Well, welcome back to all who have been kicking back for the past few days, including yours truly. This year is going to be quite interesting–and, unfortunately, not a happy one as far as the economy goes, or so I’m guessing. I’m not going to spend much time today on prognostications–I saw a bunch of those over the past days and chuckled about a few of the predictions. Let’s get concrete here…

   I may be one of the few people left in America who crinkles my nose at the slogan "tax cuts". I don’t mind paying taxes–though I prefer if they would not pay for illegal wars and end up underwriting a rich person’s new yacht in the form of tax cuts for the wealthiest American. For that reason, I was not a big fan of the president-elect’s campaign promise for tax cuts. The full political spectrum seems incapable of breaking this notion that, in order to win electorally, you have to promise to support cutting taxes.

   Taxes are too low, certainly for the highest one percent. Taxes are not the problem for businesses–the lack of a single-payer health care system is a far larger drain on the bottom line than taxes. If we want decent road, schools, 21st Century communications systems, an air transportation system that functions, safe water and food…you name it…we need to fund it. You would think that was the obvious lesson from the past failed 25-year experiment of choking our governing power.

   And, so, I do not think highly of this (from today’s Wall Street Journal but also on the front-page of The New York Times):

President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion of tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.

The size of the proposed tax cuts — which would account for about 40% of a stimulus package that could reach $775 billion over two years — is greater than many on both sides of the aisle in Congress had anticipated. It may make it easier to win over Republicans who have stressed that any initiative should rely more heavily on tax cuts rather than spending. [emphasis added]

   Dumb. Here is more:

The largest piece of tax relief in the new plan would involve cuts for people who pay income taxes or who claim the earned-income credit, a refund designed to lessen the impact of payroll taxes on low- and moderate-income workers. This component would serve as a down payment on the "Making Work Pay" proposal Mr. Obama outlined during his election campaign, giving a credit of $500 per individual or $1,000 per family.

   And…

Economists of all political stripes widely agree the checks sent out last spring were ineffective in stemming the economic slide, partly because many strapped consumers paid bills or saved the cash rather than spend it. But Obama aides wanted a provision that could get money into consumers’ hands fast, and hope they will be persuaded to spend money this time if the credit is made a permanent feature of the tax code.

   It’s not entirely clear to me what the logic is behind the tax cuts, other than as a political gesture. I’m not dismissing the value, on its own, of another $1,000 for a family to have to spend. Yes, we need economic stimulus. But, first, if economists of "all political stripes" agreed that the last hunk of cash sent to people didn’t work because people were putting it under their mattresses, where is the evidence that the current situation is any different? People are still in massive debt and home equity is gone as a place to get cash. Why do we think people will react differently.

   But, the larger question really is: tax cuts compared to what? Would $300 billion give back more to people if the money was used, for example, to states to stop cuts in health care and education, or invested in rebuilding every crumbling school in the country, or…well, you pick your priority.

   It seems to me that part of the reason we got into this mess is thinking too short term. Yes, put spend $1 trillion over the next two years in a vast array of investments that create jobs–but I don’t see the same return from tax cuts.