Tax Cuts should be Easy
With time ticking down till the end of the year when the Bush tax cuts will expire, extending tax cuts should be easy – for both sides of the aisle. The debate of extending the tax breaks, and to whom, has been a huge topic for the lame duck congress. With little compromise being seen in the Capitol, as usual, this tax policy debate will continue.
It is clear from polling that a majority of people and congressmen want the tax cuts renewed. However, it becomes less clear, and the debate intensifies, based on what income levels should continue to enjoy this tax break. The President and some Democrats feel that families making over $250,00 should not continue to receive tax breaks, while the most progressive of the Democrats want the tax cuts to expire. Republicans state that it would help the economy most to continue tax cuts to everyone regardless of income level. Rumors fly that some Democrats, including the President, are backing down to Republican wishes, or a compromise of making the new cut-off line at the $500,000 – $1m income level. However, nothing substantive looks ready to move on the House or Senate floor.
Personally, I believe that these tax cuts should be renewed for everyone to have the most effect on economic recovery. Also, historically it has been shown that by lowering taxes and simultaneously cutting federal expenditures, the economy can grow and deficits can be decreased. Through polling, most Americans agree with this notion. At this moment in time when we have a deficit ballooning, and the economy showing little signs of picking up, it is imperative to at least renew some of the taxes. But all disagreements on policy aside, it would be good politically for both sides of the aisle.
It would be politically beneficial for both parties to at least pass some extension of the cuts. After the “shalacking” the Democrats took a few short weeks ago, Obama should do a Clinton and at least attempt to work with the Republicans, compromise, and move slightly to the right politically. Especially after the failure of his stimulus packages, the President needs to be seen trying something else to right the economic ship. And again, since the country has moved right politically, it might not hurt for him to try a tax cut extension. Although this may anger Obama’s more liberal supporters, I believe the majority of the country would see this as beneficial.
In the campaign, Obama touted himself as a uniter that could find compromise and work with the other side. We haven’t seen that yet, and people are disappointed. This is the perfect situation to finally show people that he can compromise. And of course, Democrats need to stop the bleeding, and do something to get on the good side of the American people after being on the wrong side of health care reform.
For Republicans, it is equally, if not more beneficial to at least pass some extension. By at least getting a partial renewal, and hopefully for Republicans the $1m ceiling compromise, much greater than the $250,000 Obama and Dems are currently offering, they receive a political victory heading toward the end of the year. This fits well with the Republican political agenda, and gives a slight head start on fulfilling their “Pledge to America”. This at least gets the ball rolling. Then next year, when the Republicans take majority, and Boehner presumably takes the Speaker role, they can push for further tax cuts along with the weekly spending cuts Boehner has already said to be planning. Not only would this be beneficial politically with the Republican base and the many Independents that voted for them in November, but I believe this would also be a good recipe for addressing the national debt and hopefully grow the economy. Of course, a still-Democrat controlled Senate stands in the way, along with Obama’s veto pen. However, from a purely political standpoint, Americans do not want to see Obama and the Democrats blocking tax cuts and spending cuts that could help our economy and decrease debt, especially after the clear failures of deficit spending stimulus that added billions to the national debt.
The bottom line is that for the health of our country and economy, the Bush tax cuts need to be extended, at least for the majority of folks, and at least for right now. Therefore, its best for both parties, if not by extending all the tax cuts, to at least find a compromise and find one fast. December is almost upon us, and everyone, except the most progressive, will be extremely disappointed to see the calendar year change without some extension, along with another all time low in the congressional approval rating.