"Economic Stimulus Plan" Is Just More Bush Insanity

Insanity: doing the same thing over and over again and expecting different results. -- Albert Einstein

On Friday, George W. Bush rolled out an "economic stimulus plan" that simply looks like a variation of what we saw after he took office in 2001. There are proposed rebates, tax breaks for businesses -- you know the drill.

Congressional Democrats -- out of election-year fears, I suppose -- appear willing to fall for this. An AFP news report said that they "signaled willingness to suspend their own budget rules and accept a tax break without first figuring out how to pay for it."

It hasn't been lost on some observers that a big problem with our economy is that it has become alarmingly leveraged. The U.S. has made trade agreements all over the world, and our trade deficit was up to $63.1 billion just for November.

The Bush administration handed out a package of rebates and tax bonanzas, mostly benefiting affluent people, during its first year. The Clinton administration had left the U.S. with a record federal budget surplus of $230 billion in its final fiscal year. For the past fiscal year, the most modest estimates of the federal deficit were around $158 billion, and that was much lower than the previous five years. I suppose one could conclude that the lack of spending on infrastructure and services is finally "paying off" in a modest way.

Onward.

History matters, and perhaps it's time to solicit some people's memories. I well recall the debate over the 1993 Clinton economic plan, which raised taxes somewhat on wealthy Americans. The marginal federal income tax rates in the plan were nothing close to what they had been pre-Reagan, but they were brought much more into line with what it takes to actually finance a national government for a country this size.

The plan passed by one vote in the House, and without one Republican vote. Opponents predicted that it would wreck the economy. Over several years, we got the chance to see what a relatively modest move in the opposite direction of Reaganomics would bring about.

Of course, you remember very well what happened during the '90s. The U.S. economy collapsed. Unemployment hit 25% after they raised the minimum wage. The deficit ballooned because, true to the Laffer Curve, people found ways to avoid paying taxes after the marginal rates rose, and then revenues plummeted.

OK -- on a more serious note, it seems absurd to see how many times a bad idea has to be proved wrong, or how many times it takes for a better approach to be proved better.

The U.S. economy isn't teetering on a precipice because of anything that happened overnight. The current national debt of over $9 trillion, compared to something over $1 trillion when Reagan took office in '81, is the logical enormity of a full generation of conservative Republican economic mismanagement.

We're not going to get out of this predicament easily. There will have to be shared sacrifice. The rich and the big corporations are going to have to ante up, like they did back in the late '40s and '50s, when the groundwork of this economy of relative affluence was laid.

The decisions will be hard ones. No one seems willing to propose them now. One thing that is clear -- Bush and his minions are going to keep doing the same thing, over and over again, expecting different results.

Crossposted at Manifesto Joe.