Spring Break
Dems, GOP need to focus on compromise
Aaron Igdalsky
Issue date: 1/27/09 Section: Commentary
Now that the millions of people who ventured to our nation's capital last week have left, and the pomp and circumstance has come to a halt, it's time for President Obama and Congress to roll up their sleeves and get to work on reviving our economy. Despite a brief bear market rally between the election and the inauguration, equity markets are now back near the lows they reached in the fourth quarter of last year; the Dow Jones even saw a 4 percent drop on the day of Obama's inauguration, by far the largest single day drop ever on the day of a presidential inauguration. The brief glimmer of hope that we might have seen the worst of the economic crisis has dissipated, and our economy today looks just as bad as it did three months ago. The American public, as well as the rest of the world, is waiting for Congress to pass an economic stimulus package that President Obama can sign into law.
Despite calls from both sides of the aisle last week for a renewed spirit of bipartisanship, both the Democrats and the Republicans are back to their old bickering ways; even the always cool "no-drama Obama" publicly chided Republicans for taking talking points from conservative radio talk-show host Rush Limbaugh. This bickering has worked its way into the process of negotiating an economic stimulus package as well. Democrats are calling for $825 billion in spending on projects related to repairing/building roads and bridges, as well as improving education and developing our nation's power grid, among others. Republicans are calling for sweeping tax cuts, which they say will stimulate spending and private sector investment, and in turn, result in broad economic growth. Both sides are furiously butting heads, with no clear resolution in sight.
A compromise of both tax cuts and spending would be ideal. Practically speaking, neither sides can have very much of what they want; we cannot slash taxes across the board and massively increase spending simultaneously. With lower tax revenue already because of diminished or non-existent capital gains, the feds simply cannot build new schools and bridges while also lowering income and corporate taxes. On the other hand, the American government has historically demonstrated time and time again that it cannot spend its way out of a financial crisis by printing endless supplies of cash. In fact, many of the multi-billion dollar projects included in the Democrat's version of the economic relief package would not even be able to begin until 2014, which is ages away as far as an economic recession.
Despite calls from both sides of the aisle last week for a renewed spirit of bipartisanship, both the Democrats and the Republicans are back to their old bickering ways; even the always cool "no-drama Obama" publicly chided Republicans for taking talking points from conservative radio talk-show host Rush Limbaugh. This bickering has worked its way into the process of negotiating an economic stimulus package as well. Democrats are calling for $825 billion in spending on projects related to repairing/building roads and bridges, as well as improving education and developing our nation's power grid, among others. Republicans are calling for sweeping tax cuts, which they say will stimulate spending and private sector investment, and in turn, result in broad economic growth. Both sides are furiously butting heads, with no clear resolution in sight.
A compromise of both tax cuts and spending would be ideal. Practically speaking, neither sides can have very much of what they want; we cannot slash taxes across the board and massively increase spending simultaneously. With lower tax revenue already because of diminished or non-existent capital gains, the feds simply cannot build new schools and bridges while also lowering income and corporate taxes. On the other hand, the American government has historically demonstrated time and time again that it cannot spend its way out of a financial crisis by printing endless supplies of cash. In fact, many of the multi-billion dollar projects included in the Democrat's version of the economic relief package would not even be able to begin until 2014, which is ages away as far as an economic recession.
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