Monday, February 13, 2012
Barack Obama has a potentially strong hand on the tax issue, but is misplaying it. An enormous opportunity was missed when he ignored the issue of tax reform in his State of the Union address on Jan. 24. But it’s not too late for him to get control of an issue that is certain to be widely discussed during the presidential campaign. If Obama fails to act, Democrats in Congress should seize it for themselves.
For Republicans, every problem in society is caused by government doing too much; never too little. And most of the time, it can be reduced to excessive taxation. Therefore, tax cuts are often the solution to any problem. And if tax cuts are good, bigger tax cuts are better. Thus, every Republican running for president has a big tax cut at the core of his economic policy, with much of the debate revolving around who has the biggest one.
In the real world, however, federal taxes are at their lowest level in several generations and there is no evidence that taxes are a major factor, let alone the key factor, restraining economic growth at this time. ...
[E]ven if Democrats lose the Senate as well as the White House they will easily be able to filibuster extension of the Bush tax cuts. Therefore, Obama actually holds the winning hand; only he can ensure that taxes don’t rise next year for most taxpayers by negotiating a compromise acceptable to Senate Democrats. Whether he has the skill to play it may determine whether he is re-elected or not.