The Stump, a New Republic blog:
By agreeing to channel up to 40 percent of the stimulus through tax cuts, Obama is essentially calling the GOP’s bluff. He’s saying, “You guys are making a principled argument that tax cuts can be a more efficient way to stimulate the economy. I’m accepting that argument in large part. So rather than spend a lot of money helping low- and middle-income people, I’m going to get that money to them via tax cuts.”
At which point he’s kind of backed them into a corner. If the GOP accepts, then great. If they turn around and say, “Well, when we said tax cuts, we actually meant tax cuts for wealthy people, not for low- and middle-income people,” then it becomes blindingly obvious that they weren’t making a principled argument at all. They were trying to shake Obama down on behalf of their rich cronies.
And, indeed, it looks like the GOP, while momentarily torn, can’t resist the taking the bait. According to today’s Post, Arizona Sen. Jon Kyl is responding by pushing for permanent cuts in corporate and capital gains taxes–neither of which is likely to have much short-term stimulative effect. (See here for an explanation of the faulty capital gains logic.) Something tells me Obama won’t have trouble winning a debate between tax cuts for working people and tax cuts for big business and wealthy investors.