President-Elect Obama Talks About Tax Cuts And Stimulus Package

In his address this week President-elect Obama talked about how his administration plans to face the many economic challenges that face them this coming year.

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In this week’s weekly address, President-elect Barack Obama lays out the challenges that face us in the new year, and his plan for taking them on.

“We need an American Recovery and Reinvestment Plan that not only creates jobs in the short-term but spurs economic growth and competitiveness in the long-term,” he says. “And this plan must be designed in a new way—we can’t just fall into the old Washington habit of throwing money at the problem. We must make strategic investments that will serve as a down payment on our long-term economic future. We must demand vigorous oversight and strict accountability for achieving results. And we must restore fiscal responsibility and make the tough choices so that as the economy recovers, the deficit starts to come down. That is how we will achieve the number one goal of my plan—which is to create three million new jobs, more than eighty percent of them in the private sector.

I certainly hope that they are able to create 3 million jobs, with 80% of them in the private sector.   That would be quite the accomplishment, but I’m a bit skeptical.   I’m always afraid when the government tries to create jobs and big programs to get things moving. When was the last time you saw the government successfully manage a program of this scope?  Will they really demand vigorous oversight and accountability, or will it become a pork-laden special interest spend fest?

So here’s to hoping – new roads, bridges, health care initiatives and more, that they may create jobs, and not bankrupt us in the process!

In other news, Obama stated this week that the tax cuts they want to extend may be larger than signaled previously:

The tax cuts for individuals and couples would be similar to the rebate checks sent out last year by the Bush administration and Congress in a bid at that time to boost the slowing economy. A key difference is that the tax cuts this time around may be awarded through withholding less from worker paychecks. That provision would cost about $140-150 billion over two years.

So no stimulus checks, just more in your paycheck.  I can get behind that.

Obama aides have said the package Obama has dubbed the American Recovery and Reinvestment Plan could cost as much as $775 billion. The president-elect has refused to put a price tag to the plan.

Congressional aides briefed on the measure say it likely will include tax cuts of $500 to $1,000 for middle-class individuals and couples, as well as some $200 billion to help revenue-starved states pay for health care programs for the poor and other operating costs. A large part of the new spending would go for infrastructure projects, blending old-fashioned road and bridge repairs with new programs to advance energy efficiency and rebuild health care information technology systems.

We’ll see how it all plays out once Obama is inaugurated, and congress actually gets to work.

What do you think about the “American Recovery and Reinvestment Plan”?  Does it sound like a good idea, and if so, do you think it will work?

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Last Edited: 16th January 2009

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  1. says

    I like the ideas of fixing up our infrastructure and investing in renewable energy. This is the stuff we should have been doing for years, rather than giving taxpayer money, in the form of subsidies, to large and profitable corporations. And I do agree that tax cuts are better than stimulus, but I don’t know how practical tax cuts are when you are planning massive spending.

    Mirandas last blog post..What Do I Think About the Economic Stimulus Plan From Barack Obama?

  2. says

    I think people forget that even construction jobs for infrastructure do create other jobs. I’m not big on trickle down (I shudder at Reaganomics) but think of it this way: Construction requires coordination. Those doing the coordination will need administrative help. The hiring of people will require screeners or simply operators to answer questions about this process.

    And for each job that is created, it’s one more person who (after getting back in front of finances) will begin to slowly put some non-essential money back in the economy.

    It definitely won’t be an immediate fix. Just getting the plan implemented will be at least a year, obviously. Actually getting the large-scale hiring started and on track will take a few months. And then for people to stabilize their finances, that will take time.

    But I think it will work. Maybe we won’t see three million. Maybe we will. But, frankly, our infrastructure is in dire need of work anyway, so it’s definitely better than digging/filling/re-digging ditches.

    As far as tax cuts plus spending, well the tax cuts would be for middle class. Probably those in better financial situations will pay more (shocking idea there!). But yeah we will go deeper into debt in the short-term. I think if Obama hits a second term, we’ll see him start to raise taxes again.

    Personally, I don’t mind taxes. It’s not pleasant. I like money. But I also like roads. And maybe one day even quality schools in EVERY state. So that requires taxes. So even if Obama didn’t cut taxes, I would be okay with his plan. But I do kind of get his point — for now, we need to give Americans as much spending power as possible, so they can get back to a stable base for debt repayment.

    I only hope that Americans will actually use their money for good purposes, and maybe not forget these lessons right away, as soon as the economy rights itself again.

    Abigails last blog post..Another sale of interest

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