As a post this morning confirmed, Mitt Romney is all about tax cuts and tax havens and Swiss bank accounts for the super wealthy. And not surprisingly, Romney wants to make the Bush tax cuts for the wealthiest Americans permanent. Today, Barack Obama threw down the gauntlet and said that he wants the Bush tax cuts extended for the middle class and average Americans - the bottom 98% of the population - NOW. As for the wealthy, he has said that that decision should be left for the voters in November. If the majority of voters agree with Romney and want permanent tax cuts for the super wealthy - even though their tax rates is the lowest it has been in 60 some years - then they can elect Romney. If they don't agree with Romney, then they can elect Obama. To me this proposal is perfect. After all, it's the Republicans who believe that the rights of minorities should be subject to the whims and prejudices of the majority as has been the case on same sex marriage ballot issues around the country. So let's allow the majority to decide whether the super wealthy deserve further tax cuts. But there's a catch: in every poll, the majority of Americans want the super wealthy to pay more. The Republicans need to be forced to show their hand. Are they for the super wealthy or the middle class and average Americans. Here are highlights from the Washington Post on Obama's challenge to the GOP:
The Obama administration has been facing a difficult fiscal choice: Does it anger its base and muddle its message by working with Republicans to put off the fiscal cliff — and extend all the Bush tax cuts — until 2013? Or does it stand and fight on fiscal policy, even if that means increasing the chance that markets begin to panic in the most crucial months for the president’s reelection?
With today’s announcement, the administration has made its preference clear: Stand and fight, and hope the economy — and President Obama’s reelection hopes — survive the fallout.
Technically, we won’t hit the fiscal cliff — which is Washington’s preferred term for the near-simultaneous expiration of the Bush tax cuts, the payroll tax cut and the expanded unemployment benefits; the beginning of the sequester’s spending cuts; and the predicted point at which we hit the debt ceiling — until after the election. But the effects could be felt long before.
In 2011, the recovery seemed to be proceeding smoothly. In February, the economy added 220,00 jobs. In March, it added 246,000 jobs. In April, it added 251,000 jobs. But as the summer approached, and as markets began to panic over the Republican threat to breach the debt ceiling, the economy slowed. Between May and August, we never added more than 100,000 jobs a month. And then, in September, the month after the debt ceiling was resolved, we added more than 200,000 jobs.
Payrolls weren’t the only evidence that the debt ceiling fight damaged the economy. “High-frequency data on consumer confidence from the research company Gallup, based on surveys of 500 Americans daily, provide a good picture of the debt-ceiling debate’s impact,” observed economists Betsey Stevenson and Justin Wolfers in a column for Bloomberg View. “Confidence began falling right around May 11, when [House Speaker John] Boehner first announced he would not support increasing the debt limit. It went into freefall as the political stalemate worsened through July.
But the fiscal cliff has the potential to be much worse than the 2011 debt ceiling fight. After all, the cliff begins with $607 billion in scheduled tax increases and spending cuts in 2013 alone and then we hit the debt ceiling. The Congressional Budget Office projects that if Congress does nothing, then even before taking the debt ceiling into account, the U.S. economy will be thrown back into recession.
In theory, the Obama administration could head this off by agreeing with Republicans to extend current policy into 2013 . . . Some economists, however, think the economy can survive the uncertainty — at least through to the election. ”It’s July now, and early November is soon,” says Wolfers, who is currently a visiting professor at Princeton. “While I can see the fiscal cliff having an effect on financial markets and on confidence fairly quickly, it’s hard to see that effect having much of an effect on the real economy prior to the election.
Others question whether simply putting off the hard decisions would actually comfort the markets. “Few believe there will be any kind of progress on this or any other major fiscal issue prior to the election, [so] standing his ground through the election should do no economic harm,” says Mark Zandi, chief economist at Moody’s.
The administration’s view is that they are trying to defuse the economic uncertainty by simply moving forward on the policies that everyone supports. After all, they say, both Republicans and Democrats agree that we should extend the middle-class tax cuts, so why not do it? . . . The White House’s hope is that that [the GOP's] answer won’t be very convincing to voters. The GOP’s bet is that it also won’t be very comforting to the markets.
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