Strange bedfellows?

I've been somewhat confused by the skepticism regarding the news that Obama's stimulus plan is largely composed of tax cuts - about 40%. Krugman Lefties think he's succumbing to Republican pressure, others fret that the tax cuts will essentially amount to welfare payments because only people making less than $200,000 a year will qualify.

I've noted before my shock that prominent academics are divided over this issue. But to be frank, I'm following this with cautious optimism (let's keep in mind that the bill has to pass!). Here is a politician actually fulfilling a campaign promise and proposing an idea that both sides of the aisle can get behind.

Until the bill passes speculation remains just that, but what really counts is how the cut is implemented. I agree with Cowen that the tax cuts probably won't drive recovery:

but less money will be wasted and...it shows that the Obama team is willing to flinch and be realistic.

When we're used to hearing figures in the hundreds of billions, saving a little money probably isn't the worst thing in the world. People may not spend the money, but if it helps people avoid defaulting on personal loans or expands credit to enterprise where it wasn't before then that's one less loan the government has to guarantee under TARP.

There's also a bit of pscyhology wrapped into this proposal. Unlike the Bush tax cuts where citizens received one large check in the mail, Obama's plan has a smaller portion taken out of each paycheck. Does this signal a move away from encouraging consumer spending and instead focusing on personal fiscal responsibility? Probably not, but it's an interesting tactic.