President Obama, Tax Cuts and a Call for Sacrifice
It came as a welcome change of pace yesterday when President Barack Obama took the inaugural podium, looked the country in the eye and warned that surviving two wars and this dismal economy will require sacrifices from Americans that transcend trips to the mall.
For as much as government can do and must do, it is ultimately the faith and determination of the American people upon which this nation relies.
It is the kindness to take in a stranger when the levees break; the selflessness of workers who would rather cut their hours than see a friend lose their job which sees us through our darkest hours.
What’s confusing is that, even after all the criticism of the Bush administration for borrowing money to cut taxes, Obama plans to do the same. Indeed, $275 billion of the Democrats’ proposed $825 billion stimulus plan comes in the form of tax cuts, even as the Obama economic team concedes that those cuts lack the stimulating punch of direct federal spending.
(A report this month from two members of that team — Council of Economic Advisers Chair Christina Romer and Jared Bernstein, Vice President Joe Biden’s chief economist – claims that, “because there is a limit on how much government investment can be carried out efficiently in a short time frame, and because tax cuts and state relief can be implemented quickly, they are crucial elements of any package aimed at easing economic distress quickly”).
Moreover, the Democrats’ stimulus plan includes business tax cuts that would allow companies suffering losses this year to recover taxes they paid going back as far as 2003 — a stark change from the two year window over which they can currently spread those losses. That provision is seen by some critics as a giveaway to the finance and construction industries, both of which lost tons of cash in the past year, but were also largely responsible for creating the economic crisis to begin with.
Notably, the banks and other companies (such as the automakers) who benefited from the Wall Street bailout won’t be eligible for more help under the stimulus proposal. Still, with nothing but giveaways coming down the pike, one wonders what sacrifices Obama was requesting.