Follow the Japanese example on stimulus

October 16, 2009

The new Japanese government is redirecting the country’s stimulus plan (WSJ):

The Japanese government said Friday it will scrap part of the previous Cabinet’s stimulus package, freeing up 2.926 trillion yen ($32.38 billion) so that it can redirect the money toward more effective projects to stimulate growth.

Me:  For the cost of the remaining stimulus program in the US, you could cut the cap gains rate by 25 percent for a decade. (Plus it likely wouldn’t cost nearly that much.) Just an idea …

One comment

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Typically, I’m a supply-sider as well, but there seems to be two problems with this line of thinking IMHO:

1. As far as I understand, much of the remaining stimulus is aimed at helping states through their budget crisis. While I don’t agree with this, it seems a bit late to go back now, given that states have already made their 2010 budgets.
2. What we need are jobs, not necessarily more consumer spending. A cut in the capital gains rate sort of encourages more investment, but it’s a long term process. A targeted jobs program (more than just a bunch of money thrown about) that accomplishes longer term objectives would be preferable. For instance, the US Government gives out zero interest loans and tax credits for all vehicle fleet operators to transition to natural gas. Investment, lower dependence on foreign oil, and environmental benefit. There’s a stimulus plan…

We’re gutting the middle class in this country. I’m not sure we need more tax cuts in the ‘trickle down’ theory. The Goldman bankers have enough money as it is…

Posted by John Thomson | Report as abusive