Extending the cuts for another two years is considered a relatively painless kind of stimulus. Same with extending jobless benefits and cutting the payroll tax. Even NYT columnist Paul Krugman says the deal is a little better than he had expected just a few days ago.
Well, sort of. Here's a sampler of reaction from Real Time Economics:
-The proposed temporary tax cuts and spending increases will provide a substantial boost to growth in 2011. Instead of another year expanding at no more than the U.S. economy's potential growth rate -- with job gains of 1.2 million and unemployment hovering near 10% -- real GDP growth will accelerate to 4%, job gains will pick up to 2.8 million, and the unemployment rate will decline to around 8.5% by year's end. In all likelihood, the recovery would have made it through next year without backtracking into recession, but this deal improves those odds significantly. -Mark Zandi, Moody's Analytics
-The [tax proposal] would represent a significantly more positive fiscal outcome for 2011 than we and most others have been expecting, including a one year reduction in the payroll tax. In all, this proposal would add $185 billion in stimulus in 2011 beyond what we have been assuming, not including the corporate tax provisions. -Goldman Sachs
-As the policy was described yesterday, this payroll tax cut goes entirely to the worker. This increases work incentives, but the main motivation is probably to increase take-home pay and consumer spending... -Greg Mankiw, Harvard University
-Most of the money in this package is maintaining tax cuts in place that were scheduled to expire. This will prevent tax increases from having a contractionary impact on the economy, however there is very little, if any, net stimulus in this package compared with current levels of taxation and spending. -Dean Baker, Center for Economic and Policy Research
-It's the typical pattern we've seen for the past several years. "Bipartisan compromise" means both sides get what they want, because deficit financing of these policies seems like the painless way to get out of gridlock. Rather than mutual sacrifice, it is mutual grabbing. We can never manage to "trade off" -- we only "pile on." -Diane Lim Rogers, The Concord Coalition
-Most of this round of stimulus does look to be relatively low bang-for-buck, and it is not paid for over ten years, but it does look to me as though it is better than a poke in the eye with a sharp stick. -J. Bradford DeLong, University of California at Berkeley
At last check, the stock market was holding onto its gains, with the Dow up 60 points and both the S&P 500 and Russell 2000 indexes hitting two-year highs.