Krugman discusses the tax cut deal

[n2doc]

So the tax deal is out. Obama extracted some concessions, with the big surprise being a payroll tax cut. How much better do these concessions make the thing?

snip:
So, a bigger boost next year, fading out in 2012. Since all the evidence says that elections depend on the rate of change of unemployment, not its level, this is actually bad news for Obama: he’s setting himself up for an economic stall in the months leading into the 2012 election.

Oh, and he’s overpromising again:

“It’s not perfect, but this compromise is an essential step on the road to recovery,” Mr. Obama said. “It will stop middle-class taxes from going up. It will spur our private sector to create millions of new jobs, and add momentum that our economy badly needs.”
Millions of new jobs? Millions? Not by my arithmetic.

So, was this worth it? I’d still say no, although it’s better than what I expected over the weekend. It still greatly increases the chances of the Bush tax cuts being made permanent — especially because the front-loading of the stimulative stuff actually worsens Obama’s 2012 electoral prospects.

Overall, enough sweetener has been added to diminish, but not eliminate, the bitterness of the disappointment.

the rest of the article:

http://krugman.blogs.nytimes.com/2010/12/07/the-deal/

[n2doc]

1. more:

December 7, 2010, 8:52 AM
The Problem With Front-Loading
A further thought on the tax deal: didn’t the administration repeat exactly the same mistake it made on the original stimulus? The stimulus was too small; but it also too short-lived, with the maximum impact on growth coming in the winter of 2009-2010, then turning negative just in time for the midterm election.

Now we have unemployment insurance and payroll tax cuts for 2011, going away in 2012 — just in time to put the administration in big trouble as the election looms.

This only makes sense if you believe we’ll be in a self-sustaining, strong recovery by late 2011. Stranger things have happened, but …

And remember, mistaken forecasts of self-sustaining recovery taking hold were a big part of the original stimulus mistake.

http://krugman.blogs.nytimes.com/2010/12/07/the-problem-with-front-loading/

[Ichingcarpenter]

2. What does a Economic Nobel Prize winner know?

Vs a Nobel Peace Prize winner? Whose stuff has been proven true?

Sorry its a rhetoric question but most of you know the answer or think you do.

[Still a Democrat]

6. The GOP kept it small, not the President

Just sayin'.

[tekisui]

3. This is a Big Sucking Deal.

[WhaTHellsgoingonhere]

4. To paraphrase Jim Mora...

Millions? Millions? Did you say millions?

[TexasObserver]

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