[Dialogue] {Disarmed} The Stimulus Swindle

Mon Jan 28 17:34:45 EST 2008

AlterNet

The Stimulus Swindle

By David Sirota, Creators Syndicate
Posted on January 25, 2008, Printed on January 28, 2008
http://www.alternet.org/story/74933/

"Stimulus" -- you've probably heard this nebulous, scientific-sounding word
this week. Every politician suddenly wants economic "stimulus," and wants
you to think this "stimulus" is unequivocally good.

But here's the question: Why are we talking about "stimulus" only now? After
all, most people have been hurting for quite a while. Paychecks have been
stagnating, foreclosures have become commonplace, health care premiums
continue their double-digit increases -- and up until recently,
conservatives greeted such hardships with saccharine fantasy.

Following government reports showing a surge in income inequality, Treasury
Secretary Hank Paulson last year gushed that the economy is "as strong as I
have seen it in any time." In the summer, as the housing crisis exploded,
President Bush said the economy was "thriving." This month, as the Labor
Department reported another drop in wages, Republican Rep. Michele Bachmann
(Minn.) said not to worry, her state is doing just great because "we have
more people that are working longer hours, we have people that are working
two jobs." And with word that there are now 195,000 homeless veterans
nationwide, Bill O'Reilly insisted on Fox News that really, "there's not
many [homeless veterans] out there."

Message: Nothing to see here. The economy is fabulous. Move along.

Lately, though, the rhetoric has switched. Paulson now says there is an
"urgent need" for action, and President Bush is demanding a "stimulus"
package from Congress.

And that gets us back to the critical question: Why the sudden shift?
Because the group demanding help has changed.

Before, it was just commoners complaining -- regular homeowners, wage
earners, troops coming home from Iraq, you know, the 99 percent of us who
can't afford the thousand-dollar-a-plate political fundraisers.

But now Wall Street is panicking. In the last month, the financial
industry's profit margins dropped thanks to mortgage defaults brought on by
irresponsible lending. And when the corporate executives who underwrite
campaigns start whining, politicians develop "stimulus" schemes using the
blight of layoffs, foreclosures and wage cuts to justify tax cuts for those
doing the laying off, foreclosing and wage cutting. 

Specifically, most GOP presidential candidates are demanding corporate tax
cuts as the "stimulus" to improve American competitiveness, ignoring a
recent Treasury Department report noting that the United States already has
among the lowest effective corporate tax rates in the developed world.
Republicans like John McCain, fresh off a Merrill Lynch fundraiser, say we
need not expand unemployment benefits and food stamps to help workers and
give the economy a reliable Keynesian boost. No, they say we must hand over
more cash to the same financial industry that just gave its executives $39
billion worth of year-end bonuses.

Leading figures of both parties seem eager to help limit the debate over
"stimulus" and make the final package a corporate goodie bag. According to
the Washington Post, Democratic Sen. Max Baucus (Mont.) asked economists
affiliated with The Hamilton Project -- a Citigroup-backed think tank -- to
testify to Congress at its initial hearings on a stimulus package. Labor
economists, by contrast, were not invited.

You might think Citigroup's central role in creating the current financial
crisis would disqualify it from influencing legislation addressing that
crisis. But remember, Citigroup gives lavishly to Democratic politicians and
pays Democratic financier Bob Rubin roughly $10 million a year as a top
executive.

Not surprisingly, congressional Democrats appear poised to support a package
stripped of increases in safety-net programs and comprised primarily of
business tax cuts. This, even though experts agree the former would have an
immediate economic impact and the latter will take at least six months to
hit. As usual, We the People are told to wait patiently as moneyed interests
claim their latest gift from Washington.

President Bush is undoubtedly pleased. He said he wanted "stimulus" built
primarily on tax cuts and no new public investment -- more proof of his
desire to win the Most Out of Touch President title from Herbert Hoover (at
least Hoover proposed new infrastructure with the tax cuts he claimed would
prevent the Great Depression).

Let's be clear: There's nothing inherently bad about Washington interacting
with Big Business, and nothing conceptually wrong with "stimulus" as a
concept. But as this recession intensifies, there's a big problem with
politicians catering exclusively to Big Business and an even bigger problem
with converting "stimulus" into yet another code word for "swindle." 

David Sirota is a bestselling author whose newest book, "The Uprising," will
be released in June of 2008. He is a fellow at the Campaign for America's
Future and a board member of the Progressive States Network -- both
nonpartisan organizations. His blog is at www.credoaction.com/sirota
<http://www.alternet.org/module/printversion/www.credoaction.com/sirota> . 

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