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By Dylan Matthews
You know when your stimulus package is too cautious? When Marty Feldstein is attacking it from the left:
The proposed business tax cuts are also likely to do little to increase business investment and employment. The extended loss "carrybacks" are primarily lump-sum payments to selected companies. The bonus depreciation plan would do little to raise capital spending in the current environment of weak demand because the tax benefits in the early years would be recaptured later.To be fair, Feldstein also criticizes the unemployment benefits in the bill, but this selection is still pretty telling. There's no economic argument - none - to be made for business tax cuts as a stimulus component. When Marty Feldstein and Joe Stiglitz agree on an element of fiscal policy, there's really no controversy within the profession on the matter. The only reason to include them was to curry favor with Republicans in Congress and get a wider margin of victory. Obama liked this logic, so the business tax cuts stayed. And they bought him a grand total of 0 Republican House votes, with eleven Democratic defections thrown in for good measure. Bipartisanship fail.
This stimulus will still pass in the end, and it's probably better to get something through fast than to repeat the fight in order to get a better deal. But I hope that Obama is taking away the right lesson from this. He tried cooperating. He reached out to John Boehner and Eric Cantor, even though he didn't need their support. And they screwed him. They had their choice between having an input into policy and becoming irrelevant, and they decided they'd rather be irrelevant. So here's hoping Obama helps them stay that way.
