Obama's Tax Cut Gambit May Be Shrewder Than You Think

[babylonsister]

Obama's Tax Cut Gambit May Be Shrewder Than You Think
Noam Scheiber

Another thought occurred to me reading this morning's stories about Obama's trip to the Hill yesterday. One of the presumed rationales for leaning so heavily on tax cuts is political, the theory being that it helps you attract GOP votes. (Set aside the substantive rationale, which is powerful on its own, and Obama's denial of this motive.) In response to which, people like Paul Krugman argue that:

Republicans are not going to come on board. Make 40% of the package tax cuts, they’ll demand 100%. Then they’ll start the thing about how you can’t cut taxes on people who don’t pay taxes (with only income taxes counting, of course) and demand that the plan focus on the affluent. Then they’ll demand cuts in corporate taxes. And Mitch McConnell is already saying that state and local governments should get loans, not aid--which would undermine that part of the plan, too.

I think that's mostly right as a prediction of the GOP response. But, unlike Krugman, I think that response could be a good thing for Obama and the Democrats, in that it exposes the GOP's true priorities in a way that's politically damaging to them.

By agreeing to channel up to 40 percent of the stimulus through tax cuts, Obama is essentially calling the GOP's bluff. He's saying, "You guys are making a principled argument that tax cuts can be a more efficient way to stimulate the economy. I'm accepting that argument in large part. So rather than spend a lot of money helping low- and middle-income people, I'm going to get that money to them via tax cuts."

At which point he's kind of backed them into a corner. If the GOP accepts, then great. If they turn around and say, "Well, when we said tax cuts, we actually meant tax cuts for wealthy people, not for low- and middle-income people," then it becomes blindingly obvious that they weren't making a principled argument at all. They were trying to shake Obama down on behalf of their rich cronies.

more...

http://blogs.tnr.com/tnr/blogs/the_stump/archive/2009/01/06/how-obama-s-tax-cut-gambit-is-shrewder-than-you-think.aspx

[Captain Hilts]

1. I think this is very true. nt

[annabanana]

2. That's fine . .but by the time the media is through with it...

It won't look like itself at all...

[babylonsister]

5. Not that many people pay attention to the media; I think people are

going to want to see action and changes. That's what they'll be looking for.

[Fumesucker]

10. Huh? The media is how the great majority get their info..

To say that not many people pay attention to the media is to deny reality.

[babylonsister]

12. I do. My 'children' and their children don't. I don't think people sit

in front of cable news anymore when there is so much variety out there to entertain their kids. So no, I'm not denying reality. :eyes:

Go look at what programs are popular with Nielsen ratings and get back to me.

[Fumesucker]

16. I don't pay any attention to the media..

I get all my news online, mostly from blogs such as DU.

But most people don't get what little news they get that way, they get it from the media (which is far more than cable news).

Edited to add: Many people get their info second or even third hand but it ultimately comes mostly from the media.

[n2doc]

3. The problem is, Tax cuts don't work.

They did not work in 2001, they did not work in 1981. Period. We need people to go to work, not a few dollars more in my paycheck.

[babylonsister]

This is one aspect; the stimulus package to get people working

has not been canceled afaik.

[apnu]

6. There is more in this than just tax cuts

Yes there will be checks issued (again) to tax payers. But the tax cuts Obama is talking about are for the middle class, small businesses and for corporations that generate jobs in the US.

These tax cuts are very different than Bush's tax cuts (AKA The Two Great American Bribes) Additionally this package is only 40% tax cuts, the remainder is state aid for infrastructure and other things.

Obama, also, has said in the past that he would like to see a FDR like government jobs program focusing on infrastructure and green energy. Its a two pronged solution, to get people working and break our oil addiction. I do not know if this plan includes any of that, which suggests that more is to come after this current thing.

[Jackpine Radical]

13. 1981 (Reagan) and 2001 (Bush) proved that tax cuts for the rich don't work.

Now, it may be that tax cuts for the middle class also don't work, but that belief hasn't been tested, and the Republicans hve been harping on the tax cut harp for so long that maybe we gotta try it. Let Obama test it and, if it doesn't work, he can do something else, saying "We proved tax cuts for the middle class don't work."

Anyway, it's 40%, not 100%. That leaves quite a bit of money for public job creation & other interventions.

[EOTE]

15. Middle class tax cuts DO create jobs during a recession.

This is why middle class tax cuts make so much more sense than providing tax cuts to the wealthy. It's called the marginal utility of the dollar. If someone has no expendable income at the end of the month (as so many in the middle and lower class don't nowadays), then they're not going to spend it on any non-essential goods and employment will suffer because of that. If the middle class is given a tax cut, they'll have more supplemental income and will spend it. This will in turn help fight unemployment. ANY money given to the wealthy has almost no marginal utility because they're already wealthy. The wealthy aren't going to spend more if they're given larger tax breaks because they're already spending all the supplemental income they desire.

[drm604]

4. I think this hits the nail on the head.

I love the last paragraph.

The reason the conservative power structure has been so dangerous, and is especially dangerous in opposition, is that it can operate almost entirely on bad faith. It thrives on protest, complaint, fear: higher taxes, you won't be able to choose your doctor, liberals coddle terrorists, etc. One way to deal with that kind of bad-faith opposition is to draw the person in, treat them as if they were operating in good faith, and draw them into a conversation about how they actually would solve the problem. If they have nothing, it shows.

[riqster]

7. Briar Patch tactics have worked for Reeps for a long time

...methinks they will start working against them now.

[FredStembottom]

8. If only I could believe.......

....that our Dems in D.C. have ever had a single strategic thought, ever. Even once.
Other than "run, hide, apologize", of course.

However,.... may Obama be the first.

[Are_grits_groceries]

9. I think it is a shrewd move too.

At first I wasn't sure. However, the Rethugs whine so much about cutting taxes, Obama
has dared them to veto the bill. It will contain a lot of other items I'm sure they
won't like, but the headlines would be about them defeating tax cuts not pork.

[Renew Deal]

11. It'll be hilarious if Dems get to run ads against pukes for voting for "increased taxes"

And that sort of BS.

[Winterblues]

14. Except Obama ran his campaign on giving 95% of Americans tax cuts.

I don't see this as giving in to Republicans unless he plans on cutting taxes on those making over $250,000. a year, and if he does that then nothing he says has any credibility.....

[TygrBright]

17. ::snork:: I first read that as "Obama's trip to Hell yesterday"... n/t

[backscatter712]

18. One thing I love about Obama. He does play chess instead of checkers.

Even when you might disagree with him (I think this stimulus package could use less tax cuts myself), seeing someone thinking a few moves ahead is refreshing after eight years of a total dumbass in the White House.

[anigbrowl]

19. This is pretty much what I'm thinking.

Tax cuts re not the answer to everything, but they do have their economic uses. Additionally, it petty much draws Republicans' teeth come April 15 - they won't be able to wage a media campaign about Obama taxing the country to death or some such BS.