The Obama Doctrine
by matt at 6:01 am on January 5th, 2009 in Congressional Man Date, Economy, Obama Uber AllesObama Eyes $300 Billion Tax Cut – WSJ (1/5/09):
President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion in tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.
The size of the proposed tax cuts — which would account for about 40% of a stimulus package that could reach $775 billion over two years — is greater than many on both sides of the aisle in Congress had anticipated, and may make it easier to win over Republicans who have stressed that any initiative should rely relatively heavily on tax cuts rather than spending.
All compromise, all the time. Obama really doesn’t need Republican support, he’s burnishing his already sterling bipartisan image just for the sake of it, and making a huge mistake in the process. We’ve already had two rounds of Bush tax-cut stimulus, after 9/11 and again in mid-2008. Neither was successful, with some experts calculating that only 20% of the 2008 cuts were spent. Beyond the nuts and bolts of discredited supply-side theory is the political reality.
So to sum up, Obama’s first order of business is a stimulus package because the economy is in deep trouble. But he’d rather devote 40% of the cost to tax cuts already proven ineffective so he can start his term off ceding valuable ground to insane maniacs.
This is going to turn out well.
UPDATE 8:30am PST: Larry Kudlow is on CNBC right now quite literally celebrating these tax cuts. Shouldn’t that be setting off warning sirens? I can’t think of anyone who has been more wrong about everything having to do with the economy.
KathyD wrote:
It’s NOT enough!
The proposed amount to individuals is not enough to stimulate the economy. $500/individual and $1000/family is enough to pay a mortgage and a few groceries, it is not enough to stimulate wide-spread spending. The government has already bailed out the banking/mortgage industry, and they’ll be the end-recipients of the proposed amounts from consumers.
Why not give every individual $10,000. We’d all run out and spend. (Many would buy cars which would have been a better bailout for the auto industry!) OR why not return any income taxes paid in 2008? We already work until May to pay our tax debts–refund the money!
Posted 05 Jan 2009 at 7:06 am ¶
matt wrote:
clearly we’re all very lucky that kathy isn’t writing the stimulus.
Posted 05 Jan 2009 at 7:16 am ¶
Darryl wrote:
My read of the recent planned increase of tax cuts by Obama’s team is that opposition to his stimulus plan is growing steam and/or they have quietly admitted that quick stimulus can’t be done effectively in the short term by means they have studied. They therefore are looking at 2010 and beyond both politically and economically, probably praying that they can change the current negative psychology by some clever tactical spin. So that maybe means that big pain is coming in the next six months, be prepared.
Posted 06 Jan 2009 at 12:35 am ¶
matt wrote:
>probably praying that they can change the current negative psychology by some clever tactical spin.
doesn’t every argument in favor of obama come down to this at some point?
>So that maybe means that big pain is coming in the next six months, be prepared.
there is absolutely no doubt in my mind that more and bigger pain is coming. the problem is that tax cuts, especially the carry back/carry forward business cuts can’t possibly help this, and the personal tax cuts won’t be spent, or best case they’re spent at wal-mart on chinese goods.
Posted 06 Jan 2009 at 2:30 am ¶