Krugman: Is Obama relying too much on tax cuts?

[Cronopio]

http://krugman.blogs.nytimes.com/

... What this says is that there’s a reasonable economic case for including a significant amount of tax cuts in the package, mainly in year one.

But the numbers being reported — 40 percent of the whole, two-year plan — sound high. And all the news reports say that the high tax-cut share is intended to assuage Republicans; what this presumably means is that this was the message the off-the-record Obamanauts were told to convey.

And that’s bad news.

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. ...

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I totally agree with Krugman. It's starting to sound like the DLC influence of going easy on the change thing is starting to insinuate itself into the Obama economic plan. If so (and I really do not want to believe that Obama can be so naive about this), it is *very* bad news.

[Captain Hilts]

1. Obama has no track record of being anything other than a go-along, get-along guy.

That might be a good thing. But it's not a Progressive Thing.

[Warpy]

2. Yes, but everything the DLC suggests will be doomed to failure

Obama's campaign rhetoric on the trail suggests he realizes what really needs to be done. However, he might also realize he won't be allowed to do any of it until and unless every trick the monetarists have has been tried and has failed miserably.

That's the other reason 2009 is going to suck.

By the end of next year, events should force everyone to the left enough that they realize the demand side is what needs the help, not the supply side.

[RaleighNCDUer]

5. By the end of next year --

2010. Isn't that when the Bush tax cuts are due to expire? We HAVE to let them expire, get some balance back into the tax load.

[Kolesar]

4. laughable...

a go-along, get-along guy

[leftofthedial]

3. unemployed people who can't make their house payments

will get ZERO benefit from tax cuts.

Obama sounds more like bush every day.

[RaleighNCDUer]

6. Obama is not a one-trick pony. He won't pretend that tax cuts

will help people who have no income. For them, a different plan - for some, tax credits; for some, expanded unemployment. There will be plenty of options to look at.

[leftofthedial]

7. the only solution has three components.

Component 1: Jobs.
Component 2: Jobs.
Component 3: Jobs.

[RaleighNCDUer]

12. Now THAT sounds like Bush.

That's why they give the massive tax cuts to the rich - so the rich people who own the businesses can create jobs.

Nevermind that there is no point to creating jobs if nobody can buy your product.

That's why Obama's been talking about the creation of a green energy economy - it creates jobs where there is a market, and where the current industry is badly lagging.

That's why Obama's been talking about a new 'CCC' type of public works effort, so that federal and state money will go directly into the pockets of the workers, without being filtered through business bureaucracy, while at the same time improving the infrastructure that the republicans have been ignoring for the past 40 years.

There are MANY ways to approach this crisis - and I think Obama's going to use most of them.

[leftofthedial]

14. creating jobs sounds like bush?

but Obama's plan is to create jobs?

:shrug:

[RaleighNCDUer]

16. Your simplistic 'jobs, jobs, jobs' is not a plan.

As i pointed out in my reply. The Bush answer was cut taxes on the rich so the rich could create jobs with the freed up capital. But those jobs never get created, in this country - they go to China.

What is needed is real tax relief on the middle and lower class, while increasing taxes on the rich to fund expanded unemployment benefits, job training programs, and CCC style state job creation for infrastructure development. Corporate tax breaks should ONLY go to developing green tech, which will in turn create new jobs that are NOT outsourced.

But I am repeating myself. The upshot is, Obama has a plan and you just like to disparage him, trying to make him sound like Bush.

[leftofthedial]

17. who ever said it was a plan?

it's a priority.

you just like to disparage me, trying to make me sound like bush.

Whatever Obama's plan, it must create jobs or it will be just as ineffective as bush's "stimulus" plans in which those $600 checks ended up in the hands of big oil. Nicht war?

"Tax relief." Now THAT sounds like bush. The only thing wrong with taxes in Amurka is that rich people and corporations don't pay any.

[GOPBasher]

8. Tax cuts are only part of the plan.

We'll see an extension of unemployment benefits, perhaps help with mortgages, perhaps and expansion of the earned income tax credit, etc. He's not sounding like Bush at all. In fact, even his tax cuts are not like Bush, because Obama's tax cuts will focus on the middle class.

[Cronopio]

9. Even though you're right about middle-class tax cuts being anti-GOP ...

... I think Krugman's point is still valid - that the balance of tax cuts and economic investment is important. Too much middle-class tax cutting takes away federal funds that are needed for long-term infrastructure investment, and the vast majority of the money should not go into tax cuts. 10 to 20 percent should be enough to prime the pump, anything more is diminishing returns. Even though the solution will cost a lot of money, Obama still needs to be prudent and not spend more than necessary.

[depakid]

10. Democrats never learn

You can't make deals with these folks- and if you try, they'll stab you in the back.

Krugman's right. The Obama "team" is already sounding weak- and as he notes, Republicans are smelling the weakness- and already moving the goal posts.

[tom_paine]

11. Bingo. Obama is starting to smell a little like Clinton redux.

Stop all investigations of Bushie Openly Performed Serial Felonies and Treasons "for the good of the country".

Bend as much as possible to the Kristols and Cheneys of the world, seeking and getting their approval and approbation.

Betray your constitunecies. Be "post-partisan". Which the Bushies interpret as "drink this Mickey Finn and open your legs, baby."

Is it POSSIBLE this is what is about to occur? My God, after working so hard for Obama, the very thought is agonizing.

Would it surprise me if that is what is about to happen, as the snowball of evidence seems to point to? No, after the last eight years of the behavior of BOTH wings of the Rulers of America, nothing and I mean NOTHING can surprise me?

But is it yet a certainty that this IS what is GOING to happen?

No. Not yet. Not before Obama has governed for one day. FDR didn't campaign on the New Deal, they say.

But the signs are not good. Almost all of the signs are not good, I am so very sorry to say.

[Dr.Phool]

13. He's trying to offer Ghengis Khan an olive branch.

Ghengis already has his knife out, to sharpen it into a spear.

Fuck that. Hit Ghengis McConnell over the head with it.

[northernlights]

15. when are they going to figure out

Give tax cuts to corporations, and they'll just pay themselves bonuses.

Give tax cuts to most average people today, and they'll either save them or use them to pay down debt.

Tax cuts are *not* going to stimulate demand in the current climate.

[MISSDem]

18. Ahh, Krugman.

Is he brillant cause he is soo sexy or is he sexy cause he is soo brillant?

[Hawkowl]

19. The Obama Depression

If Obama overplays the tax cuts and underplays true government investment, infrastructure and job creation, he will own this depression. Too little, too late is the mistake he has to avoid. Kow Towing to the very rethuglicans that caused this debacle is INSANE.

[Jakes Progress]

20. But giving the republicans everything they desire

has worked so well for us for the last four years --- right?