In her latest capital report, Rep. Cynthia Davis, R-O'Fallon, in the news lately for her thoughts about hunger being a motivator for children, offers her service in helping the federal government handle the economic crisis.
In one part of her column, Mrs. Davis writes,"If I were giving advice to the President, I would tell him the best way to stimulate the economy is to have an income tax holiday. Can you imagine what would happen to our economy if even for one week people could receive the full reward of their earned wages? Some people may even want to work overtime! Imagine what they could do with their extra wages. Some could give more to their churches, help their struggling neighbors, eat out more often, pay down their mortgages or pay off credit cards; they might even boost tourism by going on a vacation. All of the above would benefit the overall business economy and therefore support and strengthen the national economic health."
The full text of Mrs. Davis' column is printed below:
Our district was recently honored by a visit from the governor’s office. Margaret Donnelly, head of the Health and Senior Services Department, came to announce the additional government spending authorized for the Senior Jobs Program. This funding is made available through the federal stimulus package. Officials with the Senior Jobs Program and participants who have acquired jobs through the program were in attendance for the announcement.
Missouri will receive $2.2 million in new federal money that will go directly to contractors who help place seniors in jobs. Another $586,706 in federal funds will go to the state, which will pass the money along to agencies that operate the program. The program is formally known as the Senior Community Service Employment Program. It could be more appropriately called the “Senior Community Service Entitlement Program.” The program pays participants’ federal-minimum-wage salaries while they are gaining work experience and on-the-job training. The average recipient spends 27 months in the program before moving into unsubsidized employment.
I am an economic-stimulus-fund skeptic. The studies show all this “extra money” is not accomplishing much in the way of creating new jobs. With the unemployment rate increasing, trying to teach people over the age of 55 new skills will add to the supply of workers, but not the demand for workers. This could create more unintended consequences because the taxpayers are paying these wages, not the businesses. This government program is another way to redistribute the wealth. While all of this seems “nice”, we could have accomplished even more for our senior citizens if it were not for federal government interference with our free markets.
The information from the governor’s office estimates this will create about 300 new jobs for people over 55 years old. However, since the government is paying their salaries, it is hard to imagine this being on par with a new private sector job. When the stimulus money goes away, it is likely the jobs will also go away. If there were true demand for them, they would have appeared spontaneously without governmental intervention.
It seems like the policies coming from our national government are devoid of an elementary understanding of economics and are designed to tear apart our country rather than make us strong. The last time we had a recession, we had a much different philosophy in place. Frank Donatelli advisor to former President Regan said the plan in the 1980’s was to “cut taxes for everyone to give them the incentive to work harder, invest and make better lives for their families. In turn, Americans launched the longest peacetime economic expansion to that point in our nation's history; we led the world out of a global economic recession; we created more than 18.5 million new jobs; we doubled the amount of products we exported overseas; we saw a one-third increase in our GDP, we dramatically reduced inflation; all the while, low and middle income Americans saw the most economic gains of all.”
If I were giving advice to the President, I would tell him the best way to stimulate the economy is to have an income tax holiday. Can you imagine what would happen to our economy if even for one week people could receive the full reward of their earned wages? Some people may even want to work overtime! Imagine what they could do with their extra wages. Some could give more to their churches, help their struggling neighbors, eat out more often, pay down their mortgages or pay off credit cards; they might even boost tourism by going on a vacation. All of the above would benefit the overall business economy and therefore support and strengthen the national economic health.
I don’t expect anyone from Washington D.C. to call me asking for advice, but isn’t it sad that most of the common sense people, (for example, those cutting hair and driving trucks) seem to know how their money should be spent better than congress? Deep down inside, most of us know it is wrong for us to be spending so much money. I remain hopeful that the pendulum will swing back the other way. If anyone from Washington D.C. should ask for help from “An O’Fallon Economist”, I am ready to do my part.
