There is a difference between responsible budgeting and campaign promises, but Obama cannot survive a broken promise on preserving Bush’s tax cuts for the middle class. What I hope we’re seeing is a rare example of the Democrats staking out a position on the left so that they can make a compromise in the middle. They usually say what they want and then settle for something less.
It appears that the budgeters think we can’t afford to extend the Bush tax cuts for the middle class because they will cost $130 billion annually. It should be noted for those who are concerned about possible cuts in Social Security benefits, that the money has to come from somewhere and without that $130 billion/year it is more likely that the money will come out of entitlement spending. We just allocated $59 billion for Iraq and Afghanistan last night, so cutting back on those ventures could be a start, but still wouldn’t fully make up for the Bush tax cuts.
The administration has begun talking about a comprehensive retooling of the whole tax code next year, which means they might just extend the middle class tax cuts for one-year and then do a compete overhaul. As for the politics, raising taxes is always perilous, but nothing is worse than breaking a promise not to raise taxes. Obama promised to let Bush’s tax cuts sunset for people making over $200,000/year. But he promised to preserve those tax cuts for everyone else. He can retool the tax code, but he’ll pay a mighty price if he breaks that second promise.
I wish politicians would learn that it is unwise to make tax promises. You never know what economic conditions you are going to face. Right now, it would make sense to cut taxes for the middle class to create some stimulus, but Congress is talking about doing the opposite because of long-term deficit concerns.
The Republicans’ no-new-taxes-ever-for-any-reason philosophy makes it very hard to govern effectively . In reality (something unfamiliar to Republicans), taxes should go up and down depending on circumstances. Tinkering with tax-rates is one of the few ways the federal government can actually manage the economy in a crisis, but sometimes that requires raising taxes. Both parties should be able to recognize this, but only one actually acts like it understands it.
What actually should be done is some serious cutting of the Pentagon’s budget.
“We’re going to have to take a hard look at defense if we are going to be serious about deficit reduction,” said Erskine B. Bowles, a chief of staff to President Bill Clinton who is a co-chairman of the deficit commission.
That sounds good, but it isn’t happening any time soon.
Senator Daniel K. Inouye, Democrat of Hawaii and chairman of the Senate Appropriations Committee, said that he would be looking first at tax increases and changes in Social Security and Medicare to lower the deficit, and that there was “no way” Congress would make major cuts in the military while more than 100,000 troops were still at war. But once most of them return, “I’m pretty certain cuts are coming — in defense and the whole budget,” he said.
Yes, he did just tell us that we’re paying more taxes and getting our Social Security cut before the Pentagon gets a haircut. But you knew that.
And when are these troops coming home?