The Recovery Act of 2009 (i.e. the stimulus) has, according to the Congressional Budget Office, been employing more than 3 million people this year, while saving millions more from poverty through boosting programs like unemployment benefits. Though it was not large or targeted enough to deal with the depth of the Great Recession, the stimulus has been an extraordinary help to a struggling economy.
However, if Mitt Romney had been president in 2008, according to a campaign spokesman, he wouldn’t have passed the Recovery Act. Instead, he would have cut taxes for corporations and extended the Bush tax cuts, as well as opening up land for oil drilling:
Asked what President Romney would have done during his first days in office, in lieu of a federal stimulus, to address the market meltdown, Chen rattled off a few likely options: “Lowering the corporate tax rate. Enacting a permanent extension of the 2001 and 2003 tax cuts. Immediately ratifying our pending trade agreements with Colombia, Panama and South Korea. In the energy sector, freeing up the necessary land to enable greater domestic production.” He did not make clear how Romney would have steered these boilerplate conservative proposals through a Democrat-controlled Congress.
According to the CBO, extending income tax cuts and cutting the corporate tax rate are two of the least effective strategies for boosting economic growth and employment. For extending income tax cuts, only 10 cents to 60 cents in economic activity is created for every dollar spent. It’s at most 30 cents in economic activity for every dollar spent on corporate tax cuts.
Meanwhile, steps that put money directly into the pockets of low- and middle-income families or directly create jobs, like cutting payroll taxes or spending on infrastructure, have far higher bang-for-the-buck. These are the sorts of policies that President Obama has proposed in his American Jobs Act, but that Republicans have filibustered over and over.
It was the slew of tax cuts that were added to the stimulus in a misguided attempt to win Republican votes that watered down its effectiveness in the first place. If Romney had been running the show, that ratio would have evidently been even worse. Of course, considering that Romney’s economic plan consists of nearly $7 trillion in tax cuts that overwhelmingly go to the rich and corporations, perhaps this shouldn’t be a surprise.