Obama's Clever Fiscal Stimulus Strategy

Jon Henke lays out the danger to Congressional Republicans of supporting Barack Obama’s stimulus package:

Here’s the calculation on fiscal stimulus: If Obama gets his way, he’s looking at massive, trillion dollars deficits, and much more government intervention in the economy. The public may tolerate this due to fears about economic crisis, but if it works out well and the US gets a relatively soft landing from the recession, then the costs will still be visible (deficit, intervention), but the benefits will be intangible (the crisis that didn’t come).

What’s more, the Democrats have only one possible solution to the massive deficits coming down the pike: increase taxes. (Object lesson: “We can spend more of your money” is the Democrats solution to everything)

If Obama passes the perfect progressive stimulus bill without much Republican help, he owns the spending, the deficits, the tax hikes and all of the pain that comes with it. Republicans will be happy to run against those problems in 2010 and 2012.

But if Obama buys significant Republican support for his bill, Republicans will own the deficits, tax hikes and intervention, as well. The stimulus bill will be for Republicans what the Iraq war was for Democrats – a policy they first supported, then regretted, then tripped over themselves to explain. The “they were for it before they were against it” ads would be inevitable and devastating.

This is exactly right.

Republicans cannot and should not refuse to work with the newly-elected President of the United States. If Barack Obama is willing to support a targeted stimulus package built around tax cuts (which are more effective than new spending in promoting economic growth), and which eschews wasteful pork-barrel spending that inflates the deficit to no good purpose, Republicans should be willing to cooperate eagerly.

If on the other hand, Barack Obama insists on pushing a bad plan that inflates the deficit without improving economic growth, Republicans must oppose it. This is not only the right policy, it is also the proper political strategy. If Barack Obama genuinely wants a strong stimulus package, he will show real flexibility. If not, let Congressional Democrats have the ‘credit.’