President Obama's $450 billion stimulus revolves around a plan to extend and expand the payroll tax cut. It also includes incentives for businesses to hire workers -- with a separate tax credit for hiring long-term unemployed workers -- and it extends unemployment benefits for another year. And it's all offset with a plan to reduce our long-term deficit.
This is a tax-side stimulus to encourage business to hire and put more money in the pockets of both the employed and the unemployed.
Expanding immediate tax stimulus for an economy with struggling demand is smart. And $450 billion is a big number. And the ideas in the speech are boldly, even pugnaciously, presented. But the heart of this plan is an extension of current policies plus a moderate expansion of certain policies. For example, we already have a payroll tax stimulus. We already have unemployment benefits. Companies already have incentives to hire. Still, the economy is growing at less than one percent and job creation is, literally, zero.
Extending and expanding current policies is a necessary thing with economic and labor growth falling to lows since the recession. In the current political climate, this is probably as bold as the president can go. But to borrow a metaphor from football (which followed minutes the president stopped talking), this is neither a 40-yard bomb nor a straight draw for the running back. It's a checkdown pass. Carefully diagrammed, measured to bypass the defense, and just enough to move the ball downfield.