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Monday, November 22, 2010

"Call Their Bluff, Mr. President"

David Cay Johnston urges Obama to call Republicans' bluff on tax cuts for the wealthy (there's quite a bit more in the original):

Call Their Bluff, Mr. President, by David Cay Johnston, Tax.com: Will President Obama cave on yet another of his campaign promises, this time by giving in to Republican demands to extend all of the temporary Bush tax cuts? ...

Republican congressional leaders have said they will let all of the Bush tax cuts expire unless the president bows to their demand that the top 3 percent of Americans be included in any tax cut extension. Obama should call their bluff.

I don't think the Republicans are so stupid that they would let all the Bush tax cuts expire if they cannot continue tax cuts for ... the affluent... But let's assume that the Republican leaders on Capitol Hill are that dumb...

This is a fight that Obama can win, and win handily, if he has the backbone to stand up for the vast majority and sound tax policies, and to take on the antitax billionaires who are piling up huge gains while unemployment, debt, and fear stalk our land.

A sudden reduction in take-home pay in January would seriously damage our fragile economy, not to mention provoke widespread anger and fear. The economic news would be so awful that a president half as eloquent as Obama could easily focus attention on the Republican all-or-nothing tax policies as the cause of this universal pain.

And like an extra cherry atop a sundae, the Republicans gave Obama a gift when they said they have no interest in renewing his $400 Making Work Pay tax credit. That statement alone lets the president paint Republicans as tax hikers who want to hit people who work, while shielding billionaires.

Moreover, since polls show that hardly anyone knows about this Obama tax cut, which the administration calls the largest middle-class tax cut in history, promoting it would be like getting a second free cherry from the GOP.

Can Obama do it? Back in September he spoke in firm language... Now Obama seems ready to give in to the hostage takers.

Poll after poll shows less than 40 percent of Americans support extending the Bush tax cuts for all, and that support is highly concentrated among Republicans. ...

By calling the Republicans' bluff, Obama can get us talking about taxes and the future of America, instead of protecting what the richest among us already have.

The president could speak about Wall Street handing out record bonuses this year -- an estimated $144 billion to a relative handful of people... How about a presidential lecture on entitlements focused on Lloyd Blankfein, whose firm's bad bets taxpayers paid off at 100 cents on the dollar? ...

The president could change the terms of our economic debate by talking about how much the vast majority props up many of those at the very top, starting with Blankfein. He could tell people about the trillion dollars a year of tax favors for corporations and the rich...

Obama should explain how soak-the-middle-class and sink-the-poor policies damage economic growth. Obama could also talk about how America has stopped being number one in many other categories because of tax policies that are hollowing out our nation's economy and destroying the commonwealth on which private wealth building relies. ...

By winning on tax policy, the president could then renew his push for the greatest single economic growth policy around: universal healthcare financed with taxes, which could free up 5 percentage points of GDP for productive purposes. ...

In our zeal to reduce taxes, we have slashed food safety inspections... Obama could tell Americans that the ideology of tax cuts as the only economic policy means that America's rate of food-borne illnesses is now nearly 8 times that of Britain and more than 21 times that of France.

The risk of dam collapses grows with each storm, and sooner or later many, maybe thousands, will die. Roads need repair. So do bridges and water pipes and public school buildings.

If Republicans actually force a universal tax increase, the president could then focus attention on the effort by billionaire tax-favored Wall Streeters ... who profit from tax tricks...

Calling the GOP's bluff would let the president raise the issue of whether we want to cut Social Security and Medicare benefits... Obama could read to people from 1950s newspaper stories about old ladies eating cat food. The president could stop in at food banks where families who worked hard and played by the rules were crushed by the machinations of Wall Streeters.

He could talk about how a single working person making the median wage of just over $26,000 paid nearly a third larger share of her income in federal taxes than the top 400 taxpayers, who each made almost $1 million a day in 2007.

And Obama could tell taxpayers about all those people with billion-dollar annual incomes who legally pay no current income taxes, while the rest of us get dinged before we get paid. ...

The question on the table for Obama is this: Will you do the job you asked people to elect you to do? ... When it comes to taxes, will Barack Obama prove himself a profile in courage or a coward who lacks the courage of his convictions?

I think Obama should propose using the revenue gained from allowing the tax cuts for the wealthy to expire to fund a temporary extension of the Obama tax cut. (this is the "Make Work Pay" tax credit referenced above).

Though many people are unaware of it, the Obama tax cut that was part of the stimulus package is set to expire in December, and when it does taxes for the middle and lower classes will go up by $60 billion. For comparison, the tax cuts for the wealthy would be around $68 billion over the same time period, so the numbers are very close. Why not use the $68 billion to fund a temporary extension of the tax cuts for people who actually need the money rather than those who don't?

One more question, though I think I know the answer. Why are Republicans so intent on extending the Bush tax cut for the wealthy permanently, yet they oppose a temporary tax cut for the lower and middle classes of roughly the same amount?

    Posted by on Monday, November 22, 2010 at 11:07 AM in Economics, Income Distribution, Politics, Taxes | Permalink  Comments (47)


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