It’s interesting that the White House is spinning its wheels trying to devise new ways to stimulate the domestic economy when private industry has been very clear about what it needs: (1) clarity on the direction of EXISTING tax policy, and (2) agency guidelines that specify how the new health care and financial regulations will be implemented.
Instead of creating a wholly new to-do list, perhaps this White House should focus on the one it already has.
From the Wall Street Journal:
The Obama administration is considering a range of new measures to boost economic growth, including tax cuts and a new nationwide infrastructure program, according to people familiar with the discussions.
The president's economic team has met frequently in recent days to list ways to bolster the struggling recovery, according to government officials.
On the list of possible actions: additional tax cuts for small businesses beyond those included in a $30 billion small-business lending bill before the Senate. It's not clear what those tax breaks would target or how much they might cost in lost revenue to the government.
Also in the mix: a possible payroll tax cut for businesses and individuals, as well as other business tax breaks, according to people familiar with the discussions. Currently, income taxes are scheduled to rise with the expiration of Bush-era tax cuts at the end of this year.
Efforts to boost growth have taken on urgency as the economy has shown signs of flagging and is among voters' chief concerns ahead of November's midterm elections.
The White House is struggling with whether to propose ideas that would appeal to Republicans, and thus get support on Capitol Hill—such as tax cuts—or whether to promote ideas that officials believe could have more economic impact but might hit political resistance, such as more aid for states and more infrastructure funding.
Aides to the Democratic leadership in the House and Senate see little prospect of anything significant happening soon. With the party's majority in Congress under threat in November's elections, Democratic lawmakers are primarily busy campaigning.
…
Some Republicans say an array of tax cuts is the best strategy to stimulate the economy. They include on their list reductions in the individual payroll tax used to fund entitlement programs such as Social Security and Medicare, as well as cuts in corporate income taxes.
All the talk about taxes—whether to raise them to address the deficit or cut them to stimulate the economy—may be having its own effect on growth. Allan Meltzer, an economics professor at Carnegie Mellon University, said the economy wouldn't fully revive until Washington resolved uncertainty surrounding business costs, including taxes.
"Companies are cutting their expenditures and not hiring because they're very uncertain" about these costs, he said.
Mr. Manley said Democrats wanted to hold a vote this fall to extend the tax cuts passed during the Bush administration for families earning less than $250,000 a year.
But a fight is looming, and that might mean more delays. Senate Republicans are likely to resist any legislation that doesn't also extend the Bush tax cuts for families and small businesses with earnings over $250,000.
RPC Analyst Tori Gorman
