Obama 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.