...the most effective tax cut for putting people back to work quickly is one that businesses and households get only if they spend money. Last year’s cash-for-clunkers program was an example. So was a recent bipartisan tax credit for businesses that hired workers who had been unemployed for months. Perhaps the broadest example is a temporary cut in the payroll tax for businesses, which reduces the cost of employing people.

Any of these steps would increase the budget deficit, obviously. But relative to the multitrillion-dollar, Medicare-driven, long-term deficit, a temporary tax cut costing a couple of hundred billion dollars isn’t significant. The more pressing problem today, by far, is the weak economy.

The great historical lesson of financial crises is that governments are usually not aggressive enough in responding. That was Japan’s mistake in 1990s, Herbert Hoover’s in the early 1930s and even Franklin Roosevelt’s in the mid-1930s.

Read it all.

Filed under: * Culture-Watch • History • * Economics, Politics • Economy • Consumer/consumer spending • Corporations/Corporate Life • Housing/Real Estate Market • Labor/Labor Unions/Labor Market • Personal Finance • The Credit Freeze Crisis of Fall 2008/The Recession of 2007-- • The U.S. Government • Politics in General • House of Representatives • Office of the President • President Barack Obama • Senate

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