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As has been well documented, the Bush-era tax breaks, which were set to expire two years ago, are now scheduled to disappear on Dec. 31. Heightening the drama, the expiration of the lower tax rates coincide with massive automatic spending cuts -- part of last year's debt-ceiling deal -- creating the conditions for a huge mess.
We have some sense of what congressional Republicans want, namely making all Bush-era tax breaks permanent, but what does President Obama have in mind? Today, the White House plan comes into focus.
With a torpid job market and a fragile economy threatening his re-election chances, President Obama is changing the subject to tax fairness, calling for a one-year extension of the Bush-era tax cuts for people making less than $250,000. [...]
[B]y calling for an extension for just a year, Mr. Obama hopes to make Republicans look obstructionist and unreasonable. Trying to bounce back from another weak jobs report on Friday, he also hopes to deepen the contrast with his challenger, Mitt Romney. On Friday, the president said Mr. Romney would "give $5 trillion of new tax cuts on top of the Bush tax cuts, most of them going to the wealthiest Americans."
House Republicans are preparing a vote to make all of the lower rates permanent -- a proposal the White House swears up and down the president will not tolerate, and which the Senate probably can't pass anyway.
In the process, the larger fight is taking shape, with Obama looking out for tax breaks for the middle class, while GOP policymakers champion breaks for the wealthiest of the wealthy. It's also certain to become a key element of the 2012 presidential campaign -- Mitt Romney has reintroduced the "job creators" euphemism -- though most polling suggests Obama's approach enjoys far more public support.
Indeed, it's worth remembering that Obama's approach -- lower rates for those below $250,000, Clinton-era rates on income above $250,000 -- sounds familiar because it is familiar: he presented this same policy as a candidate in 2008. That position was eventually compromised away in the face of GOP intransigence, but now it's back.
This time, Obama's aides insist he'll be far less inclined to cave, especially since most of the negotiations are likely to occur after the election.
But that raises a related question: if it's nearly certain that this fight will be pushed off until the lame-duck session, why is the president staking out this position now? The answer, I suspect, is that Obama believes his proposal will be the politically popular one. It puts Republicans, from Romney to Capitol Hill, in the position of effectively arguing, "Middle-class tax cuts are nice, but we're going to the wall to fight for the top 2%."
That's what Obama wants them to do, especially before the election. If Republicans balk at a proposed middle-class tax cut, the president believes that helps him by reinforcing the worst suspicions about GOP priorities.
Given the larger context -- Romney's offshore investments, his out-of-touch elitism, his comically tone-deaf donors, his fat-cat supporters trying to buy him the keys to the White House -- it's a fight the president's team feels good about. He'll speak for the middle class; Romney can speak for the elite.
* Postscript: Keep in mind that this is very much another game of chicken. Obama's line is, "Give me the middle-class tax breaks." The GOP line is, "Give us the tax breaks for the wealthy or everyone's taxes go up." It's a test to see who'll blink first, and if no one blinks, everyone goes back to paying Clinton-era tax breaks early next year, and the deficit starts shrinking very quickly.
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Maybe the rich elite should move to China where they sent the "jobs" they "created".
No deposit, no return.
Well, one big Democratic donor just renounced her citizenship - Denise Rich. You know the big donor to Clinton who got her tax cheat/fraud husband pardoned on the last day of Clinton's Presidency? She probably won't go to China, BUT she will save a bunch on taxes. Seems it doesn't matter if you are a Republican or Democrat when you are part of the rich elite - you still don't want to pay your fair share. Oh....but I am sure that's not the "real" reason she renounced her citizenship.
I guess Clinton ticked her off by not giving her all those things she knew she could buy from the republicans.
"This time, Obama's aides insist he'll be far less inclined to cave,"
The reality is , the House will never pass a bill with tax cut extensions for everyone except the top bracket. Obama will either have to let all cuts expire or extend the tax cuts for all income levels.
Either the GOP caves, and things go the way they should (tax cuts for the people suffering, proper tax scales for those rolling in it), or they don't, and they get their actual interests underlined AND the deficit goes down on Obama's watch.
Meep meep, motherf$%&ers...
Democrats should not blink. If necessary, they can let the Bush tax rates expire, and let us go back to the Clinton tax rates for all. Then Democrats could propose tax reform that is fair and makes sense for the economy.
If Republicans truly believe in having no tax increases, they would be willing to accept the "half loaf" Obama is offering. Then, they'd try to find a way to get the rest separately. The fact that they're perfectly happy to have everyone's taxes go up if the 1% isn't included should tell everyone just exactly WHO they're really fighting for.
If Obama is re-elected, the bigger question will be this: Will he stick to his guns this time, or will he cave--like he did in 2010? If he stands firm, and taxes go up for the "99%," it will be the Republicans' fault, and Dems should go to great lengths to point this out.
This will only make a difference if Senate Democrats actually bring a bill to the floor extending the tax cuts on income less than 250K.
Yeah, and they've been a bit weak in that area.
Don't forget the FICA tax break will expire this year too - back up to 6.2% from 4.2%. I am losing track of all these "temporary" tax breaks. Why not go back to those tax rebates - one lumpsum check. Most people would spend that to help the economy rather than the 5 or 10 bucks they would get back in their paycheck each week.
Actually, from economists who have studied this, a lump-sum payment like Bush did is better for getting the president political benefit, but the smaller continuous amount is much more likely to be spent and stimulate the economy. A lump sum most often gets saved or used to pay off debt, since you know there isn't any more coming, but a little bigger paycheck becomes a routine part of household budgeting.
The tax breaks, all of them, are unsustainable. The Clinton tax rates were just about right. Just let them all expire. The rich can eat the cheaper cuts of meat. The rest of us will survive.
Ron- have to totally agree with you. If the tax breaks are allowed to expire everyone (except the bottom 47% who currently aren't paying taxes) will see their taxes rise. Then, turn around and propose dropping the tax on those who make $250K or less. The Republicans will then be in the position of arguing against a tax decrease for 90% of all Americans. Republicans have already given away the one hostage they held two years ago, the extension of unemployment benefits, and have nothing to offer in return now. This is a good time to make this a campaign issue.
Sounds like republicans have about 4 months to get something passed, this is the only kind of thing Obama will sign, so republicans have to figure out if they want people to vote for them.
Time for another chart that shows the tax "costs" by income bracket/tax bracket. How much will it cost the earner who makes $251K-1M? $1.1M-3M? $5M-10M? $10.1 - 100M?
How about another chart that shows who HAS added the 4.4 million jobs since 1/10-6/12 - who really are the job creators? Let's put out the facts - how many of those billionaires or millionaires who have gone to both party's fundraisers have created jobs and how many of them? And at what average wage/salary?
Of those 18 tax cuts to small business that the President has made, how many employees have been hired by them as a result? Is the salary of that small business owner more than $250K - if so, how much more? Are Schumer and Pelosi right that the tax cuts should go up to $1M or is the President?
What's the average wage/salary of the 4.4 million jobs that have been created in the U.S.? What's the wage range by count? Knowledge is power to those who have the power to use it.
if it's nearly certain that this fight will be pushed off until the lame-duck session, why is the president staking out this position now? The answer, I suspect, is that Obama believes his proposal will be the politically popular one.
That says it all....just for votes. Just like his decision on illegal immigrant students and maybe his sudden support (in the last year of his term) for gay marriage. In my opinion all for votes and not really purely for their merits. Predictable in the world of politics though.
Yes, best not to bring those issues up at all, and better yet, do absolutely nothing about them, say nothing, until after the elections. /sarcasm off/
Oh, of course Donna. That they all happened a few months before the election is purely coincidental. /sarcasm off/
Right skippy! Which is why it is so important NOT to do anything! Do nothing! Say nothing! Because it can be seen as political!
I mean it is much more unselfish to do nothing at all, forget all the people that could be helped because, lord forbid, it could be seen as political!
/sarcasm off/
Donna, of course it is always a good thing to help people. But why didn't he come out for gay marriage in 2009 for example? Or the immigration amnesty? Both groups would have loved it just as much 3 years ago. This post by Steve even surmises it is a "politically popular one". The italics in my first post is directly from Steve's article/post - one of Rachels own. All of the examples I brought up are great ideas that the President brought up, but seriously, except for the renewal of the taxes, why didn't he talk about these issues the first 3 years of his term? Did he "forget all the people that could be helped" until now in 2012 - or was that much more unselfish to do nothing at all ....for 3 years?
NO sarcasm this time.
Skip- Obama came out in strong support of the Dream Act several years ago. There was absolutely no way at that time that there would be immigration amnesty (nor is there now). He has stopped enforcing deportation for being brown, and ended Homeland Security's enforcement partnership with organizations like Arizona's Maricopa County Sheriffs Department.
Obama also made steady, if slow, progression on LGBT rights since 2009. Since being elected, DADT has been repealed, the DOMA is on the rocks and being challenged in court and he has stated his support for LGBT equality.
If this sounds like a political ploy, then everything that a President does is political, right from the first day in office. If you have a vision, and you try to implement it against the opposition of the Republican party, of course it's going to be political (at least in Republican minds).
Because maybe Obama has been busy doing OTHER things, perhaps?
And the GOP would have hated it then, called it a political move then, just as you and they are doing now, perhaps?
And using Steve's quote to somehow prove your agenda means absolutely nothing.
And you are forgetting all the people he HAS helped in his three years in office.
But people like you don't want to see that.
Donna,
I never said he hasn't helped anyone or that his ideas are not good ones - go on, check my posts - nothing negative (except for the fact he waited on endorsing gay marriage and immigrant amnesty for 3 years). All I was pointing out was (as Steve was too) the timing of his annoucements. If you do not believe that the President and his staff (and campaign) do not play politics like everyone else, then you are kidding yourself. It is was it is....politics. Personally I think the President is doing the best he can under the circumstances and his work experience.
Skip, your posts are really nothing but unwarranted criticisms of Obama. Timing or no: Obama DID help the gay population as well as immigrants. Now you can try to be critical of that(and using Steve's words in an attempt at proving your point is wrong) but really there is nothing to criticize.
You think Obama is doing "the best he can?" You sure have a funny way of showing it.
Your opinion Donna. I criticize all sides when they deserve it. I tend to vote 3rd party most of the time, but will vote Democrat and Republican at the state and local level based on the person running. If you really believe I have "unwarranted" criticism of the President, then based on your posts you never seem to find even the slightest fault in his governing - sort of an "unwarranted" optimism in everything he does. Understandable since he is your party's leader. I do not have such blind faith in a party or individual, that's all. I will criticize anyone including the ones I support/vote for if they deserve it. It is not meant to be mean or hateful.
And I do stand by my statement that he is doing the best that he can based on what he inherited and also, his experience. I still cannot beleive that the Democratic party really honestly thought that a junior Senator with less that 4 years experience was the very best candidate - for one of the most important positions in the world - out of all the honorable, experienced Senators, Representatives and Governors that the party has. Based on his lack of experience I think he is doing a hell of a job. He is a very fast learner...however I do not think the office of the President should be a post you learn "on the job".
Skip- The Presidency is always a post you "learn on the job", no matter who is elected. Think about it.
I like "expire", you want my vote? Let the tax cuts expire for everyone, they were never paid for and they are still on the books.. Of course, double tax the @!$%# out of the wealthy is fine by me, this is the country where we have television shows about over-eating (diabetic man Vs. food) and "million dollar rooms". Time to pay for the party ladies and (not so) gentlemen! Oops, am I being a class warrior?
1% has far more to loose on the tax cuts. It's a win-win. I will have to cut back on something if the $25. per month gets cut, but I will survive as I am now. I would prefer a much better paying job than a tax break.
Watching Mitt practice his "power words" for the up coming debates is really funny. JOB CREATORS. Ba..wahhhh!
Let them expire, since I get a refund every year anyway, (I overpay through the year to make sure I never owe, and no deductions) I can live with a smaller refund.
What I could want more is:
I make less than 40K a year, and my tax rate is around 21%. Let me have Mitts' tax rate for a while, that puts about $2,500 back in my pocket, and spent in the economy.
We don't spend, the rich will realise they can't get richer. The 1% will only spend what break they get in a foreign country, anyhow.
If the Republicans pass the bill to make the tax cuts permanent without paying for them, then Obama can turn that around on the Republicans and Tea Party. Passing the bill would increase the deficit which is what the TP has been screaming about since the midterm elections. This is Obama's chance to show the Republicans and TP are frauds. If Republicans decide to pay for the cuts, then what they cut will become a campaign issue. Either way Obama wins.
Wow. You guys need to get out of the echo chamber once in a while. Republicans will campaign on tax cuts for everyone, while Obama pursues class warfare. Republicans have the better argument.
Hmmm..so just when will this new agenda start?
Except the Republicans aren't pushing tax cuts for everyone, only the super wealthy.
It's not a new agenda, it's the reason Obama collapsed on tax hikes last time. I predict he will do so again.
I thought Republicans wanted to solve our deficit problem? So they want to reduce revenue even more than the current deficit inducing levels?
And then whats next? Don't raise the debt ceiling? Default on the debt wecan no longer pay?
The GOP are masters of spin but they have no fiscal sense.
Guess what? The majority of the electorate is okay with a little bit of "class warfare." You know why? Because what you tone-deaf ninnies call "class warfare" most Americans are smart enough to realize is actually "sound fiscal and economic policy."
You can spin like a salad shooter, but most people aren't buying your bull. That's why Romney is going to spend a billion dollars to get 46% of the votes. We get it, in a way that the brainwashed GOP goose-steppers never will. The Democrats have all of the ideas, the GOP has nothing but ideology. A false, ineffective, broken, inhumane ideology, at that.
Oh I see so if we drown the government by no longer funding it and its military,FEMA,Infrastructure construction and maintainence, food stamps and so forth..
Note that SSI is not a tax by the way.
Well they have tried before like when Reagan took us from half a billion in debt to over two trillion and when GHW took us from 2.9 to 4.2 and GW from 6 to over 11 (more if you add in the cost of his wars).
Reagan cut taxes then as the debt skyrocketed he raised them several times yet he is a saint?
If you folks are really all that concerned about the deficit, we can let all the Bush rates revert to Clinton rates. Then you'll only have to figure out where to get another trillion dollars to cover the remainder.
Sure, Shooter. Everyone believes what you post.
Shooter- If I'm one of those people in the bottom 47%, I'm really not going to see any real tax advantage. So let them expire. Then, call for a tax decrease for those making under $250k. Surely you can't be against that? You do realize that the Obama budget is actually lower than Bush's? As for that other trillion, the Republicans made the easy with the sequester, which is designed to save $1 trillion by cutting the military budget by $500 billion (as well as social spending) over the next 10 years.
By the way, are you still banned on Glenn Greenwald's blog?
I knew it, I'm a class warrior. Thanks Shooter, I wasn't sure but now we all know!
You mean Bush's last budget with all the financial crisis spending? Not a surprise.
No, that's a trillion dollars worth of debt every year even with new tax revenue from Clinton rates.
And lastly no, Greenwald let me back in after a while, but you'll be happy to know I've been banned at several other blogs since then.
Bush's budget for his last year included financial crisis spending. Obama's budget included crisis spending, a stimulus and a car industry bailout. He also included the cost of the wars in Iraq and Afghanistan to be included in the budget, something that Bush was very careful not to do. When a budget is for $1.2 trillion, that doesn't mean that it adds a trillion to the deficit each year. That $1.2 trillion is the total budget. You're conveniently ignoring that the government actually takes in 100's of billions every year. Like saying it costs you $20k to live every year, without factoring in your income as an offset.
An extended excerpt from A Distant Mirror by Barbara Tuchman:
"...On May 28, 1358, in the village of St. Leu near Senlis on the Oise, a group of peasants held an indignation meeting in the cemetery after vespers. They blamed the nobles for their miseries and for the capture of the King, “which troubled all minds.” What had the knights and squires done to liberate him? What were they good for except to oppress poor peasants? “They shamed and despoiled the realm, and it would be a good thing to destroy them all.” Listeners cried, “They say true! They say true! Shame on him who holds back!”
"Without further council and no arms but the staves and knives that some carried, a group of about 100 rushed in fierce assault upon the nearest manor, broke in, killed the knight, his wife, and children, and burned the place down. Then, according to Froissart, whose tales of the Jacquerie would have been obtained from nobles and clergy, “they went to a strong castle, tied the knight to a stake while his wife and daughter were raped by many, one after another before his eyes; then they killed the wife who was pregnant and afterward the daughter and all the children and lastly the knight and burned and destroyed the castle.” Other reports say that four knights and five squires were killed on that night.
"Instantly the outbreak spread, gathering adherents each day to join with torches and
burning brushwood in the assault upon castles and manors. They came with scythes,
pitchforks, hatchets, and any kind of implement that could be made a weapon. Soon
thousands—ultimately, it was said, 100,000—were engaged in attacks covering the Oise
valley, the He de France, and closer regions of Picardy and Champagne, and raging
“throughout the seigneurie of Coucy, where there were great outrages.” Before it was
over more than “100” castles and manors in the territories of Coucy and Valois and the
dioceses of Laon, Soissons, and Senlis were sacked and burned and more than “60” in the districts of Beauvais and Amiens..."
Now that is class warfare. If those on the right keep it up, that or even much worse is exactly what they will get.
Two thumbs up for quoting Tuchman.
Ok so if Romney is the poster child for the top one percent, and these are the people
who are creating jobs. Forget his tax returns for a moment. I want to know how many
people he has employed over the past 3 1/2 years, company's he has invested in that are creating jobs now. What type of wages and benefits do they receive? Show me how the trickle down effect works.
And campaign staffers and the like don't count. I know we're approaching the "forever campaign" stage of eternally running for election/re-election, but that's not a permanent job, still.
Go to sea dogs web stie mate..
The democrats are just making sure we follow the bible by making certain we will always have the poor with us.