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Monday, July 9, 2012

White House: "Pass Tax Cuts That We Agree On": Why This Debate is about Politics and not Economics



What President Obama and the White House are trying to set up is a political battle to not only fight against House Republicans but Mitt Romney as well. And to pit sides, Democrats are in favor of the Middle Class and want to extend their Tax Cuts, so they don't get a Middle Class Tax Hike. Republicans are interested in not just extending the current Tax Cuts for the rich but going even farther then that. Even though House Leader Eric Cantor has already announced that he's going to hold a vote later this month, on extending the Tax Cuts for everyone. The White House already knows that the Republican House will not go along with extending the Tax Cuts just for the Middle Class. And want to use that to say, look we want to extend the Middle Class Tax Cuts but the House is blocking us, so they can cut taxes for the wealthy instead and aren't interested in the Tax Cuts for the Middle Class. Thats the argument that the White House is going to make and they may get help from the Democratic Senate to do what they want, as far as holding a vote on that. Senate Republicans will block that of course and Republicans will counter that President Obama supports the largest Tax Hike in American History, because he won't extend the Tax Cuts for everyone.

There's already a compromise being worked on in the Senate led by Senator Chuck Schumer, Member of the Finance Committee. That would extend the Tax Cuts for everyone up to 1M$ and use the new revenue to pay down the deficit. Even House Minority Leader Nancy Pelosi one of the best friends if not best friend for Progressive Democrats, at least in Leadership. Has said that this is a good idea, so already President Obama is picking up opposition on this from two of the. Highest Ranking Democrats in Congress, including the House Democratic Leader. What the President is doing now might be smart politics at least with the Democratic Base, even though there are still some Progressive Democrats. That want all of the Tax Cuts to expire on everyone including the Middle Class, we've seen this movie before and it hasn't helped the President much in the past but we'll see if it works in the next few months. But it would be better for the economy if Democrats and Republicans resolve this issue now and not wait.

The best politics for the President right now, is to do anything that benefits the economy. And getting behind the Schumer plan and extending the Tax Cuts for everyone up to 1M$, would make the President look reasonable. And when Republicans say no to that, assuming they do, then he can say look I had my position, they said no and I got behind a Bi Partisan plan and they still said no. Its only Republicans that are blocking us from getting this done.