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Mike Konczal on the Moderate Republican Stimulus That Is McConnell-Obama

Moderate GOP Stimulus_ Re-examining the Who Got What Tax Deal Chart. « Rortybomb.jpg

I don't think it is moderate Republican--a moderate Republican stimulus has a bunch of infrastructure spending in it that this thing does not, and a moderate Republican stimulus has a debt-limit increase, and a moderate Republican stimulus has stand-by spending caps and tax increases as of 2015 if the deficit is still high.


Moderate GOP Stimulus: Re-examining the Who Got What Tax Deal Chart. « Rortybomb: There is no continuation of the Temporary Assistance for Needy Families Emergency Fund (TANF EF) from the stimulus bill in the tax cut compromise. Regular TANF was created as part of the Clinton-era welfare reform to get people off welfare by getting them back to work. This approach becomes problematic when unemployment is high through faults of monetary and fiscal policy, rather that people choosing not to work.  In a Great Recession TANF runs out of both money and conceptual scope very quickly.  So this Emergency Fund, at the low cost of five billion dollars distributed to states allowed locals on the ground to expand and continue TANF to meet the needs of fighting poverty and putting people to work in the Great Recession.... Who really got what in this deal?.... I want to argue the chart should look like this....

[T]he Child Tax Credit. From the Republican Pledge To America (pdf), the Republicans both take credit for the creation of the child tax credit and note the damage that will happen if it isn’t extended (“During the 1990s, a Republican Congress enacted pro-family policies such as marriage penalty relief and the child tax credit. Unless action is taken, a $3.8 trillion tax hike will go into effect on January 1, 2011 that will unravel these policies”).... [T]his is a “got” for the GOP.

The second is more interesting:  Should the payroll tax cut be a “get” for the Republican Party?... [If] you want to know what the GOP wants to get the economy jump-started, ask them, by all accounts these kinds of payroll taxes are what the GOP wanted. From (h/t Jed Lewison at DailyKos):

Q: So the only reason that the payroll tax holiday will provide more stimulus is because it’s twice as large. Making Work Pay was capped. Why didn’t you preserve Making Work Pay? Is it because, as the President said some months ago, it’s just a kind of invisible tax cut and didn’t provide any political benefit for the White House?

MR. SUMMERS: No, it came out of the process of compromise with the Republicans who were more attracted to the payroll tax holiday concept, and that was a proposal that, as had been coming out of here, we had been giving considerable thought to in the context of the President’s budget.

Weakest Stimulus And that isn’t a mistake.  This takes the weakest part of the stimulus, tax cuts, makes it weaker and puts it in front of the stimulus package. According to Mark Zandi’s estimates it has a weaker multipler than the anemic Making Work Pay tax credit.... It turns away from the idea of investing in public goods and infrastructure spending, laying out the groundwork of the 21st century economy, and instead mails checks to people. That’s the GOP response to any problem – tax cuts! – and now it is branded the Democratic stimulus response.... Viewed through this lens, this is the Moderate Republican Stimulus Package 2.0.   I wonder how it is going to work.

All I can say is that I really hope Greg Mankiw is right about the high marginal propensity to spend out of tax cuts...