Krugman on Obama's Massive Tax Cuts Plan: 'Bad News'
In a blog post, economist Paul Krugman worries that President-elect Barack Obama is relying too much on tax cuts in his stimulus plan in an effort to appease Republicans.
[T]here's a reasonable economic case for including a significant amount of tax cuts in the package, mainly in year one.
But the numbers being reported -- 40 percent of the whole, two-year plan -- sound high. And all the news reports say that the high tax-cut share is intended to assuage Republicans; what this presumably means is that this was the message the off-the-record Obamanauts were told to convey.
And that's bad news.
Politico reported Sunday night that 40 percent of the plan's cost will come from tax breaks.
"Obama strategists say he wants to get 80 or more votes in the 100-member Senate, and the emphasis on tax cuts is a way to defuse conservative criticism and enlist Republican support," Mike Allen relays.