Cut, Baby, Cut

President-elect Obama has signaled that he will not pursue the repeal of the Bush tax cuts, citing the dire financial markets and the worsening economic conditions. Barack Obama is to be applauded for heeding the advice of his economic advisors. His implied intention now is simply to allow the tax cuts to go away once they expire in 2011. At that time the previous higher tax rates would come back into effect. If keeping taxes low is the right medicine now, then what kind of economic quack would construct an argument that higher taxes would be good for the economy later? We will leave that for another day.

There is plenty of talk and maneuvering for a sizable financial stimulus package to coincide with Obama's inauguration. If you really want to see surge in consumer confidence, a curtailment of job loss, and an upward jolt in investment in both real estate and financial markets, all that Obama needs to do is to announce that he will immediately call for a tax cut. Lower personal income taxes for all income brackets, lower capital gains tax to spur investment activities, and lower corporate taxes to save jobs. This would, of course, require some gritty spending cuts at all levels of government as a show of fiscal discipline.

I don't think that the democrats will actually cut taxes across the board, or at all for that matter. However, such a move would be the ideal antidote for the economic ills that are dogging us. Cut, baby, cut.