Filed under: News, The Economy
The tax package heading to Congress could give a noticeable boost to the economy next year, economists said, giving the Obama administration a second, stealth stimulus package without antagonizing lawmakers reluctant to spend more to spur growth.
Apart from extending Bush-era tax cuts, which were set to expire at year's end, the agreement includes other components pegged at about $200 billion, including a payroll-tax cut for workers and an extension of unemployment benefits, which are likely to boost growth in 2011. The total package could amount to $900 billion worth of spending and tax cuts over two years.
Most economic forecasts had already assumed the Obama administration would win support for extending at least the middle-class portion of the Bush tax cuts. Without that, the economy would likely be closer to stalling instead of growing a projected 2.5% to 3.5% next year.
"This gave us a chance to do what most people thought wasn't going to be possible in this environment, which is to provide a real forward lift to the economy relatively quickly," National Economic Council Director Lawrence Summers said.
While economists expect the tax cuts to bolster growth, the extent of the impact depends on how much of the money consumers spend rather than save or use to pay down debt.
Of course, The Wall Street Journal might be biased in its support of the bill as it does create tax savings for the wealthiest Americans. With a name like "The Wall Street Journal," the paper will want to create propaganda with an ulterior motive that enhances the goals of its readership. At the same time, the positive provisions that are outlined above do make the plan out to be slightly better for all than many in the media are describing it. While taxes will rise by literally a few dollars for the very poor, there is a chance that some of the other provisions will increase their economic prospects.
Only time will tell, but I for one give kudos to The Wall Street Journal for trying to provide a balanced perspective that enhances the discussion. It makes one consider the possibility that Obama's tax deal is not a capitulation to the GOP, but rather a fair and balanced win-win proposal.
Question:
-Do you see the Obama tax cut deal as a capitulation to the GOP, or as balanced plan in which everyone wins?