Tax Hike Would Accomplish Nothing
President Barack Obama's obsession with ending Bush-era tax cuts makes no sense as either policy or politics.
Is there a "fairness" factory somewhere out in Middle America producing self-sustaining jobs? If not, President Barack Obama's obsession with ending Bush-era tax cuts makes no sense as either policy or politics.
To begin with, Obama—and nearly all media coverage of the decade-old tax cuts—continues to discuss the "cost" of tax cuts as if Washington had first dibs on your money. Is the president arguing that the base line of spending includes all wealth and that anything the Internal Revenue Service doesn't take is something we have to "pay" for? If not, then government spending is the only thing that really costs us. Sometimes the cost is worthwhile; mostly it isn't.
But the president says that doing away with the Bush tax cuts "isn't about taxing job creators; this is about helping job creators." But how would a tax hike on the rich do anything to propel economic growth? Are you cutting $50 checks for the rest of us? Would the tax increase have any impact in bringing down the deficit, or would it help alleviate the $15 trillion debt and put off our impending doom by a few minutes?
Or would it bring the opposite? Would revenue shrink, as it often does when you raise taxes? According to The Wall Street Journal, Congress' Joint Committee on Taxation estimates that in 2013, approximately 940,000 taxpayers will have enough business income to meet the tax threshold that Obama deems wealthy.
Moreover, if the $80 billion yearly "cost" (that is, if tax receipts don't drop after a tax hike) is such a drag on the economy, why doesn't the president match it with $80 billion in spending cuts? If the Bush tax cuts "cost" us so much, what is one to make of the president's proposed budget, which would add $6.4 trillion in deficits between 2013 and 2022, according to the nonpartisan Congressional Budget Office?
You may remember an astute observation from the president a couple of years back when he said, "The last thing you want to do is to raise taxes in the middle of a recession, because that would just … take more demand out of the economy and put businesses in a further hole." So as policy, Obama's plan is at best irrelevant and at worst a job killer.
What does all this mean politically? Obama clearly believes that class warfare is a winner. But when Mitch McConnell asked the Senate to vote on Obama's tax hike plan this week, he was rebuffed by Senate Majority Leader Harry Reid mere days after the president claimed that his plan is a vital piece of the recovery.
In fact, if the House or Senate Republicans pushed forward a vote to extend all Bush-era tax cuts, it would likely put Democrats in an even tougher position. They would have to choose between extending a decade-old lower tax rate that everyone is accustomed to in defiance of the president and holding out to institute an effective rate hike in a terrible economy.
And do you remember when the Bush tax cuts only benefited the rich? This point was repeated ad infinitum for years by nearly every Democrat in nearly every interview. I can't remember a single Democratic candidate arguing that "the Bush tax cuts for the wealthiest Americans" are in any way beneficial for the middle class. Yet today the president is running around claiming he's generously extending something that for years we were told didn't really exist.
David Harsanyi is a columnist and senior reporter at Human Events. Follow him on Twitter @davidharsanyi.