Confused About Tax Promises
I'm confused about the state of Barack Obama's tax promises. Last week we heard this strong, admirable declaration that campaign promises would be upheld - a rejection of the "center-right" media meme that tax increases on the super-wealthy hurt the economy (anyone remember how the economy boomed after Bill Clinton raised taxes on the wealthy?):
Aide: Middle-Class Tax Cut a Priority Emanuel Hints That Increase for Upper Incomes Also Won't Be PostponedBy Michael A. Fletcher
Washington Post Staff Writer
Monday, November 10, 2008President-elect Barack Obama plans to push ahead with a middle-class tax cut soon after taking office, his choice for White House chief of staff said yesterday. Rahm Emanuel also hinted that Obama would not postpone a tax increase for families earning more than $250,000 a year despite the deepening economic gloom. (emphasis added)
Now this week we get this:
Obama may delay tax-cut rollback for wealthyBy Randall Mikkelsen
WASHINGTON (Reuters) - President-elect Barack Obama may consider delaying a campaign promise - to roll back tax cuts on high-income Americans - as part of his economic recovery strategy, two aides said on Sunday. David Axelrod, the Obama campaign strategist who was chosen to be a senior White House adviser, was asked if the tax cuts could be allowed to expire on schedule after tax year 2010 rather than being rolled back by legislation earlier. "Those considerations will be made," he said on "Fox News Sunday." Bill Daley, an adviser to Obama and commerce secretary under former President Bill Clinton, said on NBC's "Meet the Press" that the 2010 scenario "looks more likely than not." (emphasis added)
I'm confused. Beyond the very clear - and admirable - mandate Obama created for himself in terms of raising taxes on the rich, history suggests such a policy is not at odds with righting an economy.
While I'm not a huge fan of Bill Clinton on a lot of issues, I think he was courageous on the issue of income taxes - and that his courage proved to be good policy, as evidenced by the economy's performance right after the tax increase, and as evidenced by the fact that the tax increases gave his government much-needed new revenue (revenue that Obama now needs for priorities like energy investment, health care and economic stimulus/infrastructure spending). Clinton proved that the right's rhetoric about tax increases on the super-wealthy hurting the economy is a bunch of B.S. - and he proved it only 15 years ago.
I hope the example Clinton set on the tax issue is the Obama administration's path forward.
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There is no one correct tax rate policy in the same sense that there is no one correct monetary rate policy. These policy tools must be put in the context of transient economic conditions.
If our economy was experiencing healthy growth, then increasing the top rate would be the right call. And the national debt is a troubling problem that has to be dealt with in the long term if not earlier. All extenuating circumstances aside, we should pursue a baseline fiscal policy of progressive taxation and deficit reduction.
But during a crisis characterized by the dramatic capitulation of consumers and investors alike, the only fiscal policy that makes any sense in the short term is tax cuts and deficit spending. I know the vaccine looks a lot like the virus, but that's just the way it is. The only arguments for raising taxes on any income bracket in these economic conditions are purely ideological in nature.
If there ever was an urgent need for borrow-and-spend fiscal policy, this is it. It's all those other times in the past where it was inappropriate. The deficit hawks and the redistributionists are absolutely right. Just not right now.
Tax cuts and spending increases would make some sense if we had a high tax rate. Right now we do NOT have a high tax rate on those most able to afford it, which shows our unwillingness to come out of the past into the future, and when coupled with our national debt of more than $11 TRILLION makes confidence in the US economy VERY low, which reduces the chance that we will be able to come out of it.
In other words, at this time, we NEED to increase the upper tax rates!
I think it's perhaps a matter of magnitude, and a comparison of how much actual gain is made when raising those upper bracket rates, with how much political leverage loss is incurred if the gains are insufficient to make a noticeable difference in the short term.
If raising those rates now would show no significant short term effect, and instating middle class tax cuts would help at a populist level, then it's probably a smart move to work the upper bracket tax increases in a year later when their effect would hopefully be more dramatic in a positive sense, when compared to other measures that have been taken, and more accurate estimates of positive long term effects can be offered.
"In other words, at this time, we NEED to increase the upper tax rates!"
Exactly. It's not going to hurt the economy in the slightest if those making over $250K pay more taxes. Their marginal propensity to consume is low, and a reduction in their after-tax income will have little effect on their consumption spending, and may even be beneficial if it restrains their excessive mal-investment and counterproductive investment (like investing in overseas production facilities that compete with American producers, and put American workers out of jobs.)
We need universal healthcare and it is going to cause an earthquake in the economy and the only way we are going to recover is to use money from the RICH....
If he is going to forgo that money, you can bet your sweet bibby that we will not see a tax cut for the botton 95%...... We need the money from the rich for the 2.5 million jobs, the infrastructure recovery...
He is going to let them expire I think that is the politically smart thing to do. He can say he never raised taxes on anyone. I wish folks would realize that Obama is not trying to punish anyone be it traitors like Joe republicans or rich people. His goal is to FIX the economy. I wish people would stop seeing Obama as their hero coming in to slay dragons because thats not who he is. He is a pragmatist a practical outcome results kind of person.
Carol
I agree.
Very frustrating. Could it be that letting them expire in 2010 is a lot easier then drafting new legislation and putting in a political fight that could be geared towards Universal Health Care? Just asking...
How about Obama, instead of repealing the BUSH taxcuts, he repeals the REAGAN tax cuts and puts us back on the pattern that we were on for the entire economic boom of the 40s, 50s, 60s, and 70s!!
I am in agreement as to repeal of Reagan cuts, ad of course Bush's, but you might be the first writer ever to call the 1970's a part of an economic boom. Whatever boomishness was present at the decade's beginning was certainly gone by the oil embargo and the doubling of oil price-- which happened because we did not honor an promise made to the Saudi king re our support of Israel' s 1974 war.
The oil embargoes certainly existed, and they certainly contributed to the recession caused by the US fighting Vietnam on credit, but look at 1980, and you will find that although numbers were not increasing as fast as they had been in 1970, we were improving, and were in fact better than in 1976. The fact of the matter is that yes, there had been slowdowns throughout that time frame, but overall, until raygun, there hadn't been a period that never recovered!
You know there is always more to the story than just one element. You can't solely repeal tax cuts and hope that'll fix everything. Issues are complex. Not one isolated factor.
No, you're right, you've ALSO got to go back to the REST of the New Deal programs that were gutted by raygun!
It is beginning to set in. The Obamaphiles, 'Netroots, MSM and everyone else who voted for Mr. Obama are beginning to see that they have gotten hosed over. Repeal the "for-the-rich-only" Bush tax cuts? Forget it, not in these economic times. Quick withdrawal from Iraq? Nope. Instead Obama's gonna keep Robt. Gates as SecDef, and abide by the new agreement to keep US forces engaged in Iraq until 2011. Those are just for starters. As a conservative, this is change I can believe in. I gues we'll all have to wait a while longer for the sea levels to drop and the planet to cool too.
A lot of speculation and extrapolation from a very few attributed statements by people attached to the campaign and/or the new president's staff is evidently exciting fuel for speculation, but mean very little necessarily. I'll wait for Obama to talk about Obama's plans and priorities before I sign on to this 'roll back 'trope, which is probably wishful thinking on conservatives' parts.
Bah, merely sour grape projections from you.
To me this is about Obama selecting people that qualify in two ways: 1) Obama is selecting people who have the basic knowledge and experience to implement the changes he wants to make with the least amount of false-starts and high drama, and 2) those people chosen for these positions must be open enough to take directives from the Obama the BOSS, and not let former mindsets/policy positions/administration goals interfere with a new vision.
If you seriously think this will pan out in a manner conducive to conservative ideology merely because of the selected players and their track records, I suspect you will be very surprised and not just a little unhappy with the final outcome.
Your analysis is about 1mm deep....
http://www.inthesetimes.com/article/discuss/4041/#55291
[Obama is] either being, or about to be, run like any other asset by the same fiends who've been jacking us into this Waste Land, and sticking us with the bill, for centuries now." knowbuddhau said that.
http://www.consortiumnews.com/2008/110708c.html
Ray McGovern has seen presidents be propagandized with "the particular brand of "shock and awe" that can be induced by ostensibly sexy intelligence to color reactions of briefees, including presidents. [He has] seen it happen."
Our mythos shapes the political-economic cosmos in which we enact the theater of life. Acting within the same mythos that intended the Newtonian cosmos that grew the social Darwinian psychos who now confuse the Commons with fiefs won’t get us any nearer the Promised Land.
My fervent hope, that Obama will cast away the vipers dripping "bipartisan" poison in his ears, remains unfulfilled.
McCain’s slip is so painfully apt: “My fellow prisoners....”
Cryptic, like a pronouncement from an oracle, but what I think I understand I appreciate having opportunity to read...
I hope Obama goes after those offshore accounts of all those tax evaders.
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