President Obama is taking a hard line on extending any of the Bush tax cuts. In order actually help stimulate the economy he proposes keeping them for one year for families making less than $250,000 per year. This helps the middle class get some relief and as most economists know with this income group, they will spend the extra money. This will help stimulate the economy and create more jobs.
In pushing for the $250,000 cap, the president is both helping those who most need it and helping the economy. Just as importantly, this limited extension of the tax cuts is just for one year as the president knows that government cannot lose this money permanently and do the job it needs to do for the people. Republicans want to permanently extend all of the Bush tax cuts, which will primarily benefit the wealthy who both don't need the money and will not spend it to stimulate the economy.
The president has pledged to veto any bill that extends the tax cuts any more than he has proposed. This is a hard line. Many Democrats want a $1 million cap. This should at best be a fallback position. Going back to the health care fight, the lesson learned was that if you come into the battle with anything less than your hard line position you will not even get your fallback. President Obama has learned this lesson. The Republicans don't want to compromise and will push to get everything they want. So any deal must start with the strongest possible position.
A $1 million cap may be acceptable but starting with that position already shows weakness and will likely end up with a result nowhere near this number. It is good to see the president sticking to his guns on this issue. We can all hope he continues to do so. That is leadership.
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