THE FIGHT OVER TAX CUTS THAT DIDN’T WORK…. By any sensible measure, the Bush tax cuts failed as an economic policy. When approved by Republicans, we were assured they would create robust economic growth — which never materialized. We were supposed to see millions of new jobs — which were never created. When passed nearly a decade ago, we were told the tax breaks would keep the budget in balance — which actually turned into massive deficits.
But one of the bigger debates in Washington in the coming months will be over whether to keep the tax policies in place, despite their obvious failure.
When Republicans passed the tax cuts, which overwhelmingly benefited the wealthy, they set the cuts to expire at the end of 2010. The point was to obscure the cuts’ cost, play a dangerous budget game, and make it so that the GOP wouldn’t have to pay for their own experiment.
While some Dems are wavering in the face of Republican demands, the Obama administration’s line is the right one.
Treasury Secretary Timothy F. Geithner pressed the case on Sunday for letting Bush-era tax cuts for the wealthiest Americans expire later this year.
In appearances on two television programs, Mr. Geithner said that letting tax cuts expire for those who make $250,000 a year or more would affect 2 percent to 3 percent of all Americans. He dismissed concerns that the move could push a teetering economy back into recession and argued that it would demonstrate America’s commitment to addressing its trillion-dollar budget deficit.
On “This Week” on ABC, he said, “We think that’s the responsible thing to do because we need to make sure we can show the world” that America is “willing as a country now to start to make some progress bringing down our long-term deficits.”
In other words, the line Obama took during the presidential campaign is the same line the administration supports now. If we want to talk about mandates, this is the tax policy the public endorsed.
The NYT noted over the weekend that the issue will “move to the top of the agenda when lawmakers return to Washington in September from their summer recess, just as the midterm campaign gets under way in earnest.”
Negotiations are expected to start in the Senate, where it is hardest for Democrats to advance legislation because of Republican filibusters. But some Democrats say a fallback plan would be to have their larger majority in the House approve a continuation of the lower rates just for the middle class right before the election, almost daring Republicans to oppose them.
In that case, Democrats say, Republicans who opposed the bill would be blocking a tax cut for more than 95 percent of Americans to defend tax cuts for a relatively few wealthy households.
Every time Republicans complain, the same answer should come to mind — it was their idea for the cuts to expire. Maybe if the GOP hadn’t left a $1.3 trillion deficit for Democrats to clean up, it’d be easier to talk about keeping more of the tax breaks Republicans love so much.