Saturday, November 6, 2010

Obama Should Hold Steady on Bush Tax Cuts

This seems right to me:

"In his weekly address Saturday, Obama said that Democrats and Republicans not only agree on middle-class tax cuts but the need to rein in spending, and used this to try to drive his position on the tax cuts.

'At a time when we are going to ask folks across the board to make such difficult sacrifices, I don’t see how we can afford to borrow an additional $700 billion from other countries to make all the Bush tax cuts permanent, even for the wealthiest 2 percent of Americans,' the president said. 'We’d be digging ourselves into an even deeper fiscal hole and passing the burden on to our children.'"

This seems worth fighting for. The tax cuts are better targeted at the middle class than the rich, even in a down economy, because the middle class will spend the money, doing their part to at least keep growth from bottoming out entirely. Couples making more than $250,000 -- yes, that's rich -- are more likely to save the extra dough. That's a virtue, but it's not the virtue their country needs right now.

And as politics: If Republicans want to hold a tax cut for the middle class hostage to a tax cut for the rich, let 'em. I'm certain voters will be paying attention.


DOTDOT said...

Saving money is a virtue our country doesn't need right now? Is that what this is all about? The only people that can afford to save money are in the 250+ bracket, and I say power to 'em. These tax "cuts" are smoke and mirrors. This is not an entitlement proffered to 250k+ households. This is THEIR MONEY. The prospect of success is a driving force in our economy. Penalizing success, no matter how it plays among the entitled masses, contributes to a downward spiral that actually increases the numbers of the entitled masses.

Good God. Is this the issue that drives me into the arms of the Republicans?

Joel said...

DotDot: Hmmm. Maybe I didn't explain myself so well.

You're right. Saving is good. But we need people to be spending money right now. Money being spent makes increases demand. More demand means more jobs. I don't encourage people to spend on credit - lord no - but I do encourage people to use 'their own money' to spend.

That's more likely to happen with tax cuts for the middle class than for people with more money. Our economy will be helped more by middle class people spending than by rich people saving.

At the same time, our government is spending more than it's taking in. The Republicans will tell you that can be balanced by spending cuts alone, but ... well, your own mileage may vary on that. Suffice it to say, if we're going to balance the budget, I don't think that returning marginal tax rates to Clinton-era rates is unduly oppressive, and it hurts the day-to-day spending of couples making $250,000 much much less than couples making less than that.

You're right. It's their money. So is the first cent of tax collected. I'm not arguing to return to Eisenhower-era tax rates, just Clinton-era tax rates. Unless you're a libertarian who objects to taxes at all on principle, this doesn't seem like a big deal to me.