Give Stimulus Package an Extra Kick
The American Recovery and Reinvestment Act, better known as the Stimulus Package, takes a couple of steps in the right direction. The best part of the package is the money that it provides for improvements in infrastructure.
That's good, because our roads, bridges, power grids, and water systems are in bad shape. The American Society of Civil Engineers recently gave the nation's overall infrastructure a grade of D, and we can't maintain the world's biggest economy with failing roads, bridges, and water systems. Still, the plan’s spending for infrastructure is just a tiny part of what the country needs.
Maintaining our infrastructure is something that government must do. So doing something that’s already the government’s responsibility hardly qualifies as a stimulus.
The time lag for infrastructure improvements and creation of new green jobs is not the only problem.
A bigger problem is that the package perpetuates the myth that government can create wealth.
Government can make jobs, but government jobs don't go forth and multiply. Government jobs don't create new products and services. Government's job is to be the oil that lubricates the economy, not the gasoline that powers it. But government is not a wealth builder.
What is obvious is that we need an immediate and powerful jolt to the economy. We need action that will restore consumer and business confidence, put people to work, and lift the feeling of gloom that's hanging over the country. We need a true small business stimulus.
The National Federation of Independent Businesses’ Small Business Economic Trends report for April 2009 shows that planned capital expenditures, which have been falling since 2007, are now at their lowest levels since 1986, and other small business indices are similarly dismal.
We can jump-start economic recovery by enacting 100% write-offs for all capital goods purchased in 2009 by small businesses: cars, trucks, machinery, equipment upgrades, tools, facility expansion, etc., not just "equipment." Write-off means taking all the tax benefits now, rather than having to depreciate them over years.
Include the owners of 32 million apartments and all commercial space. Provide 100% write-offs for energy efficient air conditioners, refrigerators, stoves, and water heaters, for low-flow toilets, doubled-glazed windows and insulation.
Ask any small business owner (I’ve asked many) what they think of this idea--whether they would invest in capital goods and improvements now—and they are enthusiastic. They want their businesses not only to survive, but to grow. They want to build wealth.
Why small businesses? Because small firms (defined as up to 500 employees) employ about half of all private sector employees and historically have generated 60 to 80 percent of new jobs. Small businesses are less likely to be multi-national than large ones, so their growth will be more likely to flow to local communities.
Why 100% write-off? In 2008, Internal Revenue Code 179(b) gave businesses 50% first year depreciation for equipment purchases, capped at $250,000. It didn’t work. Too little, too late.
The problem now? The stimulus package (H.R. 1) extends the 2008 plan that didn’t work well to 2009.
We need a 100% write-off that will create immediate economic demand, generating manufacturing and construction jobs across the country. And with more jobs will come stronger consumer confidence, with greater ability and willingness to spend.
Buy a business vehicle and write it off in 2009. Detroit will love it. Buy anything and manufacturers across America will love it. Rebuild, upgrade, or expand a business facility or rental property, and local contractors and construction material suppliers will love it.
Give our economy a righteous jolt. What’s important is not what government revenue will be lost, but the revenues that will be gained throughout the economy by creating jobs.
We have everything to gain by turning on the great American economic engine full force.
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