Thomas Sowell on the Economic Stimulus Plan

HANNITY: As we begin the new year, one of the biggest problems that Americans face is, of course, the economy. President-elect Barack Obama has been working on a stimulus package to get us back on track, but with experts predicting it will cost up to $700 billion of your hard-earned tax dollars. Could his plan, well, make things worse?

Joining us now to answer that question is the author of the brand-new book, "Applied Economics: Thinking Beyond Stage One." Thomas Sowell is with us, one of my favorite columnists.

Thomas, good to see you, Professor. Thanks for being with us.

THOMAS SOWELL, AUTHOR, "APPLIED ECONOMICS": Thank you.

HANNITY: All right. Well, here's what he's promising: 600,000 new government jobs. We already spent 750 on a bailout package for insurance companies, financial institutions, and banks. And up to $1 trillion, which is in part a welfare program.

Is -- is that how we get out of the economic downturn we've had?

SOWELL: It will be the first time if it works. The big -- one of the big problems with these kinds of things is you have no way of knowing how long it's going to be before the money actually gets into the market. You've got to go through environmental laws. You've got to go through all kinds of local delays.

And when the money actually gets into the market, we don't know what the market is going to be like. We may be in the midst of an inflationary rise, and this is just going to add to it.

HANNITY: Well, Congressman Gohmert, I thought, had a good plan, and that was give the money back to the American people. Maybe they don't pay taxes and Social Security taxes for three months, nine months.

Barack Obama says the economy is getting worse. Is he trying to use fear tactics so America does embrace a socialist economy?

SOWELL: I think so, because if you turn the money over to the people, they would probably spend it a lot faster than if you turn it over to people to have to go to build infrastructure, after doing environmental impact reports and having all sorts of unions and other special interests delaying things before the money ever gets spent.

HANNITY: What, for example -- see, I think Republicans, Dr. Sowell, have lost a little bit of their conservative spending principles since they've been in power.

And I think this is an opportunity for them to go back to those conservative values, and that is we can't afford -- Social Security is bankrupt. They never put our money away. Medicare is bankrupt.

Here's an opportunity for them to say, "You know what? We're going to have tax cuts for every American." Do you see them doing that? Or are they -- or are they fearful that, if they don't go along with this giveaway that they're going to lose politically?

SOWELL: Oh, I think they're fearful, because anything that goes wrong will be blamed on their obstruction. Whereas, if the plan goes forward as it is and it's a bigger disaster, then it will be blamed on Bush.

COLMES: Professor, it's Alan Colmes. Welcome back to the show. I don't understand what you're complaining about, given the fact that Obama's plan, to a large extent, is tax cuts. He's talking about $150 billion a year over the next two years, similar to the $150 billion tax cuts that Bush offered this year.

Plus, Bush offered the $700 billion bailout plan, and he's the one who is socializing all these countries. And you want to blame Obama?

SOWELL: No, I think -- I think that -- there's plenty of blame to go around. I think the Republicans have discredited themselves by going in for wild spending, I think that the current administration is giving Obama a get-out-of-jail free card by backing up General Motors, so that anything bad that happens for the next -- I don't know -- number of years can always be blamed on Bush, because he set the precedent.

COLMES: You're talking about giving money back to the people. That's exactly what Obama is doing with his massive tax-cut plan. Isn't that the very thing conservatives say they favor?

SOWELL: Well, insofar as that's true, yes, but sometimes you're giving tax cuts to people who don't pay any taxes. And that's not giving them back their money. That's simply handing out welfare.

COLMES: But you said not federal taxes, but they pay other taxes. They pay Social Security taxes. They pay other kinds of tariffs and taxes. You're just talking about federal income tax.

SOWELL: Well, but if that's the case, then -- then you can cut down on the Social Security tax. If you really want to give back people the taxes they're paying. Otherwise, you're giving out welfare and calling it a tax cut.

COLMES: Thanks. We've got to run. We thank you very much for coming on.