What never seems to occur to the "progressives" is that the Republicans might have the right idea (or, at least, "a" right idea).  Apparently, Obama and his economic team see what the "progressives" cannot see.  A tax cut oriented toward lower and middle income wage-earners that shows up in regular increments in their pay checks is far more likely to be spent than was a single large check last year.  Also, a cut in taxes for small businesses, is likely to produce more jobs than would develop without such cuts.

There is a place for targeted infrastructure spending as well as tax cuts in a stimulative program.  But the awful truth is that right wing Republicans' suspicion of government finds its mirror image in left wing Democrats' suspicion of private business.  

Even shorter Cohn: "D'oh!"  

While the Obama-Biden Plan for economic revitalization is well-intentioned and has many good ideas, there are some tax-cut ideas which are poorly-conceived and counter-productive.  Some particulars:

1) New American Jobs Tax Credit

Jobs need to be offered in response to actual business need, not government subsidy, for them to actually contribute to the economy and to be productive and sustainable.  Anyway, the $3000 credit per job is not enough to actually induce businesses to hire more people.  Accordingly, these credits would simply reward businesses for hiring they would have done anyway, without such credits.  As such, this would be a big cash giveaway, on the order of tens of billions of dollars, to no positive end.

2) Zero capital gains rate for iinvestment in small business.

As per Economics 101, economies work efficiently when economic decisions are based on the intrinsic economic merit of those decisions, and not skewed by externalities, such as special tax preferences for certain actions.  Decisions to invest in small businesses, or in any other businesses or economic activities, should be based on their intrinsic economic merits, not on relative tax advantages.  When such tax-advantages are introduced, then decisions inevitably skew investments in ways contrary to what would best fit and respond to economic conditions and realities.  Taxation of all investments, in fact of all income, should be subject to uniform taxation regimes, so as not to artificially incentives in ways that inevitably worsen investment decisions.

3) Special tax-rates for seniors

Why should income tax rates be based on age?  All people of all ages face various challenges.  There is no economic or moral reason why people of one age should have more favorable tax-rates than people of another age.  Income rates should be based on income levels, period.

4) Middle class tax-cuts

During the Presidential campaign, Barack Obama properly excoriated President Bush for enacting large tax-cuts "for people who did not even ask for them".  He further properly pronounced that we should not take the same actions and use the same approaches over and over again and expect different results.  For the past eight years, we have had big tax-cuts, big deficit-spending, and a big deficit-funded tax-rebate stimulus attempt.  Yet, this has not prevented two recessions, including the present one, and has introduced many financial and economic problems, including hurting American trade competitiveness by artificially making the dollar expensive relative to other currencies.  So, why does he plan to repeat George Bush's mistakes, and then expect a different outcome?  For many reasons, we need to reduce federal deficits, and this will require increasing tax-rates at least to Clinton era levels, about which few complained.  Tax-rates especially need to be raised on higher-income people, but all Americans who received tax-cuts under President Bush should have those cuts revoked, not increased.  Perhaps the tax-cut-reduction on the 93% of the middle-class that are still employed could be postponed for a year.  But stimulus spending need not and should not all be deficit-financed.  One of the things which could most inspire public and business confidence, and therefore improve the functioning of the credit and investment markets, would be evidence of responsibility at the top regarding federal budgeting.

5) Suspending taxation of unemployment benefits.

Definitely unemployment benefits should be extended; during recessions it takes much longer for people who lose jobs to find new employment.  But, there is no reason why those benefits should not be taxed, just like all other income.  For many, those unemployment benefits might even be higher than the wage-income of others who are working.  Why should people with low wage-income have to pay more taxes on their income than people who are receiving higher income from unemployment benefits.  Income is income.  The rates of taxation of all income should be based on income levels, not on the source of that income.  This is not only fair, it also promotes the sense of a shared fate and a shared responsibility for the overall society.

6) Exempting 401k and IRA withdrawals from taxation

The contents of 401k and IRA accounts have already had favorable taxation treatment all along, since they were initially invested.  There is no reason why these particular funds should get even more special tax-treatment by being exempted from taxation upon withdrawal.  Why should they get even more special treatment relative to investments people made outside such tax-favored accounts?  Many people did not even have 401k plans available to them, so they could not even make such investments.  Again, income taxation rates should be based on income levels, not on the source of the income.

"Obama's decision is not just politically necessary but also politically astute. "

Um, is there some other class of politically necessary actions that are nevertheless politically unwise?