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Republicans don't oppose stimulus when it fits their policy agenda

It's worth recalling that Republicans didn't always mistrust stimulus. They didn't even mistrust deficit-financed stimulus (not that there are many other kinds). Back when they were selling the Bush tax cuts, the original argument was that the economy was great and the government was running a surplus and you should get your money back. But then the economy tanked when the tech bubble burst. No problem! “Because the economy is slowing down, I believe it is vital that Congress pass a pro-growth tax cut," said Dick Armey. We're all Keynesians when convenient.

Tax cuts tilted toward the rich do stimulate the economy, of course. But they don't do it very well. According to Mark Zandi's numbers (pdf), you get 32 cents of stimulus per dollar spent on the Bush tax cuts. That's because tax cuts that tilt towards the rich boost how much money they save, not how much they spend. Compare that with state and local aid, which give you a $1.41 of stimulus for each dollar spent.

By Ezra Klein  |  June 18, 2010; 5:00 PM ET
 
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Comments

"Compare that with state and local aid, which give you a $1.41 of stimulus for each dollar spent."

If you can evaluate the effects of economic policy with this level of precision, then why was Obama's chart on the effect of the Recovery Act so inaccurate on the projected unemployment rate?

I believe that both Democrats and Republicans use "stimulating the economy" as cover to enact policies they want to do anyway due to ideology, to wit: Expanding government programs on the side of the Democrats, and cutting marginal income tax rates on the side of the Republicans.

Posted by: jnc4p | June 18, 2010 5:34 PM | Report abuse

"They didn't even mistrust deficit-financed stimulus (not that there are many other kinds)"

If you only get $0.32 per dollar, then the [i]only[/i] way to stimulate with the Bush tax cuts is if they're deficit-financed, right? You certainly can't offset them by cutting programs that are producing more bang per buck if you're looking for stimulus.

Posted by: aarhead | June 18, 2010 7:02 PM | Report abuse

They aren't putting the money under the couch- your multipliers are ridiculous. The real opposition is to expenditures- although the Repubs weakness for populist tax cut rhetoroic is undeniable, even when it is orresponsible.

Posted by: staticvars | June 18, 2010 11:39 PM | Report abuse

OK Ezra, since you are a tragically stupid liberal let me explain simple economics to you:

1. Tax cuts NEVER cause deficits. It is impossible because...
2. Only SPENDING can cause deficits. If you don't SPEND you have no need for the tax revenue.

But, of course, the truth shouldn't get in the way of your class warfare goals.

By the way - nice job with the puny 0.32 versus robust $ 1.41. It's all in how you present and try to fool the people isn't is you dirtbag.

Posted by: manbearpig4 | June 19, 2010 6:12 PM | Report abuse

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