Harvard Professor Calls Stimulus “Worst Bill Put Forward Since The 1930s” by Gregory Hilton

Dr. John Templeton and Dr. Robert J. Barro

Dr. John Templeton and Dr. Robert J. Barro

Commentary by Gregory Hilton — The current “Atlantic” magazine interview with Harvard Economics Professor Robert J. Barro focuses on the impact of the Stimulus Bill. Barro says it “is probably the worst bill put forward since the 1930s.” Barro is the author of the widely used college text book “Macroeconomics,” and the interview can be found at http://business.theatlantic.com/2009/02/an_interview_with_robert_barro.php
Many of the leading U.S. economists commented on his article in last week’s “Wall Street Journal”. Barrow says “it’s wasting a tremendous amount of money. It has some simplistic theory I don’t think will work, so I don’t think the expenditure stuff is going to have the intended effect. I don’t think it will expand the economy, and the tax cutting isn’t really geared toward incentives or lowering tax rates. It’s more along the lines of throwing money at people. On both sides I think it’s garbage. So in terms of balance between the two it doesn’t really matter that much.”
The architect of the Stimulus is Treasury Secretary Tim Geithner. The controversy regarding his failure to pay $43,000 in taxes is occurring at the same time the House Ethics Committee is reviewing the returns of Rep. Charles Rangel (D-NY), the Chairman of the tax-writing Ways and Means Committee.
Geithner is the head of a Federal Reserve Bank and Rangel has been on the tax committee for three decades. If they can’t understand the basics of the tax code it really says a lot about the need for tax simplification.
Americans spend 7.6 billion hours annually trying to figure out their federal taxes. Working eight-hour days, five days a week, 52 weeks a year, that’s the equivalent of 3.8 million full-time workers. At the average hourly wage of $27.54, that tax-preparation time amounts to $193 billion, or 14 percent of aggregate income tax receipts. A staggering 60 percent of individual taxpayers are so bewildered by the tax code that they hire outside preparers.
Barro’s Harvard faculty colleague Greg Mankiw also has an excellent op-ed article in the “New York Times.” Mankiw is the former Chairman of the President’s Council of Economic Advisers, and he has the unique ability of explaining complex economic issues in simple terms.
His most recent columns emphasize the $1 trillion cost of the stimulus and the fact that we will be borrowing this money. At the same time the Obama Administration is in effect telling the Chinese to stop lending us money! That is how they support their currency, through the purchase of dollars and investing them in U.S. securities. The undervalued Chinese currency is an enormous help to U.S. consumers who receive significantly reduced prices at stores such as Walmart and Target.

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