The stimulus, the lies and the truth

I'm rarely angry at Jon Stewart, but he ticked me off when he interviewed Marco Rubio a day ago. Rubio talked about the stimulus package in the usual deceptive Republican terms, and Jon Stewart refused to make the obvious response -- that the largest item in the stim package was tax cuts. Stewart should have said: "If the stimulus didn't work, then tax cuts don't work."

Which they don't. At least, not in a situation like this one. (Take note of California's example.)

Today, Salon offers a remarkably good recounting of the many lies in Paul Ryan's convention speech. Among them:

He attacked Obama for failing to keep open a Janesville GM plant that closed under Bush in 2008. He hit him for a credit-rating downgrade that S&P essentially blamed on GOP intransigence. He claimed that all taxpayers got from the 2009 stimulus was “more debt,” when most got a tax cut (and the stimulus is known to have saved between 1.4 and 3.3 million jobs). He derided the president for walking away from the Simpson Bowles commission deficit-cutting recommendations when Ryan himself, a commission member, voted against those recommendations.

(Emphasis added.) Yes! Salon finally said (though not loudly enough) the thing that Jon Stewart and a zillion other people should have been saying for the past three years.

Incidentally, Ryan was quick to scoop up those stim dollars for his own district in 2009. So the hypocrisy alarms should be deafening.

The jobs saved by the stim package belonged to teachers and firemen. I wish more Republicans would be honest enough to mention that fact out loud. I wish they would explain why they don't like teachers and firemen.

I too think that the stimulus failed, but not for the reasons that the Republicans offer. I think that far too little was spent on actual job creation. Obama should have instituted a new WPA; he didn't. Many ill-informed people think he did, but he didn't.

Rubio (in his Stewart interview) deceptively created the impression that this country went on a massive, $787 billion roadbuilding spree. Nonsense. Only a very small portion of the package went to that sort of thing; our bridges and physical infrastructure remain in bad shape.

(I'd like to see if our small business owners can operate for very long without bridges and physical infrastructure. Sorry all of you would-be John Galts, but you didn't build that.)

The stimulus failed because the largest item in that package was tax cuts. You can't lower taxes while still engaged in two expensive wars. Such things must be paid for. If you don't want to pay, don't go to war.

Moreover, lower taxes don't create jobs. In 2009, many pundits offered the theoretical argument that tax cuts do create jobs, but that's not the way things turned out. In theory, if lowered taxes give you an extra 500 bucks a year, you can spend that money on goods and services, which, in turn, will help to create employment. In practice, much of the money quickly went to pay hopeless mortgages on "underwater" homes. In other words, the banks gobbled it all up, as our banks are wont to do.

No. What creates jobs is a program designed to create jobs.

Keynes was right: It doesn't matter if you pay half of the people who want jobs to bury bottles and the other half to dig those bottles up again. Once money flows again, boom times will return and the bottle-brigades will segue back into private industry. Tax revenues will start flowing again, thereby reducing the deficit painlessly. That's how Clinton got the government out of the red: Boom economic times put people in higher tax brackets, which increased revenue to the government -- which started to bring down the deficit created by Reagan and the elder Bush.

Government should reduce taxes only after it pays down its debt. Common sense should tell you that. But did anyone ever credit Dubya with common sense? (Although many believe otherwise, Keynes hated debt -- and he had a particular horror of trade deficits.)

Alas, Democrats can't tell the public that the stimulus failed because tax cuts don't work. They may think that -- at least, some of them may think that -- but they can't come out and say that.

And so the Republican lie goes unrebutted.

The good news is that we've been hearing a growing number of Republicans talk about rebuilding America's defenses, which Obama allegedly allowed to atrophy. This is hooey, of course -- but in a sense, it is welcome hooey.

The Republicans who talk that way may be dangerous thugs, but at least they have not given up on this country. They understand that only Keynesian solutions will work, and so they intend to do what Reagan did: Resort to military Keynesianism. Instead of paying people to bury and un-bury bottles, they will pay people to turn bottles into Molotov cocktails. That's the only form of Keynesianism that the conservatives can justify ideologically. (Of course, Republicans would rather die than call it Keynesianism.)

The hard-core Libertarians who talk about drastically lowering the defense budget are the ones who want to see this country end. They don't want Keynesian solutions of the Reagan kind, or of any other kind.

We enter a world of paradox. I too would like to see the defense budget lowered -- but I would also like to see a real jobs program put into place. The Libertarians won't have that.

Last year, I put together a small documentary called "Libertarian Lies" which illustrates what really happened with the stimulus. If you haven't seen it -- well, here it is.