With that said, to answer your question of what went wrong, it’s not a simple answer but if you have the time, I suggest you read this post. It gives the best overview I have seen to date. Well worth the read.

Just a simple question….

With regard to the fiscal stimulus, lets look at the evidence of tax cuts vs. spending. Take Obama’s Chief economic advisor’s word for it.

Christina Romer, who along with Ben Bernanke, is considered the foremost authority on recessions, argues that, “A dollar of tax cuts raises GDP by about three dollars.” This compared to a multiplier of between 1 and 1.4 for fiscal spending. In other words, tax cuts carry more than double the firepower as spending.

Then take the recent research of University Of Chicago economist Harald Uhlig who argues that:

Our main results are that

• a surprise deficit-financed tax cut is the best fiscal policy to stimulate the economy
• a deficit[-financed government] spending shock weakly stimulates the economy.
• government spending shocks crowd out both residential and non-residential investment without causing interest rates to rise.

The study can be found here.

Or take the study by MIT economist and now chief economist at the IMF Olivier Blanchard and Università Bocconi economist Roberto Perotti who find:

we find that both increases in taxes and increases in government spending have a strong negative effect on private investment spending. This effect is consistent with a neoclassical model with distortionary taxes, but more difficult to reconcile with Keynesian theory: while agnostic about the sign, Keynesian theory predicts opposite effects of tax and spending increases on private investment. This does not appear to be the case.

In addition to all of the above, you also have economists Mark Bils of the University of Rochester and Pete Klenow of Stanford, see here. They make the same argument that Harvard University economist Ed Glaesar made here.

There is also professor of economics at Stanford University John Taylor, who argues for a permanent tax cut as the best fiscal stimulus, see here.

Thanks for asking.

Cause the rationale was used for everything
to stimulate, to go to war, to bounce back from 911…etc…

Abe Lincoln (R) Civil War
Woodrow Wilson (D) WWI
Franklin Roosevelt (D) WWII
Lyndon Johnson (D) Vietnam
Harry Truman (D)& Dwight Eisenhower (R) Korean War
(NOTE: Truman started it, Eisenhower inherited it)
George Bush (R) Middle East (Not wars, but occupations)

Looks like four for the (D) and one for (R), since Korea was started under Truman and the Middle East is an occupation, not a war.

I think it would be much more accurate to call that “Maliki’s plan” than “Bush’s plan”.

Regarding your first point, I agree: tax cuts without a reduction in spending is the same as spending. However, from a “fiscal stimulus” point of view, tax cuts are superior because they can be implemented immediately. On the other hand, spending, especially spending done right, can take years to go into affect. For example, the current spending part of the fiscal stimulus has about 8% of it going into affect in 2009, see here.

Second, if were going to be “spending” tax payers money, I consider it much more efficient to do so by letting them spend it how they want - instead of washington. So in this sense also tax cuts are different than spending.

Regarding the Iraq troop withdraw, see here, here and here. I think a year and a half is about the same time, within months, that Bush would have started significantly reducing troops as well, especially after the success of the surge. Either way, so far with Obama regarding Guantanamo and Iraq, its all talk. He promises to do XYZ within a year+…but we all know how valuable politician promises are, dont we? Wait and see is what I say.

Because I could have sworn that he (and all the Republican candidates) were dead set against setting time lines.

Someday, this knee-jerk enthusiasm the Republicans have for tax cuts has got to come to terms with that reality. Tax cuts without spending cuts (such as the ones in the stimulus bill), are equivalent to increasing government spending. From the taxpayer point of view, there is no difference.

Now, you claim that tax cuts will stimulate the economy better than creating jobs through government spending. That may be true - its a complicated question, and I don’t claim to know. But if it is true, then it follows logically that the eventual cost of the tax cuts (which will someday have to re-paid plus interest with tax money from Americans), will be a drag on the economy. Because taxes are bad. Indeed, if we accept your premise (taxes bad for economy, tax cuts good), then the eventual damage to the economy of these tax cuts will be greater than the good they do now - since they will need to be re-paid with interest by taxes.

This is a very long way of making my point. Which is: Tax cuts are not free money.