Tax Policy and Spine

Last week, President Obama’s senior advisor David Axelrod signaled that the Obama administration might agree to extend all of President Bush’s 2001 and 2003 tax cuts to ensure that taxes will not go up for the middle class. The tax cuts passed during the Bush era were passed using a procedure called “reconciliation.” That gives them a shelf life of ten years – after which taxes automatically revert to their pre-reconciliation levels. Axelrod’s implicit argument was that Senate Republicans will not allow a vote to extend tax cuts for the middle class unless the bill also extended tax cuts for high levels of income – that is, to income in excess of $250,000.00 in one year. Given that reality, the administration might be forced to give in before the cuts expire on December 31, 2010.

First, let me say that all of the Bush era tax cuts should be allowed to expire. They have always been bad policy. We couldn’t afford them when they were passed, and we sure as hell can’t afford them now. I have other objections. They were skewed heavily toward the rich. Their stimulus value to the economy is lower than almost every type of federal spending. But I won’t rely on these arguments. Any sane person can see that our nation cannot afford additional tax cuts. The “temporary” Bush cuts should be allowed expire, as the law always envisioned. Congress should take no action at all.

That said, if President Obama and the Congressional leaders want to preserve the tax cuts for the middle class, there is a pretty easy way to do it. The Democrats control the Senate and the House until January 2011. They can bring up any bill they want – including a bill that extends only those tax cuts that went to people making less than $250,000.00. They can do this and dare Senate Republicans to filibuster the bill. They can force them to filibuster in person, around the clock, while the Democrats point out that under their bill, everyone’s taxes, including taxes on the rich, are being cut. High income earners will get the same break on their first $250,000.00 as everyone else. They just won’t get a break on their additional income.

Would the Republicans deny everyone a tax cut unless we agree to tax cuts on income over $250,000.00 a year? I doubt it. They’d have to be suicidal.

I’m not a political genius, but this is a game of chicken in which Democrats have a decisive advantage. To not see this is political mal-practice. And does Obama really think it’s a good idea to sell out his base on this big an issue?

Apparently he does – either that or he was lying to us all along.

That’s my problem with Obama. He has retreated on so many important issues – not the least of which are civil liberties and executive power – that I’m left with two options. Either Obama is spineless, and lacks the courage of his expressed convictions, or he has been lying to us all along.

Thank God Nancy Peolsi has a spine.

Joe H.