Is Obama Correct on Seeking GOP Support for his Fiscal Stimulus?

From the New York Times:

In part because Mr. Obama wants and needs bipartisan support, the package is being shaped by political as well as economic imperatives, complicating the process by putting competing ideological approaches into the mix.

It includes $300 billion in temporary tax cuts for individuals and businesses, in part to attract Republican support. . . Republicans, as always, are advocating for more and broader tax cuts. But the evidence is ambiguous about whether tax cuts will really spur economic activity at a time when consumers and businesses alike are frozen in fear and reluctant to let go of their money

I understand that our post-partisan President-elect "wants" bipartisan support, but does he "need" bipartisan support? I am not convinced that there is much, if anything, to be gained from this approach. My belief is that only economic imperatives should drive the shape of fiscal stimulus. Your thoughts?

Tags: American Recovery and Reinvestment Act, Barack Obama (all tags)

Comments

37 Comments

Stop bluffing...

Charles, great points.  I was more concerned with the reaction of the Tom Harkin likes who dismissed Obama's proposals as mere trickle down economics.  The question then becomes if not Obama's plan, then what?  It's like "what do you bring to the table?"

by nzubechukwu 2009-01-09 10:22PM | 0 recs
Re: Stop bluffing...

I don't think you understand the front pager's post. It's not what do you bring to the table that the diarist is asking. He's asking what should be the focus? Politics? Or the underlying crisis? if its the underlying crisis, no one believes this bill would look like this by Obama. Thus, again - where do you see the focus. They are not one and the same. What Obama says is not same as the economic factors involved here.

by bruh3 2009-01-09 10:50PM | 0 recs
Obama needs some GOP support

This will not get through the Senate without a handful of Republicans supporting it.  Not all 59 Democrats will support it and even if they did, they would still need at least one Republican.  

by Kent 2009-01-09 11:04PM | 0 recs
Re: Obama needs some GOP support

what an odd comment. So he won't get the Dems support, but needs the GOP support. Why would he get the GOp support if he can't get the Dem support.

by bruh3 2009-01-09 11:26PM | 0 recs
Re: Is Obama Correct on Seeking GOP Support for hi

It's not so much what he says as it is what he does.  I think the plan is going to go from the bottom up, it sounds like it's going to originate in the House or Senate and then Obama will have the opportunity to sign or not sign.  If the Dems get it through, he'll sign it.

If he wants to peel off the few moderate GOP Senators left, more power to him, it could get him a reliable group to talk with in order break potential filibusters.

by auronrenouille 2009-01-09 11:13PM | 0 recs
Political math

It's a simple math made complicated by Obama's fear (and those you can find here) that we are still living under Republican rules.

Let me ask you this because to me at least this is telling: Why did he not go to the American people with the plan he wanted rather than the one he feared he would not get through the Senate? Why would you not use the bullypulpit first to hammer you plan through with GOP defectors who are convinced by public sentiment rather than first worrying about how the GOP will react? Because one is more afraid fo the GOP than the American public.

In a way, this is my nightmare. Here's a guy who won in a landslide with most progressive Congress we have seen in decades, and what are people doing? Still living in fear of the Reagan revolution boogieman.

Here's a reality check: whether it's 51 votes or the 80 he wants, the buck will stop with him and the Democrats. He will get the blame or the acolodates for the sucess of the economic stimulus package. If the package that he has now fails (which is  likely to be the case) then he will be blamed even if every Senator in Congress votes yes. If he hammers through a plan that actually has a chance of working by selling that plan to the American public he has a chance of winning a lasting victory.

This would require political leadership and courage. What bothers me here is the lack of courage to focus on the economic issues, and the bizareness of creating a plan that may have a greater potential of failing because of it.

He will obtain no cover from the GOP. They will use this.And their attacks will be effective becuase ultimately he can not argue (just as Bush could not) that it was some one else who is the President.

The math is simple: sucessful plan to change around the economy or worry about the GOP. It's only complicated by fear.

by bruh3 2009-01-09 11:38PM | 0 recs
exactly right

Lack of courage and the wrong priorities: he'd rather have Congress pass a "bipartisan" plan, even if that's less likely to work, than dare to strive for the best possible means to stimulate the economy.

This has always been one of my major fears about Obama--he would move halfway toward the Republican position before negotiations with Congress have even begun. It's a lousy political strategy, and it will produce less-than-ideal policies.

I am going to excerpt part of your comment at Bleeding Heartland.

by desmoinesdem 2009-01-10 04:23AM | 0 recs
Re: Political math

I think that he is more subtle than this.

First, Obama is not in charge yet.  He still needs to tread carefully. He's not in the Bully Pulpit yet.

I think that he overweight the Tax Cuts portion of the plan he outlined knowing that the Dems in Congress would NOT be receptive to a plan with major tax cuts.  (Cuts are a necessary part of the plan, see my comment below in this thread.)  In fact, from Congressional comment so far, it seems like he won't get all of the tax cuts he's requested. However, by making it so large that the Dems Squeal in public, the Repubs have GOT to be happy about it (they're the minority, they don't have that much choice).

The Democrats are Yelling that the Recovery portion of the package is WAY too low.  What do you think that they are going to do with that portion of the program?  They're going to fight like cats to increase that portion of the program. They're going to insert earmarks for some pet projects because Obama does not have the line item veto, and won't veto a whole bill that is mostly his.  But the bottom line is that Congressional Dems will make the recovery portion of the package bigger, much bigger, perhaps almost double what it is now.

Now, he already has the Repubs on board with the tax cuts (for the minority it doesn't get any better than this).  He knows that the Dems in Congress will increase recovery (jobs creation) portion of the package.  In the end, he gets a 1 to 1.2 trillion package that is hopefully enough, with lots of Republican backing too.

To repeat, I think that this guy is subtle. He's putting a skewed product out for debate, knowing that it will be messed with, and with a bit of behinds the scenes guidance, he gets what he wants.  Smart.

by NvDem 2009-01-10 10:03AM | 0 recs
Re: Political math

I will respond to each of your points:

a) Whether not he's officially in charge yet is irrelevant. He's implicitly gearing up to be in charge. If he were not of the same thought processes as me, he would not be laying out his plans and  providing light to them now. Your first statement is therefore factually not true in the de facto since.

b) Yes, I know the Nate Silver/Obama true believers theory of everythig  Obama does. "If Obama's stimulus received a bad reception from the Congress, then Obama being Obama must have intended it." This is faith. It's not an argument. Peo make these sorts of argumens each time they don't agree with what Obama is doing, but have no way to reconcil that with how they want to view Obama. Suddenly, Obama, the great Machiavellian, shows up.

I am not going to argue with you over your faith. I will, however, asked: What about the Congressional Democrats says they will win in a struggle with the GOP to define the bill if we need the GOP?

Afterall, one would pressume under the arguments thus far presented that the Senate Dems do as well. Therefore, how can the negotiation turn into a Dem favored negotiation? You can not have it both ways. Either Obama needs the GOP, in which case, he must do what he is doing, or the Dem Senate also needs the GOP (since they are in the same body) in which case what he is doing will ensure that the process relies on GOP support.

What changes with your argument? In fact, why wouldn't it be more difficult to obtain support at the level of legislating than in the light of public pressure that the President creates?

c) No, he has what he thinks is the GOP support. Your argument requires trusting the GOP or that somehow the GOP as the minority will be limited to their status rather than using the gift you have already given them. That gift being "we need the GOP."

It also requires that the GOP remains static in this process or that they are idiots. That Obama is so brilliant, and that they are idiots is the flaw in your analysis.  No one is that brilliant, and the GOP maybe thugs, bu tthey aren't idiots. What happens if he does not have the GOP aboard? What happens if they fillabuster? Since that's the fear- why would that change given the fact he does not have anyone on record in public sayign they support Obama's plan? In fact, I have seen some rumblings toward the opposite direction.  There is no guarantee that any increase in the package will be spending. THere is every likelihood that they will split the difference, and probably favor the Republicans who wll claim there is too much spending. And, we will have to give them concessions because as you and others keep saying "We need them."

by bruh3 2009-01-10 10:38AM | 0 recs
He ran on bipartisan-ship

and won with a landslide on it, he wants a bipartisan bill just because that is how he works  on major issues. simple as that, get it? now STFU.

Your concern trolling is disingenuous, I have seen you try to back stab Obama at every point here and on kos on any topic (pushing the Rush Limbaugh obama recession now in kos, dissing his gay appointments and gestures as tokens while taking major issue with warren and supporting keeping bush tax cuts for rich while opposing his tax cut proposals here for middle class-- to name few). You dismiss any factual counter argument as "Faith"(for example, FDR was not blamed for depression even though it lasted under him for years, but no! this is an obama recession now!). Weak indeed. I say you are the one who "supposedly" supported and voted on faith since his stances were crystal clear (esp on middle class taxes and bipartisanship) in the last two years.He will try to be bipartisan as long as it works (and so far gop have come out in favor of doing a stimulus, if they had came out blazing it you can bet he would ram it through regardless). You should Show your true colors imo.

by YourConcernsAreNoted 2009-01-10 02:48PM | 0 recs
It ain't that hard

He would LIKE Republican support, it would be a bonus. But all he NEEDS is for the American people to see that he is clearly trying to win Republican support. It's win-win, because he either gets points for being fair or the GOP loses even more points for being naysaying douches. Which they are already.

by vcalzone 2009-01-10 12:41AM | 0 recs
obama's new politics may be hard to understand...

especially if you've already defined the term to fit your own preconceptions.

yes, barack obama needs bipartisan support for major initiatives.  there are myriad reasons for this, and it doesn't take much consideration to figure at least one of them out.

but it seems the biggest obstacle is for people to get beyond the old politics -- i'd call them the clintonian politics -- of winning battles regardless of what effects they have on the war.  clinton and his administration may have had tactical success, but barack obama is not a mere tactical thinker.

you need to take seriously barack's promise to unify the country.  just from that perspective, obama and his administration have to make serious efforts to keep republicans engaged in the process, even if they don't vote his way in the end.  i know, i know, those who seek revenge for the voters imposing bush upon us will hardly be satisfied with a bipartisan approach.  they want blood and will never be at peace with barack's strategic approach.  better to kill republicans than save the country.  barack obama does not share those values...

by bored now 2009-01-10 03:38AM | 0 recs
no, you do not understand

Economists are telling us that Obama is not offering the best stimulus plan for "saving the country," in this case the U.S. economy.

He is loading up his plan with tax cuts for business that will not work, because politically that will make the plan easier to sell to Republicans.

This is explicitly NOT what Obama said he would do. He said he would propose the best policies for the country. Yet here he is already, proposing a less-than-ideal plan because the aura of "bipartisanship" is more important to him than getting the best possible stimulus through Congress.

Also, bruh3 is correct that Obama's approach is wrong from a negotiating standpoint. Anyone who has taught a class on negotiations could tell you that.

by desmoinesdem 2009-01-10 04:21AM | 0 recs
Not having had a negotiation class

would you be so kind as to explain why it is the wrong approach from a negotiating standpoint?

by NvDem 2009-01-10 10:09AM | 0 recs
Re: Not having had a negotiation class

I think she's referring to my point about how to negotiate price point. I will give a simple straight forward example below that gets to the problem with starting at the bidding point Obama has started at with the negotiation. This is not referencing the political issues. I do that elsewhere in this thread.

This is the negotiation flaw as I see of what Obama is doing:

Party A really wants to sell a car at 10,000, but is willing to settle for 5,000.

Party B really wants to pay zero for the car, but is willing to settle for 5,000.

What should Party A do?

Obama's argument would be $5000 since that's the compromise position. I would disagree.

Why?  Because obtaining the right compromise is the product of how you start the negotation as much as how you end it. It sets the parameters of negotiation amongst the parties.

Party A starts the negotation at $5000 rather than $10,000. The negotation subsequent will now be between $5000 and zero or no deal, not $10,000 and zero as we started. Thus we will get less than $5000.

This is a simple model not meant to capture the more complicated negotation here, but to capture its inherit flaw for explanatory purposes.

But let me try to put this idea into play a little. Even the argument that the bill will increase in the future is reliant upon what type of negotiation Obama is now engaged. I am only giving a couple. There are more.

First, we say we need the GOP aboard. That affects our ability to negotiate.  In part, because he does not provide another way of looking at how we can obtain their support, even if that's true, other than compromise from the start.

One example, that I give, is using the bullypulpit of his office to pressure the GOP moderates like Specter who are up for re-election next year.  We would still have their support even if we do not compromise. Thus, when we enter negotiation it would be from a position of strength, and one would start from a place of obtaining a better bill according to our interest of a deal that will help the economy from this place.

Second, the assumption that any negotiation will leave the GOP static as to an increased stimulus package from 775 bil to 1.3 tril is flawed. The assumption seems to be that by giving the GOP the tax cuts now, they will what? Negotiate in good faith later?

Let's say they are honest players (yes this will never happen, but let's assume). They still would have every incentive to resist the additional funds being spending rather than more tax cuts and business incentives.

Why? Because we have already given them the compromise with the first move, and, therefore, like the guy negotiating for zero for the car- he sees he can get it for cheaper than his compromise position. There, I expect more tax cuts and business incentives rather than less. I also expect while there maybe spending. It will not necessarily be enough just because the number increases of the overall package.

There are other theories of negotiation.  But all of them rely on pscyhology of the parties involved and understand who are the parties and interests involved. For example, you could start from a compromise if we were dealing with a trusted customer with whom you have had a history of a good relationship so both parties know that neither party is going to undercut the other or will sucessfully bullshit the other.

I am not even getting into trying to understand the history and specific pscyhologies of the parties involved- ie , the Congressional Dems do not leave much room for comfort about their abilities to negotiate good deals and the GOP is good at obstruction and ae not to be trusted.

by bruh3 2009-01-10 11:09AM | 0 recs
most people...

well, most realistic people, don't think that our economy has the leisure time that your negotiation technique demands.  you see, democrats are trying to pass an economic recovery package in january, not in june.

that's one of the great flaws of keynesian economics, the belief that perfect information exists that will be reacted to perfectly within the course of the business cycle.  yet the reality is that governments are slow to react to changes in the economy, a flaw you are insistent on continuing.

fortunately for americans, especially distressed americans who are without a job or worry about the future of their job, barack is not following your go-slow approach.  he's reacting quickly, albeit with the understanding that some sacrifices to "the perfect plan" will have to be made.

i'm not particularly concerned about the psychologies of the parties involved but the psychology of the market and the american public.  striking quickly, in this case, is far better than perfection.  i can't even imagine how many jobs would be last waiting for your negotiating technique...

by bored now 2009-01-10 05:26PM | 0 recs
Re: most people...

Your post is kind of Rovian. You use the weaknesses of Obama's approach as if they are applicable to my arguments:

a)  What I described is basic negotiation. There is no question that it is the fastest approach because its the most direct. Its haggling 101 with clear objectives in mind. Right now, Obama just left it open with no clear objective in mind.

What's fastest? Clear President-led- plan or waffling congress-member-plan-by-committee?  The Obama as Machivelli 2 argument requires the later. Indeed, that's where we are right now regardless of the veracity of Obama intending this. We have no clear idea of what plan will be voted on. If you think  the later is faster then you aren't someone who understands the legislative process.

b) Also, another bit of Rovian commenting on your part: If there is no time, then you don't have time for legislation by committee. You certainly don't have time to worry whether its 51 or 80. Its more incentive to use the bullypulpit rather than the committee approach.

Simple logic. You are trying to spin me. The problem is your argument is not true.  It's just trying to flip the weaknesses of Obama's approach onto my arguments. Its why he has went from "I am going to have the legislation by the time I am in office" to "We should have it in Feb."

c) I am also unsure how to speak to your sec post. You put together words, but they have no real meaning. Perfect information?

A spending plan v tax plan is the exact opposite of what you describe. Tax policies requires assumptions about behavior based on the assumption of perfect information.  Thats at he core of tax policies.

Spending requires no assumption about whether people will spend or not. So, here again what you say is the opposite of what it actually is.

I am kind of done with this post. Look if it makes you feel any better, no one will listen to the types of arguments I am making. Its clear like Clinton before him Obama has a couple of fatal flaws. Unlike CLinton he does not have people will to tell him about it. Instead many of you seem to share them with him. So desperate for GOP approvall you a) dont realize you don't need it and b) even if you do need it- the way you are going about getting it isn't the fastest approach.

by bruh3 2009-01-10 06:00PM | 0 recs
Back at you in tems of not understanding

Romer Obama's chif council in economics released a report last month showing tax cuts will have the most timely and fastest short term effect on the economy, eps tax cuts for small businesses and middle class. so not all economist agree with a pundit like Krugmen that wants a 2-3T$ dollar pork project in 3 weeks (how the hell you spend that much?). Obama has more than 20 economic advisers, some liberal and some center left and some centrists and his plans reflect their idea's. so its hardly credible to think all economists think the way you like.

by YourConcernsAreNoted 2009-01-10 02:56PM | 0 recs
i don't live in the black and white world of...

economists, i live in the real world.  there is a dramatic difference between what economists would propose and what politicians have to live with.  i don't know about you, but i've had quite enough of the policies that economists prefer with the last 8 years of economic mismanagement.  fsck the economists.  i prefer competence in government.  i want to see policies that work.  in order to work, they have to get passed.  that's the mathematical reality that no economist seems to understand...

by bored now 2009-01-10 05:18PM | 0 recs
You seem confused

Yet you trust policies coming out of the black and white world of Republicans? Interesting that you should mention the last 8 years since is precisely the break from the past that economists are advocating. That we not repeat bush's mistake of relying on Tax policy as a stimulus package. I honestly don't think many of you are thinking much about anything other than 'I like Obama and you are attacking him."

by bruh3 2009-01-10 06:04PM | 0 recs
it would be remarkably stupid to make these...

assumptions.  feel free to show where i said i "trust policies coming out of the black and white world of Republicans."  that's a strawman because you can't handle the feedback.

most of us trust barack.  it's going to take a lot more than some simplistic economics modeling to raise questions about someone who's actually trying to do something, and has already admitted that he's going to test to see what works.  but since you understand that your approach is flawed from the start, i don't see the need to point it out further...

by bored now 2009-01-11 12:52AM | 0 recs
Re: it would be remarkably stupid to make these...

No thanks.

by bruh3 2009-01-11 09:16AM | 0 recs
understood...

i know i always appreciate it when people don't make up arguments and try to put them in other people's mouth.  ymmv...

by bored now 2009-01-11 09:40AM | 0 recs
Re: understood...

no its that i am not going to argue with stuff you are making up on the fly. you aren't interested inthe subject. you are interested in disproving me. the problem is you are just throwing out random shit to see what sticks to the wall. if iw anted to listen to that, i could listen to my republican friend trying to call obama a communist. there is a world of difference between what you are doing and constructive conversation.

by bruh3 2009-01-11 10:57AM | 0 recs
Re: understood...

thanks for your input.  since you've already admitted that no one will listen to you, i hardly see the need to "disprove" you.  i'll leave your assertion about what does, and does not, interest me to stand on it's own.  obviously, you like to make stuff up.  gotcha.

as for the rest of it, i don't need to throw shit on the wall.  i wrote some of the econometric equations used in computer models, using a mathematical technique you probably never heard of (or even rational expectations, for that matter).  nope, i don't need to make shit up.

i would simply prefer that you wouldn't, either.  but hope springs eternal.  you don't have a rational understanding of what barack obama is doing, and you are wedded to what you say you understand, trying to force fit your understanding onto this particular situation.  it's not good science, but, hell, maybe it is good "negotating" technique...

by bored now 2009-01-11 01:24PM | 0 recs
Re: understood...

You keep demonstrating why this is about arguing. Actually there are other places where I am discussin gthis issue with people who disagree with me, but aren't just throwing shit at the wall. They are provding me with a real discussion over policies and concepts. This is that place. For you, its about circling the wagons and throwing out concepts that you really don't undertand and aren't trying to understand. When you want to have a real conversation the first rule is to understand what the hell you are saying.

by bruh3 2009-01-11 02:13PM | 0 recs
Re: understood...

by the way I no more believe your claims than I believe in Santa Claus.

by bruh3 2009-01-11 02:16PM | 0 recs
Re: understood...

i'll leave you to your thereotical discussions.  i'm too busy.  you really aren't interested in reality.

i note that i was right.  not that anyone should be surprised.  i didn't make the extreme assumptions you did, but relied instead on obama's past...

by bored now 2009-01-13 03:29PM | 0 recs
Yes

There will be some tough races for Dems coming up soon and this will help them.

by nikkid 2009-01-10 07:47AM | 0 recs
Re: Yes

Yet, you don't explain how it will help. You simple , as usally with these sorts of posts., provide the conclusion.

by bruh3 2009-01-10 09:39AM | 0 recs
Rule of 60 Gives Rs Some Say

The Senate operates on the rule of 60 vote so of course Obama needs at least some Repub support because he needs anywhere from 2-4 votes (depending on the outcome of Illinois and Minnesota) to break a fillibuster.  And no Repub is going to vote to break the fillubuster and then oppose the bill.  There is nothing to gain by doing that.

This creates a dilema for Obama - does he craft a narrow bill and try to throw a few bones to bring the remaining moderates - Snowe, Collins, Voinovich, Spector - over or does he try to craft a bill which has broader support.

There are arguments on both sides:

A narrow bill with few tax cuts makes the Dem base happy but it also puts Obama in the situation where virtually every Senator supporting it has a veto over the bill and can ask for favors up the wazoo.  We saw that with the 1993 Clinton Budget bill.  It also makes Obama look weak because he will be scrambing up until the last minute to ensure he has 60 votes.

A broad bill is probably more expensive and creates some grumbling amongst the Democratic base.  Obama most likely gets to 65-70 votes by keeping the $300 billion in tax cuts but upping the infrastructure and other govt spending to bring Dems along.  It makes Obama's negotiating easier because he is not in a situation where one Senator can basically veto the bill.  Obama also looks stronger with the public because he is shown to have broad support for his initiatives.

The way I see it is Obama is a little bit between a rock and a hard place because he doesn't have 60 votes. He cannot just ignore the Repubs or else he will end up with nothing.  As is typical with Congress, no one will be thrilled with the stimulus package in the end but it will be workable.  I also believe the dollar amount is going to end up b/w $900-$1 trillion because Congress almost never reduces the cost of a spending bill.

by jmnyc 2009-01-10 08:03AM | 0 recs
Re: Rule of 60 Gives Rs Some Say

The problem with your argument is that you assume the way you go about obtaining Republican support is by giving them what they want. this is only one approach. Not the only one. he's only in a hard place if you assume that there are only two, rather than three forces at play here.

That's the reason why Democrats fear the GOP. That's a fine thouht process if you are in the legislature, and lack the bullypulpit of the Presidency and are not a highly rated President. that dynamic changes immensely if you are.

No one has argued ignore the GOP. They have, as I did above, argued don't approach the situation like you need them in the way a legislative representative thinks. Use the power of the role you have- that of the Presidency. I keep saying the problem is many , including Obama apparently, do not understand the power he has now.

And no, the public will not care how he got here if the plan fails. The only thing they will care about if that they don't have a thriving economy.

by bruh3 2009-01-10 09:44AM | 0 recs
Re: Rule of 60 Gives Rs Some Say

Bush did use the bully pulpit to get his tax cuts through pre-9/11 but it took him until the summer of 2001 to get a bill he could sign.  It was also done as part of the Budget Reconciliation which is one of the few items that cannot be filibustered in the Senate. Clinton did the same thing with his 1993 budget plan.

If Obama wants to move this fast, and he does, he is going to have to give something to the Rs to avoid a filibuster.  That doesn't mean he can't get a lot of what he wants via the bully pulpit but it just isn't going to be everything.

Also, I don't think his tax cuts are so horrible, especially the ones for the middle class.  He promised those and he has to give them considering how much he is spending.  I also support reforming the AMT which has a $100K exemption limit set in 1969 that catches a lot of people in high cost areas like NY, SF, Chicago that it wasn't designed to get.  If it had been adjusted for inflation, it would apply to incomes over $500K today.  The main part that bothers me is $3K credit to businesses for not laying off an employee.  The amount sounds way too small to make a difference.

by jmnyc 2009-01-10 11:16AM | 0 recs
Re: Rule of 60 Gives Rs Some Say

Bush did not enter in 2001 where Obama is in terms of strength of public sentiment, crisis mode or Congressional power.  The best comparator is Bush post-9/11, not pre.  People are scared. Obama could recite the list to McDonalds menu and get a high approval right now, or, as my favorite anecdote during the election:

When one woman was asked whom she was voting for in VA - she said, 'I am voting for the nigger honey." It takes a lot of fear to get you to that place where you will override your fears that you would vote for someone whom you consider to be the n-word. So, again, the correct comparator where Americans are is post 9/11, not the summer of 2001.

You also use 1993 which was still within the Reagan  revolution ascendacy rather than decline and fall. We are post Bush and fall of GOP acendancy.

I take my cues from economists rather than my views of what might work. I also take my cues from the data that is doubtful at best about taxes, and basically say that they have not worked. The chief problem with the argument, however, is that it decreases the probabilities. There is a bigger if with tax cuts than with direct spending. With taxes you have to have faith in the next step- ie, will they spend the money once they get it? Maybe. Or maybe not. In an economyof which you need the spending to be a certainty, this is a problem.

by bruh3 2009-01-10 11:44AM | 0 recs
Re: Rule of 60 Gives Rs Some Say

Oh- and by the way, proof of this can be found in the early Bush years. He used the bullpulpit to get what he wanted. Now, his policies were bad, and thus they did not work out, but that is not an argument against the strategy of passing legislation. Your argument to me rest on political cover for hte President, and I do not think thats possible regardless of the vote.

by bruh3 2009-01-10 09:47AM | 0 recs
Re: Is Obama Correct

To really do this recovery, you need both a short term and long term plan.

The effect of Tax Cuts is that it puts money in the pocket, Right away.  Think about it, what if withholding tax was dropped by 50%, suddenly you got a substantial raise (R's hate that one btw).  But the effect of tax cuts is going to be temporary, it's spent, it's gone.

However, there is no incentive to spend the money that we just got.  It just goes under the mattress.  But, it is a short term fix to the liquidity crisis (it's still there, small businesses that have taken a hit won't qualify with a bank for money, they have been juggling supplier payments to make payroll, or maxed out their credit line or were late on a credit payment for payroll, etc. etc. etc.).

Therefore, Tax cuts are an absolutely necessary part of a stimulus package. 37.5% tax cuts for the plan sounds excessive, but hey, anything that gets things moving is good.

Next Problem, Incentive: Let me repeat, with tax cuts there is no incentive to spend the money.  No one is going to spend a dime of a tax cut unless absolutely necessary if they are unsure if they will have a place to live or work next week.  The problem now is to motivate people that spending is good again.  This is where job creation is so very important.  Jobs convince people that there is opportunity and that they can spend to maintain a desired lifestyle.  

The past (Friedman, aka Reaganomics) model is that private industry can create jobs without the government help (or regulation), of course with any such venture without controls  greed takes over, and we have the boom & Bust cycle, welcome to bust.

The Tried but True (Keynesian Theory) model allows government to guide, influence, and participate where necessary to create an environment with steady, maintained, and reasonable growth.  Thereby avoiding the boom & bust model.

This is why Jobs creation is so very important.  Tax cuts don't mean jack unless there is a way in place to create jobs.  Creating Jobs through massive infrastructure investment is an absolutely necessary component of a solution to the current crisis. The goal is long term Steady stable job growth, while ensuring a future controlled with reasonable growth through government guidance.

I think that Obama has a good strategy here. I think that he is counting on the Democrats in Congress to raise the ante on jobs creation (earmarks, like it or not - like Burris, he can't stop them), while the Republicans marry themselves to the tax cut mantra.  He shot high on the tax cuts knowing that there is no appetite in a Democratically controlled Congress to do any more than absolutely necessary on that component of a Recovery package.  Yeah, It seems high...for now.

Let Congress fight like cats about there not being enough incentive, more is needed, pile it on! The hidden message to the public during this fight is that Democrats are Creating Jobs. In the long term, the public is  going to have much fonder feelings toward Democrats, because, as I said earlier, tax cuts are a temporary, not long term fix.  

In the end, I think we'll have a Recovery package where the requested tax cuts pass, but the tax cuts comprise a more reasonable 25%-30% of the total package.

by NvDem 2009-01-10 09:38AM | 0 recs
Amazing Thread

Wow, it was a pleasure to read this. I learned a lot. Thanks.

by Charles Lemos 2009-01-10 01:37PM | 0 recs

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