, and your malls are in similar economic regions?
My bet is on the guy whose mall is entirely on sale, because he is not presuming to know which stores will do better, which stores will draw more people, which stores will drive more business.
That is the tax-cut model; allow the folks to keep and spend their own money as they see fit.
Your model is the government spending model. You know better than the customers what they want and you will determine where the money will be spent.
It don't work and has been historically shown to be the case.
My point in picking out a couple of boneheaded private spending options was that, given the sheer immensity of the spending government does, you're always going to be able to find an $800 hammer or a bit of naked cronyism. Just as the GOP was able to find a few billion chunks of delicious pork in a trillion-dollar stimulus package. So?
(My word verification is "prick," strangely enough.)
(It's not clear to me why the tack guys who pocketed my pal's college fund are going to go out and stimulate the economy, but Patrick's cronies are going to take their fat salaries and...what? Stash them in the Caymans?)
You've sorta got two arguments going here, one about government in general, one that I infer to be about the stimulus.
Government doesn't always spend wisely, but one thing it does is spend on things you and I wouldn't. Give me back all the money I spent in taxes this year, and I tell you, I'm going to direct precious little of it towards paving highways, hiring air traffic controllers, invading Pakistan or paying off Cheney's government pension. And two of those items (I'll let you guess) I actually think are a good idea. Maybe you'd sink all your extra money into strengthening the tide wall in Swampscott, but I doubt it.
As to the shopping mall analogy, let's imagine this imaginary mall existed in a country in the middle of a steep recession, where millions of people are losing their jobs, home values are tanking, banks are lending money and, most of all, people just aren't spending. I'm guessing that neither of our sales techniques are going to have much effect. Drop all the prices, and people - those rugged individuals that make the USA #1, etc - are still not likely to day, "Ah, NOW I'm gonna buy that widescreen TV I always wanted!" People right now are saving - hoarding might be a better word - and so there's a pretty good chance that all the stores in the mall will close, all those people will be out of work, and - since they're not jobless - they'll start scrimping and saving and hoarding, and pretty soon all the other stores who depended on them as customers will start to go out of business. Government, because it has far deeper pockets than anyone else, can, in extreme circumstances, say,"Okay, all federal offices are now going to be equipped with an American-made widescreen TV," and buy out the entire mall. This would of course be greeted with scorn and derision form certain quarters, and Glen Beck would probably get a whole week of programming out of the "Fat Cat Bureaucrats and Their Widescreen TV's," but maybe his ratings go up a little and the people who work for him make more money and keep their own shopping malls in business a little longer. That's why it's called stimulus.
Will Obama's work? I'm guessing it won't, because it's frankly just too small. But it's not clear why anyone would think you can tax cut your way out of this mess. Are you saying that the problem with the last Administration was that it was somehow adverse to cutting taxes? Especially on the super-rich, who are the ones, if I understand the theory, who are supposed to trickle it all down to the rest of us?
>>>But it's not clear why anyone would think you can tax cut your way out of this mess.
The Kennedy tax cuts of the 1960s revived the economy. The Reagan tax cuts in the 80s (yes on the super-rich) worked to create the largest and longest period of growth in the country's history. The 90s tax cuts pushed through by the Republican congress worked (credit Bubba, if you want, but it worked). The Bush tax cuts stopped the Clinton recession, led to the highest stock market levels in US history, dropped unemployment lower than under Clinton.
Carter's massive taxation failed. Bush I read-my-lips tax increase didn't work; Clinton's largest tax cut in US history (retroactive to tax money perviously earned) didn't work.
The Japanese massive spending programs in the 1990s did not revive their economy , but led to the "Lost Decade."
Europe, with its higher taxation rates, have a lower standard of living than in the US by any honest measure.
And finally, the USSR and Cuba, countries where there is/was excessive taxation and total government spending are abject failures as societies. Cuba is a hell hole. If massive government spending were a panacea, Cuba would be the workers' paradise that the liberals all want to pretend it is.
Sorry for all the facts. I know they jut get in the way....
>>People right now are saving - hoarding might be a better word
And this is why you cut people's taxes -- to get them to spend money.
What would give you more "consumer confidence" to spend some extra dough? Seeing a bunch of highway workers poking away at some "shovel-ready" project or opening your paycheck and seeing more money in there than last week.
If giving $13 a week to "95%" of the population will help, why will giving more money to 100% of the population not help?
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