Tax Cuts Forever
Here's some info on the proposed tax cuts:
If the two-year plan is enacted, workers would see larger paychecks almost immediately because taxes withheld by the government would drop. The break would be retroactive to Jan. 1, and couples receiving a $1,000 tax cut would begin receiving an extra $40 in twice-monthly paychecks as the government tries to spark more consumer spending.
The Obama plan's tax cuts for individuals and couples would be a bit different from the rebate checks sent out last year by the Bush administration and Congress in a bid to boost the slowing economy. The relief this time around would be awarded by withholding less from worker paychecks. That provision would cost about $140-150 billion over two years.
It's going to cost a whole lot more than that. One of the problems with this kind of tax cut (as opposed to a one time is rebate)is that you will likely never get the cash flow back into the treasury after the crisis is past. (And if anyone doesn't believe me on that, I think they should contact Gray Davis and ask him what happens when a Democrat tries to reinstate taxes or fees that were "temporarily lowered" in order to respond to a shortfall. And then ask Arnold Schwarzenner how that whole thing's worked out for California in the long run.)
But hey, if people go out and spend that extra 80 bucks a month and it gets the economy going again then the government can cross that bridge when they come to it. If it doesn't, then I suppose our problems are going to be much bigger than a permanent loss of tax revenue. (And at least the 140 billion is going to working people. The larger number of tax cuts are going to business, which as Krugman says, "isn't very New Dealish".)
I'm sympathetic to the idea that "shovel ready" projects aren't the quickest way to stimulate the economy and that they need to do something immediately, but I really don't want to see anyone doing the kind of fiddling with budget projections the Bush administration did with their bogus "sunset" provisions. Let's have honest accounting, both in the numbers and the politics.
And hey, in the end, it might make it possible for the Obama administration to actually allow the Bush tax cuts on the rich to expire (but which the Republicans and the Blue Dogs are going to turn into a shrieking war cry for the 2010 election.)It's a shame they think they can't raise those taxes right away, but maybe this will provide them a good argument down the road --- in order to preserve the middle class tax cuts, they have to raise revenue from the wealthy.
But tax cut politics are never good for progressives in the long run. It's playing the game on Republican turf, which is a shame.