Photo: The White House
Think Obama is a wild-eyed liberal with a passion for deficit spending?Think again.
In a new column at The Daily Beast, writer Noam Scheiber (author of the brand new book Escape Artists) reveals that Obama could be willing to let ALL the Bush tax cuts expire in his second term — not just the tax cuts on the rich.
Evidently, the idea of letting the Bush tax cuts expire across the board first surfaced inside The White House as early as 2009, when it was supported by The White House’s Chief Congressional lobbyist Phil Schiliro, and well-known fiscal hawk Peter Orszag.
In the fall of 2009, Obama’s chief congressional lobbyist, Phil Schiliro, touted a clever idea for dealing with the tax cuts: introduce a bill that would extend the middle-class cuts for two years while allowing the upper-income portions to expire. After two years, the middle-class cuts would also expire unless Congress paid for them with offsetting savings or tax increases.
By November 2009, Orszag had become so fond of the idea that he insisted on presenting it to the president in the Oval Office. Orszag’s fellow wonks were cool to the plan, having heard him and Schiliro sing its praises repeatedly. But the administration’s chief wonk—Barack Obama—was intrigued. He asked a series of encouraging questions about how the proposal would work. According to two sources in the room, he was taken with both the political merits—that is, putting Republicans on the defensive—and the policy rationale of lopping trillions off the deficit. He gave no indication that he was troubled by the plan’s most explosive feature: that it would likely break a central campaign promise—not raising taxes on the middle class—one Republicans would surely wrap around his neck with populist glee.
Scheiber’s lesson is ominous for taxes should Obama be re-elected
In the end, the lesson of the Schiliro plan and the Orszag meeting—to say nothing of the months Obama spent petitioning Republicans for a major deficit deal in 2011—is that the president is a true fiscal conservative. Perhaps even a severe one, to paraphrase his likely opponent. For such a breed of politician, the chance to let the Bush tax cuts lapse may simply be too tempting to pass up.
Were this to happen, 2013 really could be the brutal year of fiscal contraction people have been fearing.
And even if nothing happens, it’s depressing to think that in 2009, when things were going horribly for the economy, there was a serious discussion of tax hikes and deficit reduction at the highest levels of government.
ADDED: This issue of what happens to fiscal policy in 2013 is a big deal. If current laws remain in place that will lop a lot of growth off thanks to austerity. There’s an assumption that somehow Congress will undue the imminent cuts, but this story just shows that it’s going to be pretty complicated.
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