July 9, 2012
Obama/Democrats and Romney/Republicans Stake Out Tax Cliff Turf
Wall Street Journal editorial: Democrats and the Tax Cliff:
President Obama has staked his re-election on the promise to raise taxes on anyone making more than $200,000 a year, but it's going to be fascinating to see if he can hold other Democrats through Election Day. June marked the third month in a row of lousy job creation, and the economy is growing slowly even as the January 2013 tax cliff grows closer by the day.
Already, as many as six Democratic Senators are hedging their bets as the economy looks worse. That list includes Joe Manchin of West Virginia, Jon Tester of Montana, Claire McCaskill of Missouri, Bill Nelson of Florida, Ben Nelson of Nebraska and Jim Webb of Virginia. The first four are running for re-election this year, while the last two are leaving the Senate. They haven't all declared outright support for postponing the tax hikes, but they have expressed a willingness to negotiate a deal with Republicans that would avoid raising taxes on anyone next year. ...
If Congress doesn't act to change the law, tax rates on income, capital gains, dividends and estates are all scheduled to rise in January. (See the nearby table.) The best policy would make the Bush-era tax rates permanent pending a major tax reform. But at least a one- or two-year extension of the Bush rates would avoid a nasty hit in the near term to a still-vulnerable economy. ...
The only jobs plan that has any chance of passing the House and Senate before the election is a bill to cancel all tax increases in 2013. With White House support, this would fly through the House and Senate and eliminate one major antigrowth headwind, as even some Keynesian economists and the Congressional Budget Office are telling the President.
The dilemma for the White House is that calling off next year's tax increase would undercut Mr. Obama's re-election theme of redistributing income. His liberal base has become so obsessed with the politics of envy that it is demanding higher taxes no matter the economic or political costs.
The question for Senate Democrats is whether they want to jeopardize their personal futures, and their majority, by jumping off the same tax cliff. With the House poised to pass an extension of the tax rates for at least one year, Senate Democrats have to decide if they want to vote before Election Day to wallop an already weak economy with a giant tax increase.
- ABC News, Obama Picks Tax-Cut Fight With Republicans
- Bloomberg, Obama Calls for Bush Tax Cut Extension for Middle Class
- Len Burman (Syracuse), Obama Backed into Corner on Tax Cuts Again
- New York Times, Obama Pushes Tax Cut Extension That Excludes Wealthiest
- James Pethokoukis, Is Obama’s New Promise to Lower Middle-Class Tax Rates Credible?
- Wall Street Journal, Obama to Push Extension of Middle-Class Tax Cuts
- Washington Post, Obama Pushes Extension of Middle-Class Tax Cuts, Says Expiration Would Hurt Economy
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