There's been some buzz about a wrinkle in the various Obama stimulus plans being floated around. Here's one of many, notable only for being the one I just read. [via IP]

Obama has advanced from trying to be like Bush to trying to outdo him. WSJ, $300 billion tax-cut plan:

They call it a tax cut, but is it so?

The payroll tax credit is a rebate of payroll taxes for low-income workers. As faithful readers of this blog surely know, an increase in spending coupled with lower tax collections is an INCREASE in taxes. AN INCREASE in taxes. NOT A TAX CUT. If I spend more money and collect less, the government is promising to collect more taxes in the future. It is not a tax cut. Not a tax cut. Not a tax cut. And when you don't cut rates but rather give people a lump sum of $500, there are no incentive effects other than to increase the probability that the US Treasury will be unable to honor its obligations in the future.

I can't wait to see all the studies that show how a rebate creates jobs. What a relief to know that this is just one more example where the Obama administration will not let petty ideological principles get in the way of what works.

It's a one off rebate rather than a tax cut, and that matters. The bill comes due later. You have in effect borrowed money from yourself, and pay interest on the loan. Worse, next year there will be no rebate. The tax rates are unchanged. You can't plan for the future, make investments based on an expectation of lower tax costs, and so there is little if any real economic stimulus.