The defense of the administration’s “economic stimulus plan” by Speaker of the House Dennis Hastert’s (R-Ill.) illustrates some of the flaws in the plan that helped get us to where we need such a plan (“Bush leading us back to fiscal recovery,” Commentary, Jan. 10).
Hastert’s comment that “ending taxation on dividends is one of the best ways to restore faith in the stock market because it rewards investors who invest on age-old investment principles, such as profitability” really illustrates one of the reasons for the economic troubles we’re currently in.
Cutting dividend taxes may create an incentive to invest in the stock market.
But it may also create an incentive for corporate malfeasance of the type Hastert condemns just lines earlier.
Emphasizing profitability only gives companies an incentive to exaggerate their profit statements, a problem that encouraging people to invest in profitable companies only exacerbates.
Republican tax cuts will only further the economic decline and increase the incentive for companies to misstate their annual profitability reports.
Tax cuts did not, as Hastert asserts, evade a recession but rather accelerated our path into one.
After all, if the economic policy of two years ago helped the economy, why do we need another stimulus package now?
