The Bargaining On The Bush Tax Cuts

Ezra Klein:

It's worth saying, again and again, that the Bush tax cuts cannot pass without Democratic support. They expire before the House changes hands. And even if they didn't, Democrats still control the Senate and the White House. They have a much stronger negotiating position than the Republicans: They can decide what passes, and Republicans have never been willing to end the tax cuts for most Americans simply to preserve the tax cuts for the rich. But though they're the party in charge, Democrats aren't acting like it.

Here's what Ezra Klein won't say - President Obama does not need to bargain with anyone if he wants the Bush tax cuts to expire. He can simply veto any bill that extends them (and he does not need to announce this either.. He can just do it.) From that position, the President can negotiate new tax cuts for the middle class. It really is that simple.

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    Amen. (5.00 / 1) (#1)
    by oldpro on Tue Nov 16, 2010 at 11:23:44 AM EST

    Except for one fact (5.00 / 1) (#10)
    by pluege2 on Tue Nov 16, 2010 at 06:39:47 PM EST
    It really is that simple.

    obama is as phony as they come.

    Take it to the bank that the richest 2% will get exceptional tax breaks under obama's [cough] leadership.

    IMO there is little doubt that the (none / 0) (#2)
    by MO Blue on Tue Nov 16, 2010 at 11:37:33 AM EST
    tax cuts for the rich will be extended. The only question remaining is how long they will extend them.

    well, anything less than eternity (5.00 / 2) (#3)
    by observed on Tue Nov 16, 2010 at 11:54:26 AM EST
    is a huge victory for Obama.

    Using the same measuring stick, (5.00 / 1) (#4)
    by MO Blue on Tue Nov 16, 2010 at 11:59:18 AM EST
    the November elections were a huge victory for Obama. I expect to hear confirmation of that meme soon from one of the cheerleaders.

    A VICTORY FOR OBAMA??? (none / 0) (#9)
    by norris morris on Tue Nov 16, 2010 at 06:00:02 PM EST
    In Your Dreams.

    The Democrats behave like  they're not in control, and the much needed revenue and  fairness of wealth distribution and taxation are Obama's to fix.

    Obama as the great compromiser hints of backing down  from confrontation and will probably extend the tax cuts.

    At the moment if Obama continues his slide we will be looking at  extended GOP control of congress and the White House in 2012.

    So the tax cuts will certainly be permanent.  This is a victory?  In what universe?


    If they get extended... (none / 0) (#11)
    by Romberry on Wed Nov 17, 2010 at 03:21:20 AM EST
    ...the essentially get extended as far as the eye can see. A two year extension brings them into the 2012 campaign as an issue, and that's not an issue Dems either have the spine to take or or frankly even really seem to believe in. If they believed in it, they could not be this inept. The only way to be this inept is to be so purposefully.

    Huh. (none / 0) (#5)
    by Abdul Abulbul Amir on Tue Nov 16, 2010 at 01:26:41 PM EST

    Raising tax rates in a deep business down turn, yikes!  Herbert Hoover tried that.  We all know how well that turned out.  BHO may not be willing to go down in history as Hoover the second.

    Herbert Hoover (5.00 / 1) (#7)
    by CST on Tue Nov 16, 2010 at 02:05:17 PM EST
    did a lot of things.  He raised taxes on a whole lot of people - including corporate taxes, an import levy (which caused other countries to tax our exports), a check tax which affected everyone, and he more than doubled the tax rate on high income earners from 25% to 63%.

    All of which is a vastly different beast from raising taxes on high income earners from 35% to 39.6%.

    Nice strawman though.


    So your point (none / 0) (#8)
    by Abdul Abulbul Amir on Tue Nov 16, 2010 at 05:25:08 PM EST

    is that if Hoover had only damaged the economy with smaller tax increases it would not have been as bad.  I agree with you.  

    However, less bad does not mean good.


    From US News and World Report: (none / 0) (#6)
    by Harry Saxon on Tue Nov 16, 2010 at 01:43:58 PM EST

    So with today's economy teetering at the edge of a second recession, why is President Obama so determined to let the Bush tax cuts expire on top earners at the end of the year, effectively raising their taxes? And why do Republicans seem willing to go along with the idea? Here are five reasons:

    The proposed tax hikes would affect relatively few people. Obama wants to extend the Bush tax cuts for most workers, which means that for individuals earning less than $200,000 and couples earning less than $250,000, nothing would change. That accounts for nearly 97 percent of all taxpayers. For the other 3 percent, Obama would let tax cuts expire, which means the top tax bracket would rise from 35 percent to 39.5 percent, and the one below that would rise from 33 percent to 36 percent. Dividend and estate taxes would also rise, but those mostly affect the wealthy. So for all the hype about raising taxes, it would only happen for a small minority of Americans.

    The bite on top earners won't be that painful. Some families will feel squeezed if the tax hikes go through, like those whose incomes are just over the threshold--especially if they live in expensive coastal cities and have kids in college. But most high-income taxpayers would fork over a relatively small portion of their incomes in additional taxes. A two-earner family with two kids at home and $500,000 in annual income, for example, would pay about $13,000 more in taxes under Obama's plan. (Use this tax calculator to run your own before-and-after scenarios.) That's an extra 2.6 percent of their income, not counting financial-planning changes that could lower the family's tax burden.

    That extra tax isn't a trivial amount. But since the wealthy save a much higher portion of their income, it's not likely to affect the family's standard of living that much, or translate into deep cuts in overall consumer spending that would threaten an economic recovery. The wealthy obviously spend much more per person than everybody else, but compared with the huge middle class, there aren't that many rich shoppers. Spending by middle- and low-income earners is what drives the economy. By leaving their taxes alone, the Obama proposals would at least ring-fence the incomes of those who do most of the nation's spending.

    Click Me

    From Ezra Klein at www.washingtonpost(dot)com, a graphic about the differences between the Bush tax cuts and the Obama tax cuts(subject to change, of course):

    Click Me