Tax “Cut” Recap

The debate over extending the Bush tax cuts could not be anymore muddled.

Here’s a synopsis:

  • Obama wants to extend all of the tax cuts, despite repeated campaign promises that he would end those for higher income earners.
  • The Left is mad because they hate the rich & Obama is caving.
  • Republicans are not satisfied with only a two-year extension.
  • Obama says Republicans are “holding the American people hostage.”
  • Obama only found 5 Democrats in the entire country to publicly sign on to his tax plan.
  • Politicians are out saying that these tax cuts will cost the government money–but Sheldon Richman has it right: “Tax cuts do not cost money; government programs do.”
  • Obama thinks he is cutting taxes, but he’s not.  He’s simply extending the current tax rates that were implemented by President Bush.
  • Barney Frank says the recession will be over in 2 years when this tax cut debate starts again; he plans to vote against the current proposal.
  • Obama is blaming his caving on Republicans—laughable, considering the Dems still have a supermajority in the Senate & a large majority in the House.
  • Obama said in his tax cut press conference that he has “kept every campaign promise…or at least tried to.”

Now that we have recapped, it is well worth our time to analyze Obama’s intentions with his compromise.  Why does Obama want to rehash this issue in two years, in the middle of his reelection campaign?  And why would he cave at all?  He certainly has the votes to do whatever he wants in both chambers of Congress.

One obvious answer is that he knows the tax cuts will provide a boost to the economy (something his $787,000,000,000 stimulus failed to do).  This will give him a much-needed accomplishment to tout on the campaign trail.  But Republicans argue quite compellingly that only extending the cuts for two years will not give businesses the certainty they need to expand because businesses operate on 5-10-25 year plans.

Perhaps Obama is genuinely trying to show some bipartisanship?  Or perhaps he is not as anti-capitalism as we have assumed?

I think the real motivation here is that Obama wants to look like a centrist in the 2012 campaign.  There is no question that Obama has lost the support of independents, the driving force behind any election & the force that put him in the White House.  Obamacare remains vastly unpopular with independents as does the Obama-imposed drilling ban.  To achieve reelection, Obama knows he has to get independents back on his side.

With that said, there is an important distinction to be made here—Obama is not moving to the center.  He is advancing the perception that he is moving to the center.

The ideal scenario for the country is that all of the tax cuts are extended immediately.  The ideal scenario for Democrats is that they can pass the tax cuts for those who make under $250,000 per year & raise them for everyone else now.  The ideal scenario for Republicans is that Obama’s proposal fails passage & the incoming cavalry in the House reinstate the cuts in January.  Otherwise, the Bush tax cuts will inevitably become the “Obama tax cuts.”

The majority of this article was written Wednesday night, but first thing Thursday morning, House Democrats officially voted to block Obama’s current tax proposal from coming to the floor for consideration.  Rep. Doggett (D-TX) said, “if it’s take it or leave it, we’ll leave it.”

It seems the Democratic Party is quickly becoming “the party of no,” a sign of things to come for 2011 and beyond.  This tax deal is their best chance to tap the brakes on an ensuing 2012 onslaught.  They are passing it up—for now.


Nicholas Horton is the Editor of The Arkansas Patriot & former Searcy City Council candidate.  In his spare time, he volunteers with various political campaigns & writes for The Liberty Bell.  Contact Nicholas at arkansaspatriot@gmail.com & follow him on Twitter.

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