The Born Again Taxcutter

If he had done this 18 months ago he'd probably be liking where he and his party are sitting today:

President Obama, in one of his most dramatic gestures to business, will propose that companies be allowed to write off 100 percent of their new investment in plant and equipment through 2011, a plan that White House economists say would cut business taxes by nearly $200 billion over two years.

The proposal, to be laid out Wednesday in a speech in Cleveland, tops a raft of announcements, from a proposed expansion of the research and experimentation tax credit to $50 billion in additional spending on roads, railways and runways. But unlike those two ideas, both familiar from Obama's 2008 campaign, the investment incentive would embrace a long-held wish by conservative economists that had never won support from either Republican or Democratic administrations.

"Temporary investment incentives like this can have big effects because they really pull investment forward," R. Glenn Hubbard, dean of the Columbia University School of Business and a former chairman of the Council of Economic Advisers under President George W. Bush. "This could have a big stimulative effect."

But the response Monday from business lobbyists hinted at uncertain political prospects for the idea: Many said a higher priority for their members remains extension of the Bush income-tax rates for higher earners that are set to expire at the end of 2010. Obama and many congressional Democrats want to let those breaks expire.

If the GOP is smart they won't agree to pass this without including an extension of the Bush tax cuts. Together there's no way the GOP would oppose a package like that and the Dems might actually get some credit for doing something right.