Obama’s Economic “Plan”: Ten Times Less Than Adequate and Far, Far Too Late Friedoglake
McCain, who was thoroughly beaten in the 2008 election in part because his economic policies were seen as too tied to the policies that produced the financial meltdown, now is calling for Bush’s tax cuts to be made permanent. Making the Bush tax cuts permanent has the pitiful stimulative factor of 0.29 in Zandi’s table. Inexplicably, the economist who is the “go to” source for why tax cuts are bad public policy when trying to stimulate the economy and who worked for McCain during that campaign, but now works for Democrats, is pushing tax cuts, apparently against his own advice. Note, however, that unlike McCain, who wants to make the cuts permanent, Zandi is advocating extending them a year or two.
That makes today’s announcement that Obama is backing off the prospect of hundreds of billions of dollars worth of payroll tax holiday appear to be good news. However, when we look at Zandi’s table, we see that payroll tax holidays have a stimulative effect of 1.29, so it is the “least bad” of tax cuts. With the $100 billion in R&D tax credits Obama is now proposing in its stead, the stimulative factor drops (that particular tax is hard to place into Zandi’s table, but likely would fall close to the value of 1.03 seen for across the board tax cuts).
Finally, Obama’s pitiful $30 billion (or is it $50 billion?) offered as infrastructure spending is a ridiculous move if it is meant to be evidence that he is attempting to do anything to stimulate the economy. Such spending would need to be higher by at least a factor of ten before it begins to even be worth putting into a Krugman-style analysis for its possible effect on reducing unemployment. Recall that in the previous analysis, Krugman worked from the assumption that it takes $300 billion of GDP growth in a year to reduce unemployment by 1%. If this “plan” is the best that the Obama economic team of geniuses can produce, Democrats don’t need to bother showing up for the 2010 or 2012 elections.
Obama’s Economic “Plan”: Ten Times Less Than Adequate and Far, Far Too Late
Obama’s Economic “Plan”: Ten Times Less Than Adequate and Far, Far Too Late Friedoglake
McCain, who was thoroughly beaten in the 2008 election in part because his economic policies were seen as too tied to the policies that produced the financial meltdown, now is calling for Bush’s tax cuts to be made permanent. Making the Bush tax cuts permanent has the pitiful stimulative factor of 0.29 in Zandi’s table. Inexplicably, the economist who is the “go to” source for why tax cuts are bad public policy when trying to stimulate the economy and who worked for McCain during that campaign, but now works for Democrats, is pushing tax cuts, apparently against his own advice. Note, however, that unlike McCain, who wants to make the cuts permanent, Zandi is advocating extending them a year or two.
That makes today’s announcement that Obama is backing off the prospect of hundreds of billions of dollars worth of payroll tax holiday appear to be good news. However, when we look at Zandi’s table, we see that payroll tax holidays have a stimulative effect of 1.29, so it is the “least bad” of tax cuts. With the $100 billion in R&D tax credits Obama is now proposing in its stead, the stimulative factor drops (that particular tax is hard to place into Zandi’s table, but likely would fall close to the value of 1.03 seen for across the board tax cuts).
Finally, Obama’s pitiful $30 billion (or is it $50 billion?) offered as infrastructure spending is a ridiculous move if it is meant to be evidence that he is attempting to do anything to stimulate the economy. Such spending would need to be higher by at least a factor of ten before it begins to even be worth putting into a Krugman-style analysis for its possible effect on reducing unemployment. Recall that in the previous analysis, Krugman worked from the assumption that it takes $300 billion of GDP growth in a year to reduce unemployment by 1%. If this “plan” is the best that the Obama economic team of geniuses can produce, Democrats don’t need to bother showing up for the 2010 or 2012 elections.