After watching Republicans trying to completely sabotage Congress’s ability to effectively deal with the challenges that have affected the country …. it appears both parties have put their bets all in on this election. President Obama has effectively played the Republicans to a draw as they tried to extract a pound of flesh from him politically regarding the deficit; it seems very clear that both parties have a handshake deal that whoever wins this Presidential election is going to be able to move forward with their agenda.
In this case – that means that if President Obama wins … taxes on the rich go up while taxes for the middle class stay where they are. If Mitt Romney wins … taxes on the rich will go even lower and that will only further lead the country to more spending cuts and “privatization”.
Now – the tax cuts are set to expire – period. They will expire. The only question is if Republicans will allow the middle class tax cuts to expire right after a dramatic loss (should that happen). If Obama wins reelection … it will be easy to use that moment as a transitional event and the election will be in the past …. and Republicans can always say they didn’t raise taxes because all they have to do is extend it for the middle class only and the tax cuts for the rich will just expire on their own. If Obama wins re-election – conservatives will be forced to pivot politically just like Obama did in 2010.
In a first baby step towards cooperation and putting together a deal – a bipartisan “gang of six” comprised of 3 Republican Senators and 3 Democratic Senators has vowed to put together a “balanced deal” to stop sequestration cuts. If you’re unaware of sequestration or the “fiscal cliff” then you need to read this HERE; keep up already.
Roll Call explains what the “gang of six” is doing HERE:
“We are committed to working together to help forge a balanced bipartisan deficit reduction package to avoid damage to our national security, important domestic priorities, and our economy,” the Senators wrote.
It is not insignificant that the group used the “balanced” to describe their goal because that has been the term of choice for Democrats who want to see targeted tax increases as part of any deficit reduction deal. Of course, Republicans have been more open to raising taxes by eliminating certain tax loopholes and deductions rather than changing income tax rates on the wealthy, as Democrats would do.
The way the “fiscal cliff” is structured … these tax increases on the rich will make up a good portion of the minimum needed to avert sequestration. So – once Republicans start to agree that tax cuts for the rich going up is inevitable – we can look to see some negotiation around how to more responsibly balance the budget and reduce the deficit. That’s a healthy discussion and I think it is clear that we can expect Congress to go back to adopting more of what’s in the Simpson-Bowles plan. The only reason that never got voted on was because of the three House Republicans (including Paul Ryan) who walked away because it raised taxes on the rich.
Then the Washington Post grabs these three quotes from anti-tax Republicans HERE:
“We’re not going to save our defense unless we go along with the president’s wishes to raise taxes on small business. It’s not a good choice. I would never support it. . . . [But] there are enough Republicans, I think, who are so afraid of defense cuts that they would probably give in.”
~Jim Demint (R-SC)
“This is a referendum on taxes. If the president wins reelection, taxes are going up” for the nation’s wealthiest households, and “there’s not a lot we can do about that.””
~Rep. Tom Cole (R-Okla.)
“I hope, obviously, the status quo doesn’t prevail. But if things stay as they are, and all the players are generally the same . . . finding a responsible reform for Medicare is the secret to unleashing very productive talks that would put in place a balanced solution to our fiscal problems. If you deal with the Medicare issue, then Republicans are far more open to looking at revenues.”
~Sen. Bob Corker (R-Tenn.)
Now some might say that President Obama is full of it and he will capitulate when it comes to allowing taxes on the rich to expire. Here’s my counter argument to that:
#1 – Obama has already raised taxes on the rich. As part of Obamacare – anyone making $250k or more a year has to pay 3.8% on their income regardless of the type of income (source).
#2 – As fragile as the economy is today – can you imagine how bad it would be if he hadn’t extracted more tax cuts for the middle class out of his negotiations with the GOP in return for extending tax cuts on the rich? Unemployment would be probably 8.7%. He was able to get another year of unemployment benefits, an extension on the payroll tax cut and other benefits for the middle class that had tremendous economic benefit and helped people.
#3 – Passing tax cuts for the rich for a 2 year extension was the most brilliant, shrew move that he could have ever done. Had those taxes expired … this entire political campaign would be about how the economy is growing slowly because Obama raised taxes on the rich. And the uninformed populace would believe it. They would see it as causation when it fact it is just part of the challenge of digging ourselves out of this very deep, deep economic hole.
This has Republicans with a difficult task of trying to explain what they would actually do for the economy. Their answer? More tax cuts for the rich on top of the Bush tax cuts for the rich. They want to zero out capital gains taxes which benefits the rich. They want to get rid of the estate tax which benefits the rich. They want to cut taxes on corporations. It has gotten to the point where literally people who study Romney’s plan have called it “mathematically impossible” to do what he says his plan would do. And that isn’t playing well this time around. People are seeing it for what it is.
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