With mixed economic data coming out of Washington nearly every week, some feel that the recovery is losing steam. The mid-term elections that will occur in November are seen by some as a national referendum of the Obama administration, its policies and the stimulus.
Count us among the many that had envisioned the American Recovery and Reinvestment Act (more commonly referred to as the stimulus) as a throwback to the Work Progress Administration (WPA) of the Great Depression. When we heard that the bill was planned, we had envisioned massive public works projects.
Instead, some roads were patched and many public sector jobs were funded in an effort to avoid wholesale layoffs of teachers and other government employees.
The two budget years have passed and the economy has not recovered sufficiently enough to avoid the layoffs of public sector employees. Some see the $862 billion stimulus bill as wasted money.
Perhaps, if the federal government wishes to see some consumer spending and confidence, a different path should be chosen for a second stimulus.
Early next month, Iowa will hold the 11th annual sales tax holiday for selected clothing and footwear. This holiday has given Iowan a seven percent discount on clothing purchases at a time when many families are preparing to send their children back to school, which is becoming an increasing more expensive proposition each year.
The success of this targeted tax cut has us wondering, what if many of the taxes we pay went away for a set period of time?
What if no payroll, FICA or corporate taxes were collected for three months? It is estimated that it would cost about the same as the first stimulus, but the results would be felt by every working person in the nation, as well as every business.
This would amount to over a 7 percent temporary raise for every working person, giving many needed cash to pay for whatever they chose. Businesses could use this extra money to purchase equipment, pay down debt or help fund expansions.
We realize the odds of this occurring are slim and none. The idea makes too much sense and gives too much power to the people.
Nope, it will never happen...but it would work.