When President Obama came into office, he faced a steep recession and an indebted public. This posed a delicate challenge for tax cut advocates. If you let indebted families and businesses keep more tax money in a balance-sheet recession, they'll use the money to pay off debt rather than buy new things to get the economy rolling.

So the White House tried to trick Americans into spending. Rather than write rebate checks we might forward to credit card companies, the administration designed the $100 billion Making Work Pay tax credit so that it would withhold less money from our paychecks. This would have the effect of making us feel richer. Indeed, we were. Families got up to $800 a year from the government with MWP. The hope was that folks would be so happily surprised by the cash that we would reward our happiness with a jaunt to the mall.



As the New York Times' Michael Cooper cleverly puts it, the administration succeeded in tricking Americans ... not into thinking that we were richer, but into thinking that there was no tax cut. According to a recent Times poll, fewer than 10 percent of Americans remember the $100 billion tax rebate. Behavioral economics went from nudging to barely touching.

