Obama's 'New Economic Plan': Too Little, Too Late?

WASHINGTON, Sept. 5, 2010— -- Back from Camp David today, President Obama is preparing to hit the campaign trail Monday unveiling his "new economic plan," with additional tax cuts, but Republicans are already dubbing it too little, too late.

The plan is scheduled to be formally unveiled Wednesday during a speech in Cleveland, and Democrats must hope that it will be enough to jump-start the country's beleaguered economy if they are to be able to retain control of Congress.

The new plan implies a sort of political dare, challenging Republicans not to pass popular tax cuts before the November elections.

It may seem counterintuitive for the president to intend for Republicans to block his proposed tax credits, but many pundits believe that such an outcome would benefit the Democrats' congressional interests.

"It allows him to define the Republicans as the party of no," says Karen Finley, a Democratic consultant. "If Democrats seize on that opportunity, I think that's a great opportunity for Democrats."

This sort of sly maneuver is crucial for the Democrats at this stage of the game because the most recent polls show that Republicans are gaining ground -- even in traditionally Democratic areas, likes California and Wisconsin -- and becoming increasingly confident that they will take back control of the House.

"What you're seeing right now is this real groundswell of anger against the Democrats and against their agenda," says Kevin Madden, a Republican consultant. "Folks are looking for the alternative and the alternative happens to be the Republicans."

And Republicans say they don't believe the president's new proposals will help his party's cause. On "Fox News Sunday," Republican Sen. John McCain accused Obama of having no plan at all.

"We always like to see deathbed conversations," McCain said. "But the fact is, if we had done this kind of thing nearly a couple years ago, we'd be in a lot better shape. Look, they're just flailing around."

The Obama administration can't help but acknowledge the pervasive anti-establishment sentiment and the lack of appetite for another large stimulus. So, the White House is calling the president's new plan a "targeted initiative."

In this sort of delicate political atmosphere, rhetoric is key; as are which initiatives the president chooses to target.

The administration confirmed today that the President will call for both a permanent extension and an expansion of the research and development tax credit, which allows businesses to write off development costs.

It's a tax break that will cost the government $100 billion over 10 years. So, while the concept is popular in Congress, there's disagreement over how to pay for it. And Congressional leaders are particularly wary of supporting any offsetting tax increases or spending cuts, when an election looms on the horizon.

So the president will propose that other corporate tax loopholes be closed to pay for the new tax break.

Obama may also endorse a payroll tax "holiday" for new hires. This would mean an extension of the law passed in March that temporarily frees companies that hire unemployed workers from paying Social Security taxes on those workers.

But the question still remains: Can the president's new economic initiatives really make a difference in the country's political atmosphere or economic problems with less than 60 days to the mid-term elections?

"What you hope," says Diane Swonk, chief economist at Mesirow Financial, "is you can throw enough small things at the economy and shoot enough small bullets, that you'll be able to win this war against what is a very fragile recovery."