This morning newspapers told us about Obama’s plan to include $300 billion of tax cuts in his $775 billion, two-year stimulus plan. The cuts, for individuals and businesses, are more than both parties anticipated and seems to be designed to make the bill more palatable to Republicans. If so, it’s worked: The conservative Chamber of
Congress Commerce issued a statement saying it was encouraged by the news and released a statement of early praise. Of course, in that statement they asked for more tax cuts, which is exactly what Paul Krugman predicted Republicans would do. The Times columnist thinks the GOP will never get onboard, even with 40 percent of the plan going to tax cuts. While the Nobel Prize–winning economist thinks that tax cuts are necessary, especially in the first year of the plan, he thinks Obama’s might be too large and represent too much of a concession to the right.
What Krugman likes about them are the fact that they take into account the possibility that programs for spending won’t be ready quickly enough to make an immediate difference. And Noam Scheiber further worries that some of the cuts, designed to help small businesses expand, won’t stimulate much when demand is dropping so steeply. Josh Marshall agrees. We’ll likely hear a lot more on this when Obama actually announces and explains it on Thursday.