President-elect Barack Obama has signaled that he will pursue a far more ambitious plan of spending and tax cuts than anything he outlined on the campaign trail ”” a plan “big enough to deal with the huge problem we face,” a top adviser said Sunday ”” setting the tone for a recovery effort that could absorb and define much of his term.
A member of the Obama economic advisory team, William M. Daley, acknowledged that because of the gravity of the situation, Mr. Obama was leaning toward letting a Bush tax cut for the wealthy expire on schedule in 2011 rather than repealing it sooner.
There were hints Sunday that a stimulus package might be extraordinarily large. Austan Goolsbee, a senior Obama economic adviser, charged that the Bush administration had “dithered” as the economy turned down and suggested that the incoming administration would take dramatic action.
[blockquote]Austan Goolsbee, a senior Obama economic adviser, charged that the Bush administration had “dithered†as the economy turned down and suggested that the incoming administration would take dramatic action.[/blockquote]
Dithered? Perhaps, though $700 billions must be accounted for some way. This seems more a continuation of the victor’s campaign rather than a statement of policy, for had President Bush taken other strategic actions the incoming administration would likely be angry with him for leaving his successor baggage. As is often suggested in military circles, one needs to stop fighting the last war when preparing for the next.
No problem with keeping taxes low, but the massive spending sounds like a bad idea. How about cutting some of the excess spending already going on?
I’m skeptical of “stimulus” spending. It’s one thing to accelerate public works that are really needed and that really would have been built in any event: you’re basically just spending the same money sooner and in a way that helps soften the downturn. But stimulus spending has huge pork-barrel potential. Better to err on the side of steering a steady, sustainable course.
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BlueOntario [#1]: No shortage of baggage, including a huge increase in the public debt.
Economics 301. In a recession the correct fiscal policy is to increase government spending and lower taxes. It is when the economy is booming that the correct fiscal policy is to cut government spending and raise taxes, paying off the debts encountered during the recession.
As Irenaeus pointed out, the issue is what one is going to spend on. We have postponed spending on building up our infrastructure, energy independence, education and health care (particularly for children), all of which are investments in our future which will pay huge dividends in the future and help produce budget surpluses once again with which to pay down the debt.
It seems to me that Obama is proposing precisely the sort of things which should be done — even dropping his call to repeal the discriminatory Bush tax cuts.
Matt Thompson #4, almost any domestic spending which is not entitlement-required spending. Earmarks of all kinds. What better time than now could there be to rationalize federal spending? Plus, the usual list of programs on which huge sums go out. Agricultural subsidies, ethanol subsidies. Irenaeus says it in #3: “…stimulus spending has huge pork-barrel potential.”