Kerry not crazy about the Tax Cuts in Obama's Plan

[benny05]

"If I'm a business person, it's unlikely if you give me a several-thousand-dollar credit that I'm going to hire people if I can't sell the products they're producing," said Sen. Kent Conrad, D-N.D., a member of the committee.

"That to me is just misdirected," Conrad said.

Sen John Kerry, D-Mass., said, "I'd rather spend the money on the infrastructure, on direct investment, on energy conversion, on other kinds of things that much more directly, much more rapidly and much more certainly create a real job."

http://www.newstimes.com/national/ci_11406750

Right on, Senator Kerry!!

:kick:

[sandnsea]

1. It's John Kerry's tax cut proposal

and I don't know what the hell he's doing criticizing it now when he's the one who first proposed it 5 years ago.

Further, any new infrastructure spending will take at least a year to get into place. Tax cuts to help small business offset insurance and taxes can be immediate.

Between him and Pelosi whining about the Bush tax cuts, it smacks of pure politics.

[benny05]

2. I favor

extending unemployment benefits and helping the states in terms of Medicaid. Those would be just as immediate.

[sandnsea]

3. UI benefits have been extended

And I would imagine there will be some help for social services in the trillion dollar package as well.

[Democrafty]

5. We lived in a different world five years ago.

Had those tax cuts happened then, major growth for small businesses could have made a big difference in the economy overall.

Now, small biz owners have the same issues as before, but with no customers to support them. I know many businesses that are failing that can't be saved by a tax cut of any size. People who can't afford to pay their employees sure as hell can't insure them.

I hate to say infrastructure is more important right now, but, unfortunately, lack of growth potential in the small business arena makes me agree that jobs, health care, clean water, etc., should be the priority of the admin and the Congress.

[sandnsea]

6. I'll wait for it to shake out

But I suspect I will still disagree. The time it would take for the investment aspect to kick in would be way too long. Small business needs any help they can get, right now, to keep from going under or having to fire people. They can't wait for contracts a year down the road.

[Democrafty]

7. As someone who's already lost part of a small business,

and sees more and more friends having to close up shop, I sure hope you're right.

[karynnj]

8. The economic situation now is not the economic situation of 5 years ago

I think that Conrad's and Kerry's comments are completely on target. No company will hire someone or expand unless they are confident that it will be a good business decision. 5 years ago, this would have been something that might have motivated people to expand if they were confident of their business plan. (Conrad's comment explains the reason that it likely won't do what is needed in a very intuitive way. He is saying that the market is such that ONLY the government being the spender of last resort can provide the fuel the economy needs.

The fact is that SOME infastructure expenses start immediately and - as they are definite sales to the affected industries they do lead to immediate hiring - which leads to people having money to purchase other things.

I doubt this was Kerry's entire comment - but he has been speaking for at least 2 years on the need for really drastic FDR like government spending - where those comments have increased in the last half year.

I seriously don't get why you have a problem with Kerry stating his position. As to it being politics - I think the inference is obnoxious and it demeans Kerry. Kerry has more to gain being an Obama sycophant than in arguing for a different approach. What Kerry is asking for is more FDR New New Deal (and populist) than what Obama appeared to propose - and it is consistent with his Faneuil Hall speech of 2007 and even more so with his October speech in Lynn MA. The election is over at this point he is not a surrogate. Kerry is a very senior Senator, who owes no politician ANYTHING. He owes the voters of MA his honest opinions and his best effort to do the right thing. Kerry showed enough economic and financial judgment that the Senate gave him a seat on the Finance committee - and waived Senate rules to do so.

It seems to me, if these comments are his complete view, that Kerry sees the economic situation as more dire than Obama does - and that Obama thinks solutions Kerry prescribed in 2003 would work to fix the economy of 2009, while Kerry is proposing more fundamental drastic changes.

Now, what Obama is proposing is more likely to pass than if he proposed something more like Kerry described, but I am happy that Kerry is pulling in the direction he is. (In fact, it reminds me of why the BG gave him a glowing endorsement.

[sandnsea]

11. Fine. Then he's just wrong

It'll be too late by the time any spending gets down the pipe. If Pelosi and Kerry aren't stirring up debate for the media, then they're just wrong and big fat pains in the ass.

Repealing the Bush tax cuts are for the health care plan, which all of us will need, including business. This is the wrong time to do that.

And giving small business tax cuts to help them keep jobs here is more important now than it was 5 years ago. There is absolutely no reason to oppose them. It makes no sense.

And I don't have to be Kerry's toddy either.

[karynnj]

14. You have your right to your opinion

I happen to agree with Kerry here - for the reasons I stated.

I don't, incidentally, get your position out of Kerry's comment. The thing I would need to see is what the proposed small business tax credit (or cut) really is - it sounds from some of the comments as though the problem is the way they are designed. Before I would think of referring to either Peolsi or Kerry as "bog fat pains in the ass" I think it would at least warrant knowing exactly what was proposed and the reasons why they don't like it. I would certainly want this before calling out the strongest ally that small businesses have had in the Senate.

I find all the comments in the op article very consistent with economic theory. The other thing to keep in mind this is stated as Baucus' opinion "He added that it is too early to pass judgment on any aspect of Obama's plan." THe uniformity of the Finance committee Democrats' comments suggests that Obama's team may be doing here what HRC did on Healthcare - it seems this proposal blindsided the committee and that they likely were given no imput.

By the way, it is reasonable in this group to disagree with Kerry and state you think he is wrong - it likely is against the charter of the group to call him a fat(????) pain in the ass.

[Mass]

10. Read Krugman's post from a couple of days ago. He explained what was a problem in the tax cuts that

were proposed. There needs to be some, but the extent is too high to allow other things to happen. I am actually happy to see Kerry go this way. The point is that the package will pass, but it needs some reshaping in order for it to work.

[sandnsea]

12. Ever since Krugman supported mandated

health insurance, I haven't given him as much credibility as I once did. Clearly there are people on the left who don't get what it's like for the bottom 50% too. It is going to take way too long for spending programs to work.

[Mass]

13. Krugman is far from being the only one with this opinion. In fact, most progressive stand there.

The problem is not that there are tax cuts. Actually, Krugman in his article agrees that there needs to be tax cuts to prime the pump. This is not in debate. What is in debate is the extent of these tax cuts which will not allow to have enough money to really restart programs that will help the country for a long time, and that too many of these tax cuts are aimed to people who do not need them, while too little is done for those at the bottom of the scale.

There is a real problem, which can difficultly be captured by a couple of sentences given to the media at the end of a meeting like that, but the problem is real.

I may be wrong, but I doubt Kerry said he wanted NO tax cuts. He probably agrees that the package has too many tax cuts and not enough development.

http://www.reuters.com/article/politicsNews/idUSTRE5077O520090108

Here is the point that Kerry and Wyden made according to Wyden and it has been something that is well known: giving tax cuts to people who hire does not create jobs.

[beachmom]

4. More here on cnn.com

http://politicalticker.blogs.cnn.com/2009/01/08/key-senate-democrats-blast-obama-tax-proposals/

None of the senators CNN spoke with after the meeting said they thought the opposition to these provisions would derail the bill but suggested many meetings would be needed with the Obama team to hammer out an agreement.

First votes in the Finance Committee — which must approve the tax components of the stimulus plan — could come in the next two weeks, senators and aides said.

This is called making a bill in the Senate. Some back and forth will happen, and at the end, the sausage will be made and signed. I have no doubt about that.

Adding in a WP article.

http://www.washingtonpost.com/wp-dyn/content/article/2009/01/07/AR2009010703431.html?hpid=topnews

Lawmakers and Financial Experts Question Obama's Tax Cuts

At least two tax cuts that are part of Barack Obama's stimulus package have been criticized by lawmakers, tax experts and economists for being potentially too expensive and ineffective, signaling that they are likely to face resistance on Capitol Hill as congressional leaders begin direct negotiations with the president-elect's team.

Both Democrats and Republicans have questioned a provision that would provide a $3,000 tax credit to companies for every job created and, possibly, for every job spared. They contend that the idea would be ripe for abuse and difficult to administer.

Lawmakers are also skeptical about a measure that would allow companies to deduct large portions of recent losses. The proposal would benefit companies that have been hit hardest by the recession, including in the banking and real estate sectors, but experts worry that costs could soar because so many would be eligible.

My favorite quote:

"Senators are senators," Senate Finance Committee Chairman Max Baucus (Mont.) told reporters after a Democratic caucus meeting yesterday. "They've got ideas, too."

[karynnj]

9. I like Baucus's comment

and I suspect that we may hear more comments of that sort. Obama was a Senator and likely knows the culture well enough to know that he needs to work with this co-equal branch of government.

[Mass]

15. Apparently, Harkin disagrees too.

http://tpmelectioncentral.talkingpointsmemo.com/2009/01/a_tale_of_two_stimuli.php

And here is what Kerry's office says, BTW.

http://www.politico.com/blogs/bensmith/0109/Pushback_from_the_Senate_Democrats.html
UPDATE: A Kerry aide says it's not that he objects to the tax credit, but that he sees it as less of a priority than immediate spending on infrastructure.

And here is the another quote:

http://www.cqpolitics.com/wmspage.cfm?docID=news-000003005102

The key here is to create jobs. The key here is to restore confidence in the economy. And what I want to do, and I think others are concluding, is to make certain that every provision that we’re looking at can really be measured against the creation of jobs,” Sen. John Kerry , D-Mass., told reporters after the meeting. “There are a lot of worthwhile things. There are some worthy efforts that we want to undertake, but they may not produce as many jobs.”

Just to conclude, I disagree with the fact that the reduction of payroll taxes is a bad thing. Particularly for low income families, the $20 a week we are talking about will mean a lot.

[BlueIris]

16. I'm inclined to agree.

Totally.

[MH1]

17. It depends on the tax cut.

Tax cuts that would immediately increase paychecks for those families making less than $100K (or pick a number) per year, could have an immediate impact by boosting demand, since in that case most of the money would probably be spent, with some of it going for new demand and some going to pay down debt and help people avoid personal economic disaster.

I'm not so keen on business tax cuts at this time, although it always makes sense to implement what Kerry proposed long ago: reduce our nominal corporate tax rate but offset that by closing the loopholes that allow large corporations to avoid paying taxes on some of their profits while incentivizing offshoring. However the positive results from those changes would take too long to impact the economy to make them useful for addressing a near-term crisis.

I'll admit I haven't read the fine details of Obama's plan (for example I don't know where his proposed cutoff is for the individual payroll tax cut), and I didn't read the details of Kerry's criticism, but I've always found Kerry's thinking on economics to be very much on the same page as my own, so I suspect he's not very far off here, either.

I do think there is a little bit of theatre being played out here, to get some public discussion of the best approach. I think the republicans don't come out looking very good in that discussion, and it may be helpful to have some public pushback on corporate tax cuts. Of course this is a dangerous game for the Democrats to play, since the Republicans own talk radio. I've already heard the local talk radio "financial guru" promoting the republican point of view, and unfortunately he is very good at making it sound rational and not at all like talking points. So the end result may be that a big chunk of the public ends up more convinced then ever that supply-side economics works and that corporate tax cuts are important. Sigh.