Tax Cuts Are Short-Term Fix for Long-Term Problem
The day before Barack Obama was sworn in as the 44th president, I was on a panel in which other participants spoke of Obama as if he were a superhero.
Spike Lee, the movie director, put together a "Refresh the World" Symposium at Howard University that included a panel on the economy. At times, we hotly debated Obama's economic stimulus plan.
Like many Americans, I celebrated the election of Obama, who for the first time in a long time truly makes people feel like a change is gonna come. Obama personifies hope. And right now, we all need hope that we'll survive the economic tornado whirling through the nation.
But Obama is just one man. He's the president, but he isn't a superhero. If he's not careful and not well-advised, he'll push Congress to do exactly what previous presidents have done in an effort to jump-start an ailing economy. If we are truly to change the things that led to this recession, we need to take the time to do things right. We need to do things differently. We need a long-term rescue plan.
"Our economy is badly weakened, a consequence of greed and irresponsibility on the part of some but also our collective failure to make hard choices and prepare the nation for a new age," Obama said during his inaugural address.
But Obama, the man, the president, knows well that Americans are an impatient people. We want things fast. It's why so many people are in credit card debt. They can't wait to save up for what they want.
Obama is already making a mistake by again proposing to spend billions of dollars that the Treasury doesn't have to give a pitiful tax cut to people who need far more than that to get by.
During the campaign, Obama released his plan to revitalize the economy in the short term. It included a stimulus package that he said would immediately inject billions into the economy in the form of tax cuts and direct spending. I noticed the repeated use of such phases as "short-term," "immediately," quickly," i.e., the same old, same old. His tax cuts do not give me hope.
The tax cut that Obama proposes would give $500 a year for individuals and $1,000 for couples. This would be in the form of a credit. Practically, it's a payroll tax credit meaning that employers could reduce the amount of tax that would be withheld from employees' paychecks. The estimated cost of this cut/credit is $150 billion.
I'm a lifelong penny pincher, and I'm not above stooping down to pick up a penny, but putting our country into more debt to give people $500 is akin to handing the badly wounded a Band-Aid.
"To get people spending again, 95 percent of working families will receive a $1,000 tax cut," Obama has said.
I work regularly one-on-one with people in debt or in cash-strapped circumstances, and I have never advised them to spend more when they are already living beyond their means -- as this country is. And yet that's what Obama is proposing, at least with the tax cut for individuals.