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January 5, 2009
Tax Cuts
The Obama team announced the tax cut portion of their stimulus proposal and it turns out that 40 percent of the package is wrapped up in middle class and business tax cuts. On the surface, this is nothing new, though the 40 percent figure is catching everyone by surprise. Krugman:
Look, Republicans are not going to come on board. Make 40% of the package tax cuts, they’ll demand 100%. Then they’ll start the thing about how you can’t cut taxes on people who don’t pay taxes (with only income taxes counting, of course) and demand that the plan focus on the affluent. Then they’ll demand cuts in corporate taxes. And Mitch McConnell is already saying that state and local governments should get loans, not aid — which would undermine that part of the plan, too.
I don't quite grasp the political strategy of this yet, but it seems to me as if basic negotiation tactics dictate that you start with a lower percentage and trade to the upside. In other words, announce 30 percent, then, if necessary, negotiate up to 40. However, it'll be interesting to see the other 60 percent of the stimulus. Maybe it's wishful thinking, but perhaps there are some new and very progressive items in there -- items that required a larger nod to the Republicans.
Filed under: Barack Obama || Paul Krugman || Republicans
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Posted By Bob Cesca | January 5, 2009 9:43 AM
Comments
I freakin' hope so 'cause this pissed me off way too early today.
Posted by: Paddy at January 5, 2009 10:14 AM
I read that too this morning and my questions are basically the same. This is going to prove to be a very interesting couple of months. Hold on tight...
Posted by: willpen at January 5, 2009 10:28 AM
I'm not really clear at all how tax cuts help anything. I wasn't ever all that excited about it when Obama was running for president, and that's even when I'm getting a tax cut.
If the tax cuts were in the direction of investments - say for instance - you can divert some of your tax burden to IRAs (for instance) that would make sense - expanding investment dollars during the economic crisis seems on target. But lowering the taxes doesn't put a lot of money back in my pockets - certainly not enough to make me feel like spending in this economy. I'm just not convinced that there's any real point to it.
That said - I don't much care either way. I'm much more concerned about where we DO spend money. Those shovel ready projects get people to work NOW, and investment in green jobs and broadband/net neutrality issues create the infrastructure for a new economy.
QT
Posted by: QueenTiye at January 5, 2009 10:53 AM
um, consumption vs investment is an oft specious distinction. real output is what matters. how resources are used matters. a pound of gold on a Bentley is as much a waste as a pound of gold on a drugczars escalade.
all this s@1t about tax incentives (for us, not for them! we are the job creators! neener!), prime rates, etc is just arguing about tools (even 'stabilizing biz-climate' vs chucking deadwood (buggywhip makers) involves debatable policy choice)
Posted by: Let them eat circular thinking at January 5, 2009 6:41 PM
Um...welcome to the blog, Circular. Csn you clarify your point? Not sure I understood it.
QT
Posted by: QueenTiye at January 5, 2009 8:00 PM
