Tax Cut Extension? or Stimulus II? or Both?

[JohnH]

Interesting article by Charles Krauthammer today. He makes a pretty good argument that the extension of the Bush-Obama Tax Cuts is actually a stealth stimulus package. And that's just based on the agreed-upon tax cuts, never mind the pork that's currently being added in both houses at a frenetic pace. The final result could be the mother of all stimulus packages.

http://www.washingtonpost.com/wp-dyn/content/article/2010/12/09/AR2010120904472.html

[BHoffman]

I sort of disagree with Krauthammer. The unfunded extension of unemployment benefits is like stimulus (giving something for nothing), but the tax rate extension isn't. Stimulus, I believe, is the government's taking, borrowing or printing of money and then passing it along to friends and allies without the goal of effective results.

The tax rate extension leaves the money in the hands of the taxpayers, friends and enemies alike, and we decide where to spend it. The government is out of the equation. Stimulus is basically defined as the government spending. Tax rate extention will result in private sector activity, and hopefully private sector growth. I doubt it will be enough to really drive the economy.

Obamacare and the Fin Reg bill, love them or hate them, are extraordinarily complex and not understood by employers and banks. Until employers and lenders are able to comprehend their myriad obligations so they can obey the laws, I'm afraid hiring will be slow and credit will be hard to get.

If I were Queen of the forest, I'd automatically veto any bill that was more than 150 pages long, 12 pt font, double spaced, 1.5" margins.

[taxxcpa]

Unfunded extension of unemployment benefits

[QUOTE=BHoffman;109943]I sort of disagree with Krauthammer. The unfunded extension of unemployment benefits is like stimulus (giving something for nothing), but the tax rate extension isn't.
You have a point, but the trade-off will be a net gain for the economy. But this gain does nothing to reduce the deficit and we will keep on borrowing and spending more than we take in.

Spending more than we take in can only work well if you save in good times and use the surplus accumulated when spending exceeds income.

[Jiggers]

Add-ons to bill

All these new add-ons to the bill, increasing spending. What part of "No more spending" message from the last election didn't anyone understand.

I would hope that the Republicans will vote against this.

And then in January pass a tax bill that cuts entitlements and makes it so that everyone pays something.

[DTS]

All these new add-ons to the bill, increasing spending. What part of "No more spending" message from the last election didn't anyone understand.

I would hope that the Republicans will vote against this.

And then in January pass a tax bill that cuts entitlements and makes it so that everyone pays something.

I'm with Jiggers on this. Sound like business as usual. I feel the R's were played.

[BHoffman]

Wondering whether the tax rate extension legislation will actually be pushed into January?

[Jiggers]

There is no change in Congress until January 2011

The Democrats are the majority party in both houses now. Thru December 31, 2010.

How can they blame the Republicans for this?

How can they blame the Republicans for all the add-ons?

[JohnH]

I guess we can't blame anyone for anything at the moment.
In the midst of all this uproar, they took a 4-day weekend.

Wonder if this entire thing could be just a huge charade. Obama comes to an agreement with the Republican leadership. The Democrats rebel against Obama by adding lots of pork, then the Republicans rebel against their leadership by shooting down the pork-laden legislation. The agreement is called off and the Democrats get their default tax increase, but each side gets to blame the other for the mess. But that would be a much too cynical way to look at it, right?

Incidentally, after yesterday's first-rate performance in the Briefing Room, if it does pass I think we need to change the name to the Bush/Obama/Clinton tax cuts. Much of it was worthy of an Oscar nomination. Haven't seen that much showmanship since, Oh, about 2000. I swear I think I saw Bubba even wipe away a tear at one point.

[DTS]

...But that would be a much too cynical way to look at it, right?

Not too cynical at all. You pretty much summed it up correctly.

[OtisMozzetti]

seeking to get some tax laws passed

I am disappointed with Mr. Obama. He has stated that he will negotiate with hostage-takers. He will negotiate with them so long as they make sure that the hostages are the American people. Think anything you want about the game of chicken as we seek to get some tax laws passed, but Mr. Obama's metaphor is unwise.