By request: tax cuts and stimulus

I basically agree with Krugman:

Other things equal, public investment is a much better way to provide economic stimulus than tax cuts, for two reasons. First, if the government spends money, that money is spent, helping support demand, whereas tax cuts may be largely saved. So public investment offers more bang for the buck. Second, public investment leaves something of value behind when the stimulus is over. That said, there’s a problem with a public-investment-only stimulus plan, namely timing. We need stimulus fast, and there’s a limited supply of “shovel-ready” projects that can be started soon enough to deliver an economic boost any time soon...

[But] look, Republicans are not going to come on board [with the stimulus plan]. Make 40% of the package tax cuts, they’ll demand 100%...I’m really worried that they’re sending off signals of weakness right from the beginning, and that they’re just going to embolden the opposition.

One point Krugman doesn't make is that tax cuts are politically much harder to reverse in the future than stimulus spending. So relying too much on tax cuts could seriously weaken our long-term fiscal security.

Another problem I have with Obama's tax cuts is that if middle class taxes get too low, it may make the middle class less interested in politics over the long term. People who pay taxes are more likely to pay attention to how their taxes are spent. It would be a shame if the middle class became like the American poor - a long-suffering group that doesn't realize how much it could improve its situation by getting politically engaged.

So no, I don't think Obama's tax-cut-o-rama is a particularly good idea, and I hope it gets severely curtailed by congressional Democrats.