If economic illiteracy were a disease, The New York Times would be terminal.
The Times’ understanding of economics boils down to a simple formula — tax cuts, bad; spending, good. The Times thinks it’s not only possible, but desirable, to try to spend our way out of a recession caused by over-spending, deficits and misplaced priorities.
An editorial in yesterday’s Times urges President-elect Barack Obama to spend more — apparently, $800 billion isn’t enough of a “recovery package” — jettison his call for business tax breaks (which amount to less than $1 for every $5 of new spending) and forget entirely about his promise to cut taxes for those who make up to $200,000 a year.
The paper’s prescription for our economic woes is extended unemployment benefits (we certainly wouldn’t want to encourage the jobless to get out and look for jobs) and shoveling more money at the states to invest in “the nation’s crumbling and outdated infrastructure.”
Is it possible for The Times to say “infrastructure” without adding the modifiers “crumbling” and “outdated”? Funny thing, no matter how much the states get for highway repairs (from the gas tax, general revenue, tolls and federal aid), the infrastructure is still crumbling and outdated.
While The Times is all for tax cuts for “low and middle-income” Americans (at least in theory), it is apoplectic at the idea of cutting taxes on the rich (a term it never defines).
It reasons that while middle-class tax cuts will “stimulate the economy” — by resulting in immediate spending — upper-income taxpayers are more likely to save, which supposedly will result in little economic benefit.
How does The Times think the rich will save — by shoving their tax refunds into a piggy-bank? Their tax savings will be invested in stocks, bonds and mutual funds, which will lead to more capital investment and more job creation — far more than simple spending on consumer goods.
Investment, which leads to job creation, which in turns leads to long-term consumer spending, is essential to a recovery. It’s amazing that the editorial board of America’s self-styled newspaper of record can’t grasp basic economic principles.
@nytimes.com
