Intersecting Minds: Education, Business and Technology at the North Carolina State Jenkins Graduate School of Management

Debating the Stimulus | February 10, 2009

President Obama is scheduled to hold his first major press conference in about 45 minutes following a day spent aggressively pushing his stimulus package in Elkhart, Indiana. It’s expected that he’ll repeat the same refrain he used today: Less bickering, less infighting, more action. Following a brief statement, he’ll handle about 40 minutes of follow-up questions from reporters in regards to the stimulus.

This comes on the heels of an announcement tomorrow that Obama will be heading to Florida tomorrow to continue taking his case for the package directly to the public. Governor Charlie Crist released a statement today: “…I am eager to welcome President Obama to the Sunshine State as he continues to work hard to reignite the US economy.”

In other stimulus news, 18 Governors from across the country including Crist, as well as Arnold Schwarzenegger amongst others, released a statement saying they supported passage of the bill. This is no surprise since many of these cash-strapped states are scheduled to receive a large chunk of much-needed money.

CNN and Gallup also released separate polls today showing the public solidly supporting Obama and that a majority are behind the stimulus package.

Meanwhile, Republicans continue to hammer away at the stimulus. Most of their attacks focus on the idea of “wasteful spending” and a desire to include more tax cuts. From my view, yes, there is a lot of spending in the bill. But that’s the whole point. Most economists think that we’re facing a $2 trillion shortfall this year in capital demand. If anything, a fear exists that the stimulus is too small, not too large. Forget about what’s wasteful and what’s not in the immediate future. The economy needs a jolt of capital infusion to shock it out of this slump.

As far as tax cuts go, yes, tax cuts for small businesses and sensible, targeted cuts for corporations are all well and good, but they’re already included in the bill. The most recent Senate version of the bill includes nearly $300b in tax cuts, and that includes a $70b suspension of the AMT, which would directly impact middle income and upper income earners. Frankly though, in this economic environment, tax cuts are going to go straight into the savings account, not spent back into the economy where they need to be.

I’ll be watching Obama’s presser tonight, and I’ll try to jot down a reaction to his comments a bit later.

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