Dear Mr. Saiz:
Thank you for contacting me about the president's stimulus spending bill. I believe that Americans need more job opportunities, but I do not think that the president's proposal is the way to do it. Even the president has said we should not raise taxes in the middle of a recession because taxes inhibit job growth. Yet, that is exactly what his proposal would do.
His plan, considered in the Senate as S. 1660, proposes $447 billion in temporary stimulus measures paid for with a permanent $453 billion tax increase on small businesses, families, and other individuals. Below are just some of the reasons why I opposed the legislation (incidentally, the measure failed on a procedural vote because the Senate majority leader would not allow a vote on the president's proposal when the minority leader asked for it).
First, history tells us that the plan will not work. Just like the stimulus that was passed in 2009, this legislation is predicated on the theory that increased government spending can lead to an increased number of jobs. However, if that were the case, the president's 2009 stimulus package (which cost more than $1 trillion, including interest) would have created millions of jobs. Instead, we now have a much-higher 9 percent unemployment rate and nearly 2 million fewer jobs than before the stimulus was signed into law. By almost any measure, the stimulus was an unfortunate failure that, if anything, has only made our current fiscal situation worse.
Stimulus plans in the past have yielded similar disappointing results. The Wall Street Journal recently ran a column about stimulus bills proposed by presidents of both parties. In almost every case, the plans failed to deliver. For instance, battling recession in 1975, President Gerald Ford proposed a short-term stimulus plan that produced only modest results; sluggish growth and rising unemployment returned the following year. A second stimulus in 1976 similarly failed to jump-start the economy. Ford's successor, President Jimmy Carter, tried again with a 1977 stimulus package. It, too, had little effect, and the economy fell back into recession in 1980.
It was not until President Ronald Reagan "rejected temporary stimulus measures and instead proposed permanent income-tax rate reductions" that the economy started to turn around. The column continued: "By late 1982 the recession was over and in early 1983 employment and investment began to rise rapidly. In 1984, it was 'Morning in America' and...nearly two decades of strong, steady, noninflationary economic growth ensued."
Even if we ignore all the history and assume that President Obama's stimulus plan could create lasting jobs, they would be prohibitively expensive. According to a recent Harvard study, any jobs that might be created would cost taxpayers about $200,000 each – a finding that Treasury Secretary Tim Geithner did not dispute.
Of course, there is also the enormous tax increase in this plan. As I noted above, President Obama himself said "you don't raise taxes in a recession." Common sense tells us that increasing taxes won't create jobs – especially with our economy in its current shape. This tax hike, which targets small businesses and job creators (80 percent of those impacted by this tax increase are business owners), will do more than almost anything else to halt – not promote – U.S. job creation.
Given all of this, even some members of the president's own party have expressed strong reservations about his stimulus bill. The Senate vote against consideration of S. 1660 included opposition from both parties.
There may be individual elements of the president's package that might be worth passing. In doing so, we must be careful (as doctors are taught) to first, do no harm. As we know, in an effort to prove that they are "doing something," politicians sometimes try to pass measures that can actually make things much worse.
In short, our country is in need of policies that can encourage job creation; however, raising taxes or spending hundreds of billions of dollars we don't have (and have to borrow) is not the answer. We should, instead, ensure the private sector – the engine of our economy – has the tools it needs to drive long-term, sustainable job creation and provide better wages and benefits. There are many things we can do to achieve that aim. I invite you to visit my website for more information.
Thank you for taking the time to write.
United States Senator