Commentary | Economic Growth

Time to rescind wasteful business tax cuts from stimulus

The Wednesday night vote in the House on the economic recovery package is astonishing in that no Republicans voted for the legislation. This, despite there being large scale, and wasteful, business tax cuts in the legislation that were seemingly included solely to attract Republican votes.

The lesson that might be drawn is to not water down your own program in the hopes of attracting a bi-partisan coalition. It only makes sense now to remove those tax cuts from any Senate legislation  to make the recovery effort more effective. It could matter a lot. The amount of stimulus in this fiscal year and next (through the end of September 2010) is $525 billion and the Senate bill provides for $107 billion of business tax cuts with limited effectiveness, leaving only $418 billion of real stimulus over the next eighteen months.

Filling the space taken by the business tax cuts with infrastructure and other spending that will create jobs could make the effort 25% more effective. The best economic and political logic now seem aligned.

See related work on Recession/stimulus | Economic Growth

See more work by Lawrence Mishel