The NYTimes notes that most Americans wrongly believe their federal taxes have gone up. In fact, taxes have been cut for 95% of the country. One reason why Democrats have failed to capitalize on this fact - apart from our general inability to hammer away at politically popular talking points the way Republicans do - is that the tax cut was meant to go mostly unnoticed. Why? Because it would be more effective that way. That's right: faced with the choice of instituting a tax cut that would be obvious and celebrated, or hidden and more effective, President Obama chose against political expedience and took the route that had the better chance of helping the economy.
Faced with evidence that people were more likely to save than spend the tax rebate checks they received during the Bush administration, the Obama administration decided to take a different tack: it arranged for less tax money to be withheld from people’s paychecks.
They reasoned that people would be more likely to spend a small, recurring extra bit of money that they might not even notice, and that the quicker the money was spent, the faster it would cycle through the economy.
Economists are still measuring how stimulative the tax cut was. But the hard-to-notice part has succeeded wildly. In a recent interview, President Obama said that structuring the tax cuts so that a little more money showed up regularly in people’s paychecks “was the right thing to do economically, but politically it meant that nobody knew that they were getting a tax cut.”