The chatter today found in the WSJ is that Obama may do a 180 on tax cuts, though the specifics are a bit unclear.One possibility is a total reversal on this question of extending the Bush tax cuts. They might get extended for one year.
James Pethokoukis of Reuters is spot-on in his analysis:
If it’s a one-year extension of all expiring tax provisions (including extenders), it would be a very smart political move for him.
He would triangulate his base and appeal to swing indies. It also undercuts one of the main GOP arguments. The stock market would surge. It’s a total no-brainer, unless you are just that ideologically-addled not to do it.
If it’s “tax relief” for non income taxpayers, or tax cuts that are so difficult to qualify for no one bothers (see: small business health insurance credit), it won’t go anywhere and he’ll get no bounce from proposing it. If he wants to use taxes to change the dynamic (or at least blunt the wave), it needs to be bold and he needs to piss off the Congressional leadership.
A one-year extension of all expiring tax relief would probably get 230 votes in the House and 55 in the Senate. Ask a vulnerable House Dem off the record if he would vote for that, and see how quickly he says, “you bet.”
He’s totally right that the tax cuts have to be simple to make any headway (as a political move). People understand “extending the Bush tax cuts.”
But beyond that, this move just makes sense. The whole justification for letting the Bush tax cuts laps (for the rich) was that we had to show credibility on fighting the deficit. But actually we don’t. There’s no funding crisis or sign that the deficit is an imminent issue. That’s a fictitious threat. But we definitely DO know that the slowing economy is an acute threat.
Basically this makes a lot of sense, both economically and politically. That being said, we still think Obama might actually WANT a rout in November to position himself against intransigent GOPers come 2012, so maybe this won’t happen until after the election.
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