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Thursday, August 05, 2010

Tax Cuts and the Stimulus Package

Fred Barnes either doesn't realize that just under 40% of the stimulus package was devoted to tax cuts, or he is intentionally misleading people:

Time for Tax Cuts, by Fred Barnes, Weekly Standard: The economic recovery, to the extent there’s been one, has stalled. Unemployment remains stubbornly above 9 percent and may go higher. The housing crisis endures. What is President Obama’s remedy? More jobless benefits, more money for governors to pay Medicaid bills, more funds for teachers and state and local government jobs. In other words, more of the same.
What ever happened to “bold, persistent experimentation”? ... [W]hy not experiment with tax cuts? It would be a new approach for Obama... But for reasons of ideology and inflexibility, he’s stuck on spending as the cure for economic doldrums. ...

Is it possible that he doesn't realize that a sizable chunk of the stimulus package was devoted to tax cuts (many were included to appease Republicans who then voted against the package anyway)? Though he doesn't mention them at all in the article linked above, at one time Barnes certainly knew there were tax cuts in the stimulus package:

The measure had tax cuts, but not ones Republicans believe will spur the economy.

What Republicans believe isn't important, they believe all sorts of crazy things, what matters is the evidence. And the evidence has not been supportive of Republican beliefs (despite the evidence, their faith remains largely unshaken).

Any guess who Barnes thinks should get tax cuts? He doesn't say directly, but he gives us enough of a hint to guess where he stands:

those making more than $200,000 annually ... are exactly the folks most likely to react to tax cuts by investing in the economy and producing jobs.

The Obama stimulus package had $237 billion in tax cuts, and more than $100 billion of those were targeted at lower and middle class households, but Fred Barnes doesn't even acknowledge that (and it's okay if a large component was saved). There were also $51 billion in tax cuts for businesses that he fails to note.

If they aren't the right type of tax cuts, the type that give even more breaks to the wealthy -- even though there's no good evidence to suggest that this does much to generate new economic activity and job creation -- then they aren't worth even mentioning. Barnes does find plenty of space to whine about "Obama ... letting the Bush tax cuts lapse in 2011 for those making more than $200,000 annually," but somehow programs like the HIRE Act passed in June 2010 to provide payroll tax breaks to businesses that hire workers who have been unemployed for 60 days or more doesn't merit a word.

    Posted by on Thursday, August 5, 2010 at 01:07 AM in Economics, Politics, Taxes | Permalink  Comments (44)


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