Bush Tax Cuts or Obama Stimulus: Which Will Help the U.S. Economy?

(Bush tax cut, Obama stimulus plan story update for White House economic team hiring of Austin Goolsbee)

NEW YORK (TheStreet) -- The judgment on President Obama's Wednesday night speech about sparking the U.S. economy was that the Democrats came out swinging -- but for investors, the political rhetoric is less important that which way the economy and their portfolios will swing based on the specific policy ideas enacted by the government.

The biggest showdown is between extension of the Bush era tax cuts for those individuals making more than $250,000 a year -- which President Obama continued to use as a personal punching bag as part of the Democrats' swinging -- and the Obama administration plan to give the economy a kick by investing hugely in infrastructure projects and providing tax incentives for job creation.

Democrats argue the Bush-era tax cuts only serve to increase the wealth divide in the country at the heart of the economic inequalities that have built up in the system. Many fiscal conservatives view the Bush era tax cuts, particularly at a time of weak consumer spending, as a much-needed boost to the personal pocket book of the U.S. citizen, and in fact a means keeping the economic recovery on track.

In the case of the Bush-era tax cuts for those making more than $250,000, it's trickle-down economics from the Republicans, and Main Street rhetoric about bridging the income gap from the Democrats, led by President Obama. Obama, never one to shy away from rhetorical flourishes about the American dream, invoked both his single mom and Michelle Obama's handicapped father as examples of the hard work and individual responsibility that is at the heart of individual success in the U.S.

Of course, when it comes to investment portfolios, faith in the American vision of an individual picking themselves up by the proverbial bootstraps and engineering their own success is not what the current debate is really about. In fact, it's about how to engineer, at the level of the federal government, the raising up of the bootstraps of the unstable American economy.

Even the talk about the Bush-era tax cuts is not as simple as the typical rhetoric suggests. As noted in an analysis of the income gap in The New Yorker magazine by financial columnist James Surowiecki, the income gap in the U.S. is large and getting larger, and that's a real problem, but the $250,000 cut-off as the indicator of the gap is a flawed number. The real income gap, and the real tax outliers that are reaping the benefits of uneven income distribution, exist at a level of income well above the $250,000 over which the Democrats have drawn a line in the sand.