As for Obama's tax credits for low- to middle-income Americans, he plans to include some portion of them in his recovery package in January, but the question that his advisers are wrestling over is how to pay for it.

He will take office facing a $600 billion deficit in January that's expected to mushroom to nearly $1 trillion by year's end. And that's not counting his big spending proposals, which could push the total deficit to nearly $2 trillion (when falling tax revenues as a result of a deeper recession are factored in).

But it's an open question how much his refundable tax credits (which will be dispersed in Treasury checks to low- to middle-income people who owe no taxes) will help boost economic growth. We found out with the $168 billion stimulus tax-rebate package earlier this year that a lot of that money ended up being saved or spent to pay bills -- not for new spending.

What's missing from Obama's plan is a reduction in the federal personal and corporate income tax rates to encourage work, investment, savings and business expansion.

There are a lot of excellent ideas floating around. Economic strategist Cesar Conda, a highly regarded GOP adviser, proposes cutting middle-income tax rates from 25 percent to 15 percent, "which means most people would pay a flat 15 percent tax."

Economist J.D. Foster over at the Heritage Foundation proposes that we enact a zero capital-gains tax for investors in start-up companies that would accelerate new business formation and the hiring that follows.

Stimulus bills are based on the mistaken idea that Congress can pump new money into the economy and thus increase demand and eventually production. But "every dollar Congress 'injects' into the economy must first be taxed or borrowed out of the economy. No new spending power is created," says Heritage budget analyst Brian Riedl.

That's a lesson that the Obama Democrats are going to learn the hard way.