So this is a good idea. Sorta.Obama to back more business tax breaks
The idea is good. He's starting to "get it" (maybe.) But once again it reeks of the WH trying to manage and control the economy. That part is bad. The better solution would be to make this a permanent tax break. Let's take closer look:
President Barack Obama will call on Congress to pass new tax breaks that would allow businesses to write off 100 percent of their new capital investments through 2011, the latest in a series of proposals the White House is rolling out in hopes of showing action on the economy ahead of the November elections.
Amid an uptick in unemployment to 9.6 percent, and polls showing that the November election could be dismal for Democrats, Obama has promised to propose new steps to stimulate the economy. In addition to the business investment tax breaks, he will also call for a $50 billion infrastructure investment and a permanent expansion of research and development tax credits for companies.
OK. So it's a desperation shot, from half court, at the buzzer. We get it.
"The White House is missing the big picture. None of its plans address the two big problems that are hurting our economy: excessive government spending, and the uncertainty that their policies....are creating for small businesses," House Minority Leader John Boehner said.
The uncertainty is the biggest problem, but yeah, he's right.
With the public growing increasingly concerned about the mounting federal deficit, the White House has been careful to avoid labeling their proposals as a stimulus program, hoping to avoid drawing comparisons to the massive $814 billion stimulus Obama signed last year.
Well, that and the the fact that the "stimulus" didn't stimulate anything except
Even if legislators could pass some of the proposals in the short window between their return to Capitol Hill in mid-September and the elections, it's unlikely the efforts would significantly stimulate the economy by November.
As always, it's important to be thinking about the long-term...like an election that's 57 days away.
The official estimated the ultimate cost to taxpayers over 10 years would be $30 billion, with most of the money lost in tax revenue being recouped as the economy strengthens.
Cue tonton to disparage Obama's sudden conversion to supply-side economics.
The biggest problem with this is that it is still too short-sighted. It is also transparently timed for Obama's re-election bid. From an economic perspective what it does is helps to accelerate some capital investment that might be already tee'd up and pull it into 2011. But then you're likely to see a drop off again in 2012 (and beyond) unless this is extended or made permanent. Think Cash for Clunkers or the house buying credit only for capital investments. This has the benefit over those other programs of being at least targeted to the right things for the longer-term (i.e., capital investment) and for a longer period (1 year), even if it is still more short-sighted than we'd like to see. The other problem is that while we might see the drop off in capital investment happen (a la the drop in car and house sales with the other programs) the effects
of dropping capital investment are not usually felt for further down the road (2-5 years.)