The incoming Obama Administration, driven by the U.S.'s large economic problems and by prudence, is expected to seek quick approval of a major fiscal stimulus package soon after Inauguration Day on January 20. Even so, Speaker Pelosi may do the administration one better: Pelosi will seek to include a tax cut in a fiscal stimulus package, Pelosi's spokesman told Bloomberg News.
In addition, Congressional Democrats are considering passing two fiscal stimulus packages: one during the current lame-duck session and another after the Obama Administration and new Congress take office in January.
Pelosi favors a tax cut over the earlier stimulus version of tax rebates because the latter would take too long to administer, taxs-news.com reported. Pelosi will seek Senate agreement on a modified-version of a roughly $61 billion stimulus measure the House approved earlier in September, before seeking approval from President Bush.
Economist Richard Felson told BloggingStocks Monday Pelosi is making two statements with the tax cut proposal: one procedural, one economic.
"The economy could certainly use a properly-structured tax cut that benefits middle- and lower-income citizens, but Pelosi is also making a statement about the balance of power in Washington. She's reminding everyone that there are two, co-equal branches of government as it relates to tax and budget policy," Felson said. "That's something many Americans, even members of the media, have lost sight of these past eight years. Public policy will now be a two-way street, initiating from both the White House and Capitol Hill."
Fiscal Policy / Economic Analysis: The view from here argues that both the tax cut and two fiscal stimulus packages are needed. Further, Congress must think big: appropriate at least $400 billion in fiscal stimulus in 2009, preferably more, and if Pelosi can win approval of tax cut, so much the better, from a GDP standpoint.
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