When reports emerged that the Obama administration was looking at additional spending measures to spur job creation in the wake of September’s employment report, Republicans immediately claimed that the administration was simply “preparing to push for more of the same flawed tax-and-spend policies,” while advocating yet another variation of its standard collection of tax cuts.

But Bruce Bartlett — former economic adviser to President Reagan and a Treasury Official under President Bush Sr. — hasn’t gone down that road and thinks that the Republican party “no longer has a credible economic policy.” He’s particularly put off that the party “continues to advocate tax cuts even though the recent Bush tax cuts led to only mediocre economic growth and huge deficits.”

“So much of what passes for conservatism today is just pure partisan opposition,” Bartlett has said. “What remains is a caricature — that there is no problem that more and bigger tax cuts won’t solve.” And when CNBC’s supply-side ideologue Larry Kudlow (a former Reagan official himself) asked Bartlett whether tax cuts would have been preferable to stimulus spending, Bartlett replied with this:

I don’t think tax cuts would have done any good whatsoever for the current economic problems that we have today. The problem is workers don’t have incomes to tax, because they’re unemployed, corporations don’t have profits to tax, because they’re losing money, and investors are sitting on huge capital losses, not capital gains…I think that today we have the same set of problems that we had in the 1930′s with a lack of demand, and we need to get monetary policy mobilized and that requires spending in the economy to increase and that’s what will get us out of the crisis.

Watch it:

Bartlett certainly befuddled Kudlow, who could only say “I don’t understand your analysis…What is it you’re saying here?”

But Bartlett is absolutely right — private spending has collapsed, consumers are saving more than ever, and government is the only entity available to fill the output gap, or the difference between what the U.S. is able to produce and what it’s able to sell. And with unemployment still creeping upward (and the underemployment rate at 17 percent), its becoming clearer that current spending still may not be filling that gap.

According to a new Economic Policy Institute-Hart Research poll, 71 percent of Americans support putting unemployed people back to work at government-funded public service jobs that help meet community needs (the number actually rises to 74 percent when the example of President Franklin Roosevelt’s Civilian Conservation Corps is invoked). With so many idle resources, it simply makes sense for them to be employed in a useful manner, a notion which Bartlett accepts, much to Kudlow’s chagrin.

Of course, even Kudlow doesn’t actually have any problem with government spending — as long as that spending is concentrated on Wall Street.

Earlier this year, the business lobby went into high gear to prevent the Obama administration’s plans for corporate tax reform, with the Business Roundtable promising to spend “whatever it takes” to ensure that the reforms never saw the light of day. That determination seems to have had some effect, as the Wall Street Journal reported today that administration “has shelved a plan to raise more than $200 billion in new taxes on multinational companies following a blitz of complaints from businesses.”

As the Journal noted, the particular reform in question — which would have limited the ability of corporations to defer taxation on profits that they earn overseas — drew the ire of the corporate world, and “companies ranging from Microsoft Corp. to General Electric Co. to International Business Machines Corp. put the topic at the top of their Washington agendas.”

Meanwhile, the CBO has predicted that this year’s “dramatic fall in corporate profits, combined with tax breaks designed to offset the burden of the economic recession, will drive corporate tax revenues down by more than 50 percent this year, to just $139 billion.” And, as Professor Joann Weiner pointed out, “even if corporations were not chalking up losses, the federal government would still face a shrinking tax base due to changes in the organizational structure of U.S. businesses”:

Since companies can essentially choose their form of taxation, largely through relatively permissive federal and state tax laws, it’s no wonder that the U.S. has one of the largest shares of income earned in non-corporate form…Profitable companies have an incentive to organize in a tax-favored form, while unprofitable companies have an incentive to remain in corporate form where they may one day offset future profits with today’s losses.

Currently, just 12 cents out of every federal dollar comes from corporate tax revenue. David Weidner, meanwhile, noted that “corporate income tax as a share of gross domestic product has fallen from 6% in 1951 to about 2% last year,” and that “the decline is mostly due to a shrinking corporate tax rate.”

Because of the administration’s move, not only does the U.S. lose $200 billion (over ten years) that could have gone towards remedying long-term budget deficits, but the drive to fix our nonsensical corporate tax code has stopped cold before it really got underway. Some administration aides did say that the tax deferral may be revisited “as part of a broader tax overhaul sometime next year,” but I’m worried that the business lobby will only feel emboldened by its ability to prevent reform and come out even stronger next time.