Obama's tax cut
Deciding whether tax cuts or public spending will save the economy
Obama: Will his plan work?
(AP Photo)
What happened
President-elect Barack Obama plans to include $300 billion in tax cuts in an economic stimulus package that could reach $775 billion over two years. The tax breaks are aimed at attracting Republican support needed to win quick congressional approval. (The Wall Street Journal)
What the commentators said
“Let’s not mince words,” said Paul Krugman in The New York Times. It will take “swift, bold action” to prevent a second Great Depression. But even with tax cuts as a sweetener, some Republicans are so opposed to the surge in public spending we really need that the stimulus package might end up being too late and too watered down to do any good.
“No stimulus would be better than a bad stimulus,” said Investor’s Business Daily in an editorial. So if handing Congress a blank check to build roads and schools is the best we can do, no thanks. But a major study of tax changes shows that every $1 in tax cuts adds $3 to the GDP, so cutting taxes is the way to go if we want a stimulus that really works.
That’s not the way the last tax rebate turned out, said Hilzoy in The Washington Monthly. By some estimates, taxpayers saved 80 percent of that so-called stimulus. So public spending offers more bang for every stimulus dollar—plus, we badly need to upgrade our bridges and mass transit systems, anyway.
The best way to ensure that this doesn’t turn into “a federal boondoggle bonanza,” said Harvard economics professor Edward L. Glaeser in The Boston Globe, is to divvy up the stimulus between private citizens and local governments. Low- and middle-income taxpayers badly need a payroll-tax break, and shoring up local government balance sheets will “help ensure that those governments don’t make the downturn worse by cutting spending during a recession.”
Show: Oldest | Newest
5 Comments
Posted by Decca, Monday, January 5, 2009, 4:02 pm tax cuts, low interest rates, and cutting the corporate tax would help the economy, not loads more gov't spending. any job created by the gov't is simply more gov't spending and they are not accountable for productivity. why dont we look at the nations that have tried this before? if you think the US economy is bad, look at the inflation in Germany, Italy, UK and their standard of living vs ours. this socialism gambit is not a new script, why don't we look at how it worked out for the rest of the world and scratch our heads some more as to how we 'accidentally' became the leading nation in the world. i'll give you a hint, it wasn't socialism/communism
Posted by Michael J. Gorman, Monday, January 5, 2009, 4:53 pm If forcing me to buy all kinds of stuff I don't need with government money will help the economy, I guess I'll just have to be a good soldier and buy, buy, buy! As the late George Carlin said, we buy so much "stuff" that we need to get a bigger house or apartment just to fit all the stuff in. If stuff will keep us out of a depression, bring it on -- that way a jackass like Sean Hannity will call me a "great American. But a word of warning: I may need a bigger house to pack it all in.
Posted by s.krishnamoorthy, Tuesday, January 6, 2009, 12:12 am The announcement is because of the fraudelent bankers that cheated and top bureaucrats had swallowed the funds. The tax cuts will be withdrawn once the expected level fills the treasury.
Posted by Kam, Tuesday, January 6, 2009, 7:07 pm Where's my stuff? BO promised free car gas and mortgage payments. Give me the money and I will buy, buy, buy and ask for more. No time to work too busy buying.......gotta save America!
Posted by Bette, Saturday, January 10, 2009, 3:25 pm I am barely making it as a full-time graduate student, single parent with 20 year-old twins, one with autism. This year I basically lost my earned income credit, which was something I counted on, due to to a slight raise in my IHSS income. A tax break like EIC should not cutoff for someone in my financial situation in such an arbitrary manner, IMO. We do need to repair, upgrade, and maintain our in infrastructure, freeways specifically. In cities like LA it seems with a little cooperation employers could set staggered start and stop times, such as 7, 8, and 9 am, and 3, 4, and 5 pm to immediately alleviate that part of the problem, and one issue creating stress for society. Cooperation could get something like community gardens going designed for ease of use for the disabled and elderly so they can participate, as well as sections designed for larger production, all organic using volunteer, community services, school project type labor. There would be useful jobs created there for that, plus food consisting of fresh produce, to be used in schools, aged, disabled, and other community uses. Pride in ownership, if the people own ideas like this then it can become realized. Tax breaks are ok if you make a lot, or if you make a little, I will miss that $2000 EIC I normally get. For those making barely enough then losing more it is tough. I guess I should look for loopholes like employers discovered the medical insurance exception of not having to give part-time workers medical insurance. Ever notice how Wal-Mart and other major chains employ part-time, how the 39 hour week is becoming the norm? This leaves people working a low wage 39 hour week without medical insurance. Public spending to fix that loophole would be well spent, as well as that for infrastructure and local food.
Post a Comment