Wednesday, January 27, 2010

Some Democrats Call For Obama to Extend the Bush Tax Cuts...

Now this is a surprising and positive development – some Democrats are calling on the administration to extend the Bush tax cuts.

Some (mostly Blue Dog) Democrats want President Barack Obama to extend Bush’s across-the-board income tax rate cuts now scheduled to expire at the end of 2010, arguing that a tax increase could hinder economic recovery.

"I think there is a certain logic to leaving well-enough alone for now, given the fragility of the economic recovery," said Rep. Gerry Connolly (D., Va.). "It's a question of prudent judgment and timing."

Much of this is being driven by the fact that a number of Democratic strategists, looking toward midterm elections, see political disaster in heading into the November elections with looming tax increases on the horizon. Tax increases would almost certainly be a huge wedge issue for Republican opponents as Democrats try to defend their majorities in both Houses.

Rep. Harry Mitchell (D., Ariz.), a second-term congressman who held on to his seat in 2008 with 53% of the vote, wrote Obama last week asking him to extend the lower capital gains and dividend rate, and estate tax rates.

“Given the unique economic difficulties we face as a nation, this is the wrong time to raise these taxes. We need to retain these tax cuts that encourage investment that stimulates growth and job creation,” Mitchell wrote.

In the wake of the Scott Brown victory in MA., this certainly looks like a no-brainer, but then again, this administration has been pretty brainless on the economy, so far. With GOP victories in Virginia, new Jersey and Massachusetts, it looks like any kind of major healthcare reform is on hold, Cap and Trade is all but dead and allowing the Bush tax cuts to expire looks tenuous at best.


Paul Champagne said...

It's about time the Democrats start using some common sense.

JMK said...

I think they're simply going on record as supporting those tax cuts so they can look good back home. They're certainly aware that Obama proclaimed he was going to let the upper income bracket tax cuts expire in the SOTU address last night.

Yes, most of them are "Blue Dogs" (Conservative) Dems, but the Liberals have no more use for them than they do Conservative Republicans...and come November, anyone with a "D" after their name may have a tough time in many conservative districts.

I worry about that to the extent that I liked the rise of the Blue Dogs of that Party. Their loss means liberal gains being fortified within that Party even though it'll mean a lot less seats overall.

Unfortunately, the more conservative Democrats are the ones at the greatest risk because those districts probably will express their anger at Obama-Pelosi-Reid against them.

Still, it's good to see Dodd bail after looking at the polls and seeing Harry Reid trailing badly as well.

Wait'll those upper income tax cuts expire...the top 10% of income earners in this country already pay 71% of all income taxes! What those higher income tax rates will do is to incentivize savings (deferring more of their income in various tax deferred vehicles)...that ALWAYS reduces revenues, along with investment - a double whammy!

Government takes in LESS in revenues and the investment class withdraws form riskier investments that tend to forge new companies in new fields, with the potential to create more jobs.

I agree with Arthur Laffer, that 2010 may deliver a very slight upward bump as more of those people who can, take more of their income front-loaded, to take advantage of the last year of those low tax rates.

After that comes the "train wreck"...of 2011. Laffer believes the loss in GDP in 2011 will be even larger than the mammoth loss of 2008 to 2009...which well may be catastrophic for many local and state governments!

I really do think that economically, "the worst is yet to come"

I hope I'm wrong on that score, but I don't think I am...

Skunkfeathers said...

Call me a cynic, but I don't believe this is common sense on the part of blue dogs; I think it's a desire to get re-elected, and an attempt to put some distance between themselves and the Pelosi-Reid faction.

When it comes time to put up or shut up...that's when we'll really see where they stand. And I don't, at least now, believe they'll stand with common sense.

JMK said...

I think re-election IS their priority here SF, but most of them did run on pro-gun, anti-illegal immigration and low tax campaigns...some of them (embarassingly enough) ran to the Right of some "Moderate Republicans."

As an example, John McCain once again ridiculed those opposed to ILLEGAL immigration as "a Party of assholes." Now THAT'S a disgrace!

As far as what their call for letting the tax cuts stand...I think they'll fall on deaf ears. Obama said he was going to let the cuts for the top bracket expire at the end of this year.

Without convincing the Executive Branch to keep them in place, they'll expire....even if a majority of congress supports extending them, they won't have enough votes to override a veto.

Skunkfeathers said...

When's McCain up for re-election? He needs to be fired along with the Reids, Pelosis, et al.

JMK said...

"When's McCain up for re-election? He needs to be fired along with the Reids, Pelosis, et al." (SF) the GOOD, Charlie Crist is now trailing Marco Rubio by 12 pts in Florida's GOP Senate Primary!

If Conservatives start holding rockefeller-wing Republicans accountable, that'll be a very positive development for all of us.

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