THE MONEY TREE

Posted at 9:30 a.m. ET

The Obama economic plan begins to take shape amidst reports that Congress may delay action because the issues are too complex for quick action.  From The New York Times:

WASHINGTON — President-elect Barack Obama plans to include about $300 billion in tax cuts for workers and businesses in his economic recovery program, advisers said Sunday, as his team seeks to win over Congressional skeptics worried that he was too focused on government spending.

Tax cuts are good.  They actually work.  That fact, of course, will disturb the ideologues.

Although some tax cuts were always expected to be included in Mr. Obama’s economic package, his team disclosed the scope and some details of the plans on Sunday at a time when Republicans have begun voicing criticism of what they describe as an open-checkbook approach to spending. By focusing more attention on the tax cuts in the plan, Obama aides hope to frame it as a balanced, pragmatic approach. 

At least Republicans are being heard.  And apparently listened to.

Mr. Obama’s team argued Sunday that the short-term cost of its economic plan was not a priority in the face of the dire problems in the economy. “There is no short run, other than keeping the economy from absolutely tanking. That’s the only short run,” Vice President-elect Joseph R. Biden Jr. said on “This Week.”

They actually let him out of the house.  Well, we know the new administration has some compassion for its own.

Mr. Obama’s advisers said Sunday that they were searching for a way to get that credit into Americans’ pockets quickly to help stimulate spending, but would not duplicate the rebate checks sent last year as part of an economic package signed by President Bush. Instead, they said, they were discussing making the credit retroactive to the 2008 tax year and adjusting withholding formulas so paychecks would start reflecting that right away.

These are reasonable ideas.  The president-elect has a solid economic team.  Maybe we'll get somewhere.

To encourage businesses to expand their work forces and operations, Mr. Obama wants a tax credit for each job created. During the campaign, he proposed $3,000 for each job. Advisers said he was now also trying to figure out a way to give incentives to businesses to resist cutting jobs, as so many have been doing.

One lesson the new group must learn from the Bush administration:  Those receiving funds must account for them.  We've seen the outrage, across the political spectrum, directed at banks that will not disclose what they've done with the bailout money they've received.  Not acceptable.

The Obama plan would also allow businesses to apply net operating losses from last year to offset tax liabilities from prior years, enabling them to claim refunds from the government now in hopes of encouraging capital investment, much as was done in a 2002 economic stimulus plan.

Okay.  Let's get some money back to the people.  And let's hope it's enough to stop the losses. 

January 5, 2009.