Is Obama Considering Another Tax Cut?

Yesterday, the Washington Post reported out how Tim Geithner won internal debates within the Obama administration to focus on deficit reduction over additional fiscal stimulus. The story has real potential to strain Obama's relations with his base, whose loudest complaint is that he failed to push harder to stimulate the economy. (I think the complaint is valid but overblown -- the underlying problems of a public that doesn't get Keynesian remedies and an opposition whose success depends upon economic weakness were hard to get around.)

But it's true that Obama underplayed even his weak hand, and that this creates a political problem for him. Now somebody in the administration is leaking a plan to do something:

I think this is smart, and I don't understand why they haven't done this before. I'm skeptical that Republicans will pass it. (I suspect their partisan instincts will win out over their anti-tax instincts.) But even if they oppose it, this gives Obama an issue he can run on and use to demonstrate the culpability of the Republicans. And if they do support it, it's a nice boost:

Romer happens to be a source in the Post's story.

As stimulus goes this has got to be a lot weaker than about a dozen other moves that could be made. For example, a deeper cut in the employee payroll tax.

As to your initial claim, there's no credible reason Obama couldn't have gotten a larger stimulus package initially, and one more oriented towards higher-multiple spending programs rather than tax cuts that went to savings. In retrospect, it looks like that was his one big shot; and he blew it.

As stimulus goes this has got to be a lot weaker than about a dozen other moves that could be made. For example, a deeper cut in the employee payroll tax.

As to your initial claim, there's no credible reason Obama couldn't have gotten a larger stimulus package initially, and one more oriented towards higher-multiple spending programs rather than tax cuts that went to savings. In retrospect, it looks like that was his one big shot; and he blew it.