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Dems Defend Tax Cuts While Calling Them Ineffective

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Two of the highest-profile Democrats in Congress argued on Sunday that when it comes to the economic stimulus package, spending projects will do more to jump-start the economy than tax cuts.

And then... they defended the tax cuts.

Appearing on the Sunday talk show circuit, Sen. Chuck Schumer and Speaker Nancy Pelosi touted the merits of the recovery package now making its way through Congress. But there was a peculiar logic to their defense: tax cuts would not be as effective in encouraging job growth, but they would make up a major portion of the legislation anyways.

"There isn't any economist who would give you an optimistic view of the direction our country is going in," said Pelosi. "We have listened to their assessment of where we are. ... And from right to left, they have told us that the investments that we make create more jobs than tax cuts. Nonetheless, we have a package that has both."

The Speaker went on to list examples of what would make up the meat of the stimulus: investments in green technology and infrastructure, "addressing the needs of the unemployed in this economy," and money geared towards education and health. "We also have some business tax [cuts] in this legislation, some of which were suggested by the Republicans."

"What the economists have told us from right to left, there's more bang for the buck - a term they used --- by investing in food stamps and unemployment insurance than tax cuts," she concluded. "Nonetheless, we are committed to the tax cuts because they do have a positive impact on the economy, even though not as big as the investments."

Appearing on Fox News Sunday, Schumer attempted to walk that same political tightrope. He began by noting that, "What the economists say... is tax cuts get into the economy more slowly than spending. In fact, the major criticism of the last stimulus package was it was only tax cuts and it didn't have much of an effect."

And yet, later in the segment Schumer defended "a [stimulus] package that is a third tax cuts and about a third infrastructure and a third pumping money into the economy," saying that "almost every economist that I have talked to says it's the right balance." Only then, he noted that many of those very same economics, some of whom are conservative, "say it's too little on the spending side. Martin Feldstein said the other day, spend quickly. That's your number one goal."

It's a curious bind that Democrats have inflicted on themselves: committed on policy grounds to using spending tools to lifting the economy out of the doldrums, but politically invested in walking a middle road. Much of the pressure, it seems, has come from the Obama administration, which looked to tax cuts partly as a tool to recruit Republican support for the legislation. Though, they defend the measure on the grounds that it will stimulate business and job creation as well.

And yet, it remains to be seen just how strong an olive branch this will be. Before Schumer took the stage on Sunday, Sen. John McCain said he would vote against the stimulus legislation because of some of its spending provisions. On "Meet the Press" an hour or so later, Minority Leader John Boehner hammered away at some of the items included in the bill.

"Republicans believe that we have a difficult economy. We believe we need an economic rescue plan... and we need a plan that will work," said the Ohio Republican. "Given the concerns that we have over the size of this package and the spending of this package, we don't think it will work. So if it is the plan that we see today, put me down in the no file."