In 2003, President Bush and the Republican-majority Congress passed sweeping tax cuts for the top brackets of wage earners. Those cuts were originally scheduled to expire after 2010, which Democrats do not plan on reversing. But now Congressional Republicans are calling on President Obama and Congress to act to continue the tax cuts, a call that Obama has hit back against. Here are the cases for and against the cuts.
- GOP Warns of 'Ticking Tax Bomb' Politico's Ben White reports, "Republicans on the House and Ways and Means Committee will begin a push this week highlighting what they say would be a 'job-killing tax hike' if the Bush administration tax cuts are allowed to expire at the end of the year. From talking points to be released by Ways and Means Ranking Member Dave Camp (R-Mich):
After running up record levels of spending and debt – while refusing to pass a budget – Democrats in Washington are now plotting the largest tax increase in history for American families and small businesses: a tax increase of over $200 billion next year alone and $3.8 trillion over the next ten years. … Following the loss of over 3 million jobs since President Obama took office, and despite fears of a double-dip recession and a national unemployment rate stuck at almost 10%, the Democrats’ massive tax hike will kick in on January 1, 2011 – hitting millions of small businesses and their employees.
- Obama: We Need Unemployment Relief, Not Tax Breaks for Rich In a speech today:
For a long time, there's been a tradition -- under both Democratic and Republican Presidents -- to offer relief to the unemployed. That was certainly the case under my predecessor, when Republican senators voted several times to extend emergency unemployment benefits. But right now, these benefits -- benefits that are often the person's sole source of income while they're looking for work -- are in jeopardy.
And I have to say, after years of championing policies that turned a record surplus into a massive deficit, the same people who didn't have any problem spending hundreds of billions of dollars on tax breaks for the wealthiest Americans are now saying we shouldn't offer relief to middle-class Americans like Jim or Leslie or Denise, who really need help.
- Why Unemployment Benefits Better for the Deficit The Wall Street Journal's Alan Blinder writes, "not all dollars are created equal. To take a very relevant example, consider three different ways to add a dollar to the budget deficit: increase unemployment benefits by $1, give a $1 tax cut to someone earning $50,000 a year, or give a $1 tax cut to someone earning $5 million a year. While the immediate impacts on the budget are identical, the near-term spending impacts are not. The unemployed worker struggling to make ends meet will likely spend the entire dollar right away. The $50,000 earner probably will spend the lion's share of it, saving just a bit—that's what most Americans do. But the $5,000,000 earner probably will save most of the new-found dollar."
- Recall, Tax Expiry Wasn't Democrats' Idea The Washington Independent's Annie Lowrey reality checks, "look through Democrats’ budget proposals. Peruse the House’s record for tax bills. By no means are Democrats proposing hiking income tax rates. Taxes are due to rise because the trillion-dollar cuts supported by the Bush administration and originated in a Republican-controlled House in 2001 and 2003 had expiry dates — expiry dates Republicans wrote in. Taxes will rise if Democrats take no action, but they are already planning to keep some, if not all, of the tax cuts for a few years, until the recovery takes stronger hold."
- The Twisted Dem Logic National Review's Veronique de Rugy writes, "When supporters of stimulus-by-spending explain the New Deal’s failure to end the Depression by pointing out that it was 'modestly expansionary' because of the tax increases, isn’t that an argument for opposing the expiration of the Bush tax cuts and asking the president to give up on his planned tax increases?"
- Bush's Cuts Were 'Fiscal Nightmare' The Washington Post's Ezra Klein writes, "as for the policy itself, it's a fiscal nightmare: No one who professes concern for short-term deficits can argue for the extension of these deficit-financed tax cuts and retain credibility on debt issues. This is a litmus test. It's not Democrats who are trying to pass the largest tax hike of all time, but Republicans who are calling for the largest increase in the deficit in memory."