The tax cuts had relatively little (almost nothing) to do with the economic contraction that we are in right now.
Our current economic expansion was largely caused by the Community Reinvestment Act of 1977 followed by relaxation of regulatory rules by the Bush administration in addition to efforts to try to stimulate home buying, even at high risks.
This increased home purchasing was a catalyst in the sustained stimulation of our economy but it game at the expense of unsustainable debt loads
and inflated home prices.
Anyone that knows economics knows that economies operate on a cycle of expansion and contraction. It is impossible to prevent expansion or contraction because the inherent network properties of an economic system.
Therefore, every economic expansion or "boom" period must be succeeded by an economic retraction or "bust" period.
Obama is now trying to limit the swinging of the economic pendulum on it's natural course back to the contraction side, which will create more negative implications than allowing the economy to run its natural course.
Not the least of these concerns is the eventual devaluation of the dollar.
The larger problem which Obama (and Bush) have failed to address is that instead of replacing our current system they are attempting at all costs to perpetuate the existence of our unsustainable model. Our current economic model is based on continued expansion,
and infinite expansion in a finite system is impossible.
Also as far as our current economic system is concerned, it is a fact that the Government spends money less efficiently than the private market
Source;
http://www.econ.berkeley.edu/~cromer/RomerDraft307.pdf
And rather than reading all of it "This study found that the tax multiplier is 3, meaning that each dollar rise in taxes will reduce private spending by $3."