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November 23, 2009

Do we need to keep arguing that tax cuts drive economic activity directly?

Existing home sales up over 10% in October.  Why?  The Tax credit.  It is a bit like tax crack.  Just like the cash for clunkers was for the auto industry, but the direct immediate effect on consumer behavior is measurable and real.  I bet those two programs caused more direct economic activity than all the rest of the +$700B hand-out to special interest for “shovel ready” projects that recovery.gov says has had little or no impact.  Proponents of funneling money through federal, state and local government to the unions are still trying to defend that saying we will see effects in 2010.  Meanwhile 3.1M jobs have been lost since Obama signed that stimulus saying he would save or create 6 m jobs. 

Tax cuts and tax credits work to get people spending money.  People spending money stops the recession.  It is just not that hard guys.

Posted by Martin at November 23, 2009 8:52 AM

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