Mitch Daniels and Economic Stimulus and Recession and State Government and Federal Government and Economic Recovery and Government & Economic Development

Daniels: Stimulus should focus on companies, not states

August 9, 2010

Indiana Gov. Mitch Daniels said he opposes more stimulus such as aid to states to keep teachers hired and to expand credit to small business, while favoring incentives to revive private hiring and investment.

Increasing federal help for states amounts to “asking the citizens of responsible states like ours to subsidize those places who have been more reckless,” Daniels, a Republican who said he’s open to being a presidential candidate in 2012, said this week on the “Fox News Sunday” television program. It’s “not going to help the economy.”

President Barack Obama is leading a Democratic push to add $26 billion in spending to help states fund Medicaid and teachers’ salaries, and $30 billion for increasing credit and cutting taxes for small firms. The shortage of jobs is curtailing consumer spending, the biggest part of the economy, as the U.S. recovers from the worst recession since the 1930s.

Daniels said lawmakers should consider “perhaps even an emergency program that, while not raising taxes, opens the door or encourages investment.” Incentives for businesses that invest now, and speeding up regulatory approvals would encourage job-creating spending, he said.

Responding to a question about letting the Bush tax cuts expire for the wealthiest Americans, Daniels said it’s “hard to understand” why anybody would raise taxes in a recession. To cut the deficit, “the president, at least temporarily, should have impoundment power or some sort of an enhanced power” to reduce spending, said Daniels, who was budget director under former President George W. Bush in 2001.

Daniels said “we are practicing child abuse in a literal sense” by shifting Social Security and Medicare costs to future generations. He said he’d raise the retirement age to reflect modern survival and mortality numbers, and target benefits to those who really need them.

Democrats and Republicans need to create an “unusual consensus” to resolve the threats to long-term growth, he said.

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