Stimulus worked so well, Obama’s turning to tax cuts; Updated

Victor Joecks

News broke Monday that President Obama and congressional Republicans have reached a potential compromise on extending the Bush tax rates. Details included the following:

President Barack Obama reached agreement Monday with Republican leaders in Congress on a broad tax package that would extend the Bush-era income tax cuts for two years, reduce worker payroll taxes for one year and give more favorable treatment to business investments.

The White House is backing a plan touted by Sen. Jon Kyl and others that would set the estate-tax rate at 35% for two years and apply it only to estates over $5 million.

Other elements of the deal include a temporary reinstatement of the estate tax at 35%-the level favored by most Republican lawmakers-as well as an extension of jobless benefits for the long-term unemployed.

Aside from the politics of this deal, I’d argue that it’s also an implicit admission that tax cuts – especially for rich job creators – are an important factor in increasing long-term economic growth.

And this policy change, even if it’s only temporary, is a much better plan for job growth than the $800 billion stimulus plan – an $800 billion spending spree that the folks at e21, using a study by Daniel J. Wilson of the San Francisco Fed, found had a “net job creation [that] was statistically indistinguishable from zero by August of this year.”

Taken at face value, this would suggest that the stimulus program (with an overall cost of $814 billion) worked only to generate temporary jobs at a cost of over $400,000 per worker.

How much of a miserable failure was the stimulus? Business Insider’s Chart of the Day has your answer.

The tax compromise isn’t necessarily a sure thing, as details of and votes for the tax package are still being worked out. Stay tuned.

(h/t Reason and Hotair)

Update: Or maybe the tax cut package is a brilliant political ploy by Pres. Obama. That’s the case made by Charles Krauthammer.