Tax Cuts and Stimulus

Now there's the Speaker of the House I came to admire so many years ago - before she was the Speaker:

Speaker Nancy Pelosi told reporters Thursday that she wants to see the Bush-era tax cuts for the wealthy repealed "as early as possible."

The call for repeal may place Pelosi at odds with President-elect Obama; during the campaign he called for repeal but his aides have since indicated that due to the deteriorating economy, he was leaning towards allowing them to expire.

Asked again after her press conference about the tax cuts, the Speaker said she is "urging repeal."

Pelosi noted that the Congressional Budget Office has determined that the tax cuts are the biggest contributor to the ballooning deficit. "Put me down as clearly as you possibly can as one who wants to have those tax cuts for the wealthiest Americans repealed," she said.

And it doesn't take a Nobel Prize in economics to realise that Obama's potentially wasting too much of the stimulus package on tax cuts.

Tax cuts to the lower three quintiles that could be passed outside the stimulus and tax cuts to businesses that just don't freaking need them:

Nobel laureate Joseph Stiglitz said President-elect Barack Obama’s stimulus plan to boost the U.S. economy is “not enough” because it contains tax cuts rather than being devoted to higher spending.

“Clearly more is going to be needed,” Stiglitz, a professor at Columbia University in New York, told reporters at a conference in Paris today. “With a lot of the money going to tax cuts, they won’t have the effect some would hope.”

Or, as Stiglitz is probably not inclined to state, they won't have any effect if nearly half goes to tax cuts, rather than tax cuts promised earlier being a separate issue.

The question now becomes, can we count on the Congress to do the right things, and then over-ride Obama's potential for a veto?