The voices of Tax Policy Center's researchers and staff
Barack Obama has raised the ante on economic stimulus. Just two weeks ago, when I left for vacation, the Illinois Senator was talking about a $50 billion plan. I barely unpack (and yes, I had a nice time, thanks for asking) and learn he is now considering a $115 billion boost. That, at least, is what an Obama aide told the Wall Street Journal yesterday.
The plan would include $1000 rebates, which Obama sometimes describes as a tax break for working families and other times as a way to help subsidize energy costs for the middle class. He'd also spend billions more for aid to cities and states, and for big new infrastructure projects. It is not clear how much would actually be new money, and how much is from older ideas he has relabeled as stimulus.
There is an uncanny echo here of Bill Clinton, who campaigned in 1992 on the need for middle-class tax breaks and big new spending on roads and bridges to jumpstart what was a similarly sluggish economy. Clinton, in the face of big deficits and opposition from conservative Democrats, abandoned his plan soon after he was elected. Instead, he ended up raising taxes, sharply scaling back his spending agenda and, as we all remember, eventually balancing the budget. President Bush also ran on tax cuts to jumpstart a slowing economy. He got the tax reductions, spent like the proverbial drunken sailor, and ran up record deficits.
Of course, we can't know what the economy will really look like in six months, when Obama (if he wins) would be sworn in. But it is pretty clear that he would not be shy about using a slowdown to push through his increasingly ambitious—and costly—domestic agenda.
Obama's political message is unmistakable: John McCain with his seven houses doesn't care about your economic troubles. I do, and will do whatever it takes to get you back on your feet.
As campaign rhetoric, this sort of thing works pretty well. At a time of record deficits, I am not sure it will fly as economic policy.
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