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StarBulletin.com

Differences will remain on how to boost economy


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POSTED: Saturday, January 31, 2009

PRESIDENT Obama pledged in his inaugural address to end the “;petty grievances”; and “;worn-out dogmas”; that have plagued Washington, D.C., but he has found quickly that it is easier said than done. When the economic stimulus came up for a vote this week in the House, not a single Republican voted for it. Politics can be cordial, but philosophical views will maintain the divide in perpetuity.

Democrats and Republicans agree that major action is needed to pull the country out of its worst economic crisis in recent history. Leaders of the two parties agree on some ingredients for stimulating the economy but they are far apart on many issues.

The bill provides for an expenditure of $819 billion, of which more than $2 billion would be spent in Hawaii. Much has been made of quickly putting the shovel to construction and repair of America's infrastructure, but little more than $120 million destined for Hawaii is to be spent on those purposes, mainly school and college renovations and repairs, highway work and wastewater treatment projects.

Republicans want tax cuts, and the package includes $238 million in tax credits for Hawaii's 476,000 taxpayers, according to Rep. Neil Abercrombie. The bill smartly provides for the credits to be reflected in paychecks, $12 or so a week for many workers. Surveys have shown that most of previous lump sum tax rebates of $500 or more was put into savings accounts, minimizing the effect on the economy. The incremental payments are much more likely to be spent on products, thus helping the economy.

Much of the money is to be spent in Hawaii in ways that can rightly be called the liberal agenda—helping families who need it most, in the form of job training, tax credits for targeted disadvantaged people, expansion of unemployment payments, cash payments to the aged, blind or disabled, increased funding for food stamps, Medicaid for those in need and education grants for low-income families. Funding would go to schools coping with budget shortfalls, “;green”; energy incentives and law enforcement programs.

Essentially, much of the bill would help Hawaii and other states comply with balanced-budget requirements and deal with cuts in jobs and services, at the same time expanding economic activity. After conservatives howled against provisions to put sod on the National Mall and pay for condoms for the poor, those were taken out of the bill.

Opponents of the package are right in saying only a small portion of the stimulus package will directly create jobs, but much of it equips lower-income families in ways that will inject money into the marketplace. As proven in the past, detractors are wrong in maintaining that large tax cuts for the wealthy would trickle down and stimulate the economy.