Actual Progress on Stimulus

So it looks like the Republicans have backed off the effort to use the economic downtown and the need for a stimulus package in a Shock Doctrine way to try and make the Bush tax cuts permanent.

"I think there is a way to come to an agreement," House Minority Leader John A. Boehner (R-Ohio) said in an interview. "Not having an agreement is a lose-lose." [...]

A member of the GOP rank-and-file, Rep. Lee Terry of Nebraska, expressed the feelings of both parties when he said: "People expect us to act." If Democrats and Republicans can get together, he said, it will "let people know we can do something here."

Perhaps the most striking illustration of how much these developments were changing the atmosphere on Capitol Hill was the readiness of Republicans to step back from their long insistence that Congress make the Bush tax cuts permanent. Such tax cuts have been central to GOP economic policy for more than two decades.

Now Republican leaders say they are ready to put off action.

"It's impossible for me to believe that [permanent tax cuts] would be part of the agreement, as much as I would like to see that happen," Boehner said.

I think the overriding sentiment of the rest of this Congress has to be a limit to future harm. Making the tax cuts permanent would be intolerably harmful for fiscal responsibility. And with the downturn already underway (these Q4 banking numbers are awful), there's no need to just raise the future structural deficit problems any further.

And good for Ben Bernanke for saying this so clearly.

To elaborate a bit, Bernanke's basically saying-without-quite-saying that any stimulus package that Congress passes shouldn't include making permanent the Bush tax cuts. He's not taking a stand on the tax cuts per se, but instead saying that whether or not it's a good idea is a separate issue from any short term stimulus package. They're two different issues - short term stimulus and long run structural - and they should be seen as such.

This stimulus package is by no means a done deal. But it won't make a bad problem worse and put the next President in a deeper hole. That's progress.