The Big Question for Tuesday, Jan. 6:

Obama’s tax cuts–how centrist is the president-elect?

See all responses here.

Dr. Herb London, president, Hudson Institute said:

As part of his so-called stimulus package, president elect Obama has indicated that tax cuts are in the offing. About one-third of this package will fall into this category.

What hasn’t been mentioned is that since 44 percent of Americans don’t pay taxes, the tax cut will take the form of a welfare payment. Those who fall into the bottom quartile in the economy, those are likely to be in the marginal propensity to consume portion of the population, will probably spend this government gift immediately thereby giving the economy a temporary boost.

As I see it, an across the board tax cut representing the total $750 billion stimulus proposal and the retention of the Bush tax cuts make more sense for a sustainable recovery than partial tax reduction measures and a major public works program. But it is interesting to note that even Keynesians in a recessionary cycle understand that tax cuts can be an economic stimulus.