Obama has begun to to announce details of his stimulus plan. Nearly 40% of his plan will consist of tax cuts.   As a result criticsm has come from the left, and opposition remains on the right.   While the proof will be in the pudding, a stimulus plan that includes both tax cuts and infrastructure spending seems reasonable enough.   However, the left believes any tax cut is purely pandering to the right while the right believes that the tax cuts are not enough or do not benefit the real cogs of the economy, the top earners.   Given that many of these top earners have been princes of Wall Street, I do not believe that one’s value to the economy is truly a function of one’s pay.

Obama’s very centrist play so far has exposed the critical flaw in today’s political landscape.    Compromise has become a dirty word, and idealology trump ideas. “Liberals” believe “Conservatives” are devoid of any good ideas, and vice versa.   The fact is that both liberals and conservatives have good ideas about how to best right the economy.  Tax cuts are arguably a better way to stimulate the economy from a cost benefit perspective.

The fundamental crux for arguing for a tax cuts instead of stimulus spending is that individuals and the free market are better at allocating resources than the government.   I do believe in general it’s better to let the market decide where to spend money.  However, the current fear is that consumers will choose not to spend.   This is legitimate worry, and one thing I applaud in the Obama tax plan is the tax breaks directed towards business.   In addition, I do believe there are areas where the Government is the only entity capable of spending money.  National infrastructure such as roads and bridges are the obvious places   However, I think the Government can have setting industrial policy, and funding initiatives.   Much of the research that becomes tomorrow’s technology is already funded through government grants.    There is room for Government in the coming months to do more in the light of the need for a fiscal stimulus.