The stimulus package passed in February 2009 was a 2 year deal so those were slated to expire at the end of 2010. The tax cuts in that package along with the Bush tax cuts were extended through the end of 2012.
McConnell also said that contrary to all evidence government spending (in the stimulus) made no difference. But let's take a look at the evidence. When the stimulus spending was in full gear the economy was growing faster, along with faster job creation. With the tax cuts still in place but with the spending from the stimulus drying up the economy again slowed as did job creation. The facts supported by the data paint the opposite picture of what McConnell contends. It was the government spending that made most of the difference. The tax cuts simply caused the deficit to explode.
As any economist will tell you, it is aggregate demand that leads to job creation. When the private sector does not generate enough aggregate demand then jobs are not created and may be lost. And that is where government steps in, creating increased aggregate demand. Not only does that spending increase aggregate demand, but there is a multiplier effect that provides a secondary boost to aggregate demand. Tax cuts generally go to things like paying down debt and new investments with very little increase in aggregate demand. In this case the multiplier effect is negative, meaning it partially offsets what little increase was created by the tax cuts. It is also why increasing the tax rate for the top 2% will decrease the deficit while having only a very, very small drag on the economy then by using some of that money for spending it will leave an overall increase in aggregate demand while also actually slowing the budget deficit. This is win-win while what McConnell proposes is lose-lose. Now which would you rather have?
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