So here’s a list of economic related proposals President Obama is making:

  • Extend the Bush tax cuts for 97-98% of all Americans.  Expire tax cuts for the rest, raising the second highest tax income bracket from 33% to 36% and the highest tax income bracket from 35% to 39.6%.  This will only impact income exceeding $200,000 for single filers, an income exceeding $250,000 for families.
  • Expand and extend the research and development tax credit that is offered to companies investing in research and development in this country.  Obama also seeks to make this credit permanent.  To offset the lost revenue, Obama proposes closing corporate tax loop holes for multinational corporations and energy companies.
  • Spend in excess of $50 billion on the nation’s infrastructure.  The money would be spent on repairing the nation’s roads, building and repairing railways, restoring airport runways, and installing an air navigation system to reduce travel times and delays.  He also proposes that an infrastructure bank be established to focus on funding national and regional infrastructure projects.
  • Additionally, under consideration is the extension of a law that exempts companies that hire unemployed workers from paying Social Security taxes on those workers through December, additional tax breaks for small businesses, and a fund for small-to-medium sized banks that would support increased lending to small businesses.

Now, I read the comments on sites like Yahoo, and in between the Muslim comments (who knew that “tax and spend” was a Sharia Law principle!) there seems to be the general consensus that we can’t afford this, and that Obama needs to focus on private sector jobs.  What is unclear is how Obama is supposed to go about doing this.  His proposals include a mix of government spending and tax cuts, which is really in general the only two options available to government.  Now it seems that some don’t want the government to spend a dime.  But I would argue that infrastructure is absolutely necessary to support long-term economic prosperity, that our infrastructure has been neglected, and that infrastructure spending is valid expenditures for government.

What’s funny about those who think we shouldn’t spend any government money ever is that these are often the same folks that will proclaim that it was World War II that got us out of the Great Depression, not the New Deal, and that is proof that government spending as a tool for economic recovery does not work.  Now besides the disturbing implication that we need to start a war (well, more wars) to kick-start the economy, there is the failure to understand that wars are nothing more than a huge government program.  So building tanks does stimulate the economy while building bridges (with the added bonus of less killing and destruction) doesn’t?  Also, the war thing works out better when it is fought on other people’s soil (though you still have that whole people dying thing).

The Republican line is apparently that this is all too little, too late.  Um, too late for what?  Granted, the economy will not make any significant turnarounds prior to the November election, if that’s what they mean.  But political wonks may be shocked to learn that the world does not end with the November elections, and we need to have a plan for beyond that.  Crazy, but true.

So, if this is not the direction we need to take, what is?  It has to go beyond just simply extending the Bush tax cuts for 100% of all Americans.  After all, that’s nothing more than maintaining the status quo of the last eight years, and we aren’t doing so great right now.  Can simply making additional tax cuts work?  What assurance do we have that the money will be spent?  How would cuts in government spending stimulate the economy?  There’s a lot of focus on balance budgets suddenly, but is it even possible to cut enough out of government spending to balance the budget, particularly if you cut taxes at the same time?   And will balancing the budget spring the economy back to life?

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