September 3, 2010
MIXED SIGNALS.... With the economy struggling to break out of its funk, many are asking what, if anything, the White House intends to do next. Reading the tea leaves is proving to be a bit of a challenge.
ABC News reported last week that leading officials had no intention of pushing significant new proposals, beyond what's already on the table. The Wall Street Journal reported earlier this week that leading officials are actually considering a sizeable new package.
A few days later, President Obama's outgoing chief economist said what the economy needs is more stimulus. This was immediately followed by President Obama's press secretary saying that "some big, new stimulus plan is not in the offing."
As of this morning, the Washington Post has a front-page piece suggesting a stimulus-esque tax-cut package is receiving "serious" consideration.
With just two months until the November elections, the White House is seriously weighing a package of business tax breaks - potentially worth hundreds of billions of dollars - to spur hiring and combat Republican charges that Democratic tax policies hurt small businesses, according to people with knowledge of the deliberations.
Among the options under consideration are a temporary payroll-tax holiday and a permanent extension of the now-expired research-and-development tax credit, which rewards companies that conduct research into new technologies within the United States. [...]
More spending on infrastructure, particularly transportation projects, is also under discussion. But it would be easier for a package composed purely of tax cuts to "avoid the stain of a 'bailout' or 'stimulus' label," said one official familiar with the talks, speaking on the condition of anonymity because the deliberations were private.
Great, the most effective policy in boosting the economy doesn't sound good, so it's more likely we'll see proposals touting less effective measures.
Given the mixed signals of late, it's worth noting that Politico has a report similar to the Post's, explaining that administration officials are "mulling a raft of emergency fixes to stimulate the economy before the midterms, including an extension of the research and development tax credit and new infrastructure spending."
It's hard to evaluate any of these ideas without more details, and for that matter, no matter what the White House recommends, Congress' inability to function makes progress unlikely for the foreseeable future.
That said, it's at least somewhat encouraging to see a shift away from "everything's on track, so just be patient." Moreover, there's obviously real political salience to even just having the debate -- with two months before the midterms, it's worth having the two parties fight over how to help the economy grow. If Republicans intend to kill every proposal the White House offers, that should matter to voters, too.
The Post's report concluded that President Obama "could roll out additional measures as soon as next week." Stay tuned.
—Steve Benen 8:00 AM
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Why can't anyone at the WH play politics?
Propose another huge stimulus.
Have the Republicans have their usual snit fit.
Defend it by showing where it's worked - particularly in R districts!
Show clips of R Congressmen at stimulus funded ribbon cuttings.
Even if you don't win the argument, you've framed the R's before the election. They're hypocrites who say "NO!" to help, then take credit when the help comes.
It's better than what they're doing now, which if pretty much nothing.
Hopefully, D's decided not to launch a major effort in the dog days of August and decided to wait until after Labor Day.
Yeah... I'll believe it when I see it...
Posted by: c u n d gulag on September 3, 2010 at 8:12 AM | PERMALINK
Tax cuts. Swell. Not only do they have a piss-poor multiplier, but also way to validate Republican frames, guys.
Honestly, two years ago I thought Obama's team could play this game.
Posted by: Gregory on September 3, 2010 at 8:13 AM | PERMALINK
Hmm, "bailout" and "stimulus" don't sound good. So when the next round of useless tax cuts for businesses comes around, guess what Republicans will be calling it?
Posted by: Matt on September 3, 2010 at 8:15 AM | PERMALINK
Yeah, like Congress and the WH really give a crap about anyone in America except the rich. Not gonna do squat for anyone but the rich.
I do not expect this era of adults in power to do much but play syncophant to the rich as they have for decades. It will be the kids coming in behind us that will rebuild the U.S.
Posted by: Silver Owl on September 3, 2010 at 8:17 AM | PERMALINK
Oh, c u n d gulag, you're so rational and thoughtful!
Too bad that they don't work in DC.
Rest easy, friends- there is an "October Surprise" in waiting. A Secret Weapon that will destroy the Republican Party as we know it!
-there IS a secret weapon; right, Mr. Obama?
crickets. . .
Posted by: DAY on September 3, 2010 at 8:22 AM | PERMALINK
First, targeted tax cuts can be an effective form of stimulus. A payroll tax holiday puts most of the money in the hands of people who will spend it right away. It isn't quite as stimulative as unemployment benefits, but it is a hell of a lot better than reductions in the marginal income tax rates. And it something that will result in a small but noticeable and immediate increase in take-home pay of every wage-earner in the country which makes them good politics as well.
The research tax credit also has a noticeable slightly longer-term stimulative and is arguably a good policy regardless of how stimulative it is.
Second, if the Republicans try to block these measures, as they probably will, it makes their committment to tax cuts for the rich vs everyone else even more apparent.
Posted by: tanstaafl on September 3, 2010 at 8:30 AM | PERMALINK
Everyone should watch the video on Talking Points Memo, it details the crimes of David Vitter, I wonder why there are not more websites showing it.
Posted by: joan on September 3, 2010 at 8:31 AM | PERMALINK
Steve considering there is still 258 billion dollars of stimulus money to be spent and this...
Big chunk of economic stimulus yet to be spent by state, local governments
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/13/AR2010081306058.htm
It's understandable why the administration is hesitant to spend anymore money right now.
Posted by: woody45 on September 3, 2010 at 8:36 AM | PERMALINK
Obama is a Constitutional Law Genius. Obama does not have a firm grasp of economics or Jobs. Obama is getting advice from financial economists and no advice from labor economists.
Obama is clueless on the economy. This is why the policy and messaging is so bad.
Posted by: bakho on September 3, 2010 at 8:56 AM | PERMALINK
Why can't anyone at the WH play politics?
Propose another huge stimulus.
Posted by: c u n d gulag
targeted tax cuts....something that will result in a small but noticeable and immediate increase in take-home pay of every wage-earner in the country which makes them good politics as well.
Posted by: tanstaafl
Don't quit your day jobs because you guys can't "play" politics either. Proposing a second stimulus would be a gift to the Republicans right now. Hooping and hollering about stimuluses and deficits is why they're poised to win back seats in November in the first place. Proposing a round of tax cuts right before an election also has bad optics. R's only have to scream about "buying" votes to fire up it's base even more.
Posted by: Alrighty Then on September 3, 2010 at 9:04 AM | PERMALINK
Look, for a variety of reasons, the U.S. government should be looking at a 2-3 year program to spend a couple trillion dollars on infrastructure improvements. Everything from inspecting and repairing bridges to transit projects to ports. And while they are at it, set up a CCC-style summer jobs program to rebuild trails and trail shelters, install composting toilets in the backcountry and otherwise fix up the recreational opportunities throughout our national parks and national forests.
However, most infrastructure projects have a considerable lead time and the work season for national park projects is pretty much over for the year. So such a bill would have no immediate effect except by signalling that the government is serious about the economy (and maybe signalling to businesses that there is a limit to how much further they can use the crisis to drive down wages).
It would also be dead-on-arrival in a Senate full of party-of-no-Republicans and their Blue-Dog Democrat enablers. It wouldn't have much more of a chance in the House. And would give the Republicans the fight they want to take to the public between big-spending Democrats and tax-cutting Republicans. Maybe that is a fight Democrats could win, but I doubt it. It would be worth taking the chance if they could actually pass the bill, but if the bill isn't going to pass anyway...
Posted by: tanstaafl on September 3, 2010 at 9:13 AM | PERMALINK
Prepared to be underwhelmed.
One thing I would really like to see is an effective plan to help those struggling to pay mortgages or have negative equity in their homes, but we all know that won't happen. To bolshy for this administration.
Posted by: g. powell on September 3, 2010 at 9:17 AM | PERMALINK
@Alrighty Then
WTF do you suggest? If spending is bad, and tax-cuts are "buying votes" and the failure to turn the economy around already is driving voters to the Republicans, is a Republican landslide inevitable? I don't think so and if you don't, the put up or shut up.
More to the point, Republicans are on record repeatedly calling to extend ALL of the 2001/2003 tax cuts. They have to try act on this next month because the cuts are due to expire at the end of the year.
If the Democrats try to extend the "middle-class" portion of those tax cuts and propose small-business and payroll tax breaks, then they will be offering an alternative to the Republican tax cut plan. One that will be cheaper, fairer and will do more to stimulate the economy than the Republican plan. It will be a clear choice and any attempts by the Republicans to attack it in the manner described by Alrighty Then are going to look pretty weak given their own proposals.
Posted by: tanstaafl on September 3, 2010 at 9:23 AM | PERMALINK
A payroll tax holiday makes the most sense at this time. Too bad that the Republicans in the senate will demand a Free Lunch for Millionaires rider on the bill, and will filibuster when they don't get it.
Posted by: DAY on September 3, 2010 at 9:26 AM | PERMALINK
@DAY
Both economically and politically, if the Democrats propose a payroll tax holiday, it would be best for them to be able to pass it.
However, if it fails because of a Republican filibuster, particularly if they can be forced to publicly hold it hostage to the millionaires' tax cuts, then that could be almost as good politically as actually passing it.
Posted by: tanstaafl on September 3, 2010 at 9:33 AM | PERMALINK
Payroll tax holiday???? You've got to be kidding??? Candidate Obama was right about tax holidays...not very effective. Lowering rates permanently by lifting cap--good idea. Permanently lowering the cost of employees, especially at lower levels, makes it possible to hire more and not worry what happens when the "holiday" ends. And if you want to completely undercut Social Security, Medicare, Medicaid--have the holiday. Do you think it the Republicans will ever let it end????
Posted by: golack on September 3, 2010 at 10:32 AM | PERMALINK
It seems that Obama's advisers disagree, that no final decisions have been made and they are fighting it out via leaks.
Posted by: Joe Buck on September 3, 2010 at 11:17 AM | PERMALINK
@ Alrighty,
Taanstfl is right. You got three choices: (1) do what's right, propose bold stimulus through infrastructre programs and targeted tax incentives and go on offense; (2) Try to appease with tax cuts and look like a cowardly chickenshit; or (3) do nothing and look completely incompetent. Options 2 and 3 play into GOP hands. If you think option 1 helps the GOP, then maybe you're in the wrong party (or already in the wrong party).
Posted by: bdop4 on September 3, 2010 at 11:57 AM | PERMALINK
Ooh, I touched a nerve.
I made no comment on what should be done. My only sin was to point out that the GOP has and will continue to eat the Democrats for lunch on whatever form of help they try to extend to the American people. Whether affordable healthcare, needed stimuluses, or breadcrumbs for orphan children, the GOP has more than successfully counter informed the American electorate.
As for the WTF should we do, that's for smart people than me to advise. My point is that the Democrats have been an epic fail in believing and selling their own solutions to this country's problems.
Posted by: Alrighty Then on September 3, 2010 at 12:27 PM | PERMALINK
@Taanstfl and @bdop4 make some good points -- even if the funds in a big infrastructure/improvements bill can't be spent immediately, it shows seriousness and is the right thing to do. Furthermore, if the package is sold properly to the public by emphasizing that this infrastructure/improvements program will help the average taxpayer by improving their local roads, fixing decaying bridges, improving schools, reducing traffic congestion, beautifying parks and natural areas, while at the same time putting people back to work AND laying a new foundation for future prosperity. Anyone with two eyes can see that our infrastructure is in bad shape, so lets take this opportunity of low interest rates and high unemployment to do something about it.
Posted by: meander on September 3, 2010 at 12:28 PM | PERMALINK
There are two problems with proposing a "stimulus" comprising only tax cuts. 1)The only tax cut that would stimulate the economy would be a payroll tax holiday. The GOP use that holiday to claim that Social Security funding was inadequate thus necessitating Social Security "reform." 2)The GOP will insist that any progressive tax cuts be offset by cutting things like unemployment benefits or food stamps. The net effect would be to depress the economy.
Posted by: rk on September 3, 2010 at 1:04 PM | PERMALINK