The New York Times published my letter below December 26, 2008. Meanwhile, Mother Jones has just published (not yet online) a first class piece by David Cay Johnston, “Fiscal Therapy.” He details how we can rebuild the economy without increasing the deficit by a dime, simply by reversing the great tax and subsidy machine that pumps wealth from the poor and middle class to the rich.
“Louis Uchitelle is absolutely correct that President-elect Barack Obama’s spending plan may fail—or worse, backfire (“Maybe It Can’t: A Trap in Obama’s Spending Plan,” Week in Review, Dec. 21). Spending on infrastructure, even green infrastructure, is a relatively slow, low-return investment. To rebuild the economy right now, we need fast, high-return investment, public and private.
“First, we need public investment in people: health care to keep us productive; education to train us for new jobs or upgrade basic skills; and extended unemployment insurance.
“Second, we must unburden the sector that provides the most employment and the highest and fastest return on investment: small business.
“Here is how: Rebate the payroll (Social Security) tax on low-wage earners. This tax has become a major killer of small-business jobs. Then reduce deficit spending. Treasury runs a deficit by selling bonds; the more that banks can stock up on safe government bonds, the more they will cut off relatively risky (but high-return) small business. But how to reduce deficit spending? Start by killing military pork.”