The speculation is that President Obama will give in to Republican demands to extend tax cuts to the wealthiest Americans. Although extending the cuts for everyone making $200,000 or less ($250,000 for couples) can pass the House, Republicans in the Senate are adamant that it's their way or no way. Without legislative action, the cuts approved in 2001 and 2003 will expire at the end of the year. Obama and other Democrats are desperate to get the tax cuts for the middle class before the end of the year, and tax planners and employers, as well as taxpayers, want some certainty about 2011 taxes. So Obama is apparently willing to give in rather than see all of the tax cuts expire.
Maybe Democrats should rethink their strategy. They don't want to be blamed in attack ads and on Fox News of raising taxes on the middle class, but there's another way of spinning that outcome. Obama might say something like this: "Rather than allow millionaires and billionaires to enjoy lower taxes and see the greatest shift in American wealth to continue, we have chosen to begin closing the federal budget deficit. Allowing the tax cuts to expire will reduce the federal deficit by $4 trillion — that's TRILLION! — and will go a long way toward the goal of our deficit commission of reducing the long-term federal debt. Allowing the tax cuts to expire for working people will cause some personal pain, and it might temporarily stagnate our economic recovery, but in the long term it will benefit the economy by reducing federal borrowing and will benefit taxpayers by preventing debt from overwhelming our budget options and pushing up interest rates.
"We would have preferred to extend tax cuts for the working people of America, but Republicans refused to allow this without simultaneously extending tax cuts to those who need it and deserve it least. Prevented from passing our preferred option, our second best option is to allow all tax cuts to expire and let the added revenue help solve our deficit problem."
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2 comments:
Elementary. Yep. Let the gubmnt take the money via taxes and pay their already spent handouts. Less money available for the rich people to put us back to work. People w/ no to little money do not have the means to employee. People who have money are sitting on it because there is no LEADERSHIP inside the beltway showing a positive direction for ROI on those idle funds. People are scared they have to save it because it will be collected(forced).
Where do you people get the idea that forced money collection grows the employment sectors? It simply will not.
To Anonymous: Have the strength of your convictions and identify yourself. Secondly, I did not argue that increasing taxation would increase employment. I agree that higher taxes will probably have a negative impact on employment. However, the burgeoning deficit will have a great impact, long term, on employment and every other economic measure. Current deficit projections are "unsustainable." The $4 trillion that continuing all tax cuts will cost us could at least trim the federal deficit that threatens all of us, rich, middling and poor.
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