Let me finish tonight with the real-life impact of this tax deal the president got from the Republicans.
For one, it’s a heck of a lot of stimulus – almost a trillion dollars in money being fed into the economy: tax cuts, unemployment benefits, all going into the market place to buy goods and services – pumping the economy up far more than the “stimulus” bill passed last year.
I was clued into this reality by today’s column by Charles Krauthammer, a quite conservative gentleman with whom I rarely share common ground. Here he went this morning:
“Barack Obama won the great tax-cut showdown of 2010 and House Democrats don’t have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than the $814 billion 2009 package. In exchange for temporarily forgoing a small rise in upper-income rates, Obama pulled out of a hat a massive new stimulus- what the left has been begging for but was heretofore politically unattainable.”
Let’s look what it does to push business investment. We’ve got two trillion dollars socked away by business right now. The deal the president cut would encourage spending of that two trillion dollars by cutting the cost of hiring by cutting the payroll tax by 2 percent and cutting the cost of investing in new plant and equipment by letting businesses “expense” all of it next year.
The great bulk of the tax cuts in this deal, it turns out, takes the form of measures either pushed by the Democrats or agreed to by both sides. All this could be good for the economy, especially if you believe in liberal economic policy – the belief that cutting taxes allows more money to enter the economy, perhaps not with the same bang as direct government spending but a lot of bang nonetheless. This is what so many have been missing in this debate: the strong possibility that the Democratic president has gotten himself to what is, with some nasty exceptions, a Democratic program.
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