Obama rules out any compromise that would extend the Bush-era tax cuts for the rich

• IggyPride00

  

  WASHINGTON — President Obama on Wednesday will rule out any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.
  
  Mr. Obama’s opposition to allowing the high-end tax cuts to remain in place for even another year or two would be the signal many Congressional Democrats have been awaiting as they prepare for a showdown with Republicans on the issue and ends speculation that the White House might be open to an extension. Democrats say only the president can rally wavering lawmakers who, amid the party’s weakened poll numbers, feel increasingly vulnerable to Republican attacks if they let the top rates lapse at the end of this year as scheduled.
  
  It is not clear that Mr. Obama can prevail given his own diminished popularity, the tepid economic recovery and the divisions within his party. But by proposing to extend the rates for the 98 percent of households with income below $250,000 for couples and $200,000 for individuals — and insisting that federal income tax rates in 2011 go back to their pre-2001 levels for income above those cutoffs — he intends to cast the issue as a choice between supporting the middle class or giving breaks to the wealthy.

  http://www.nytimes.com/2010/09/08/us/politics/08obama.html?_r=1&hp
  
  
  Well, the stage is set for the big showdown now.
  
  If Congress does not pass a bill by the end of the year, taxes go up on everyone to the Clinton levels.
  
  BHO intends to have Congress vote on a bill that extends all cuts for everyone making less than $250,000 before the year is out. Republicans have vowed to filibuster any bill that does not include the top 2%.
  
  BHO appears to be setting up a game of chicken with the Republicans seeing who will blink first. He is politically dead if the across the board tax increase happens because of his campaign promise not to raise taxes on anyone making less than $250,000.
  
  Republicans on the other hand put them in political peril if they really do Veto a tax cut bill that would allow the bottom 98% of people to keep their tax cuts all over the rich not being able to keep theirs. Polling shows a majority of the public favor letting those expire anyway, so it would be terribly risky to potentially alienate the middle class over that. You can bet BHO would be on TV 24/7 telling people they will be paying higher taxes on Jan 1 because Republicans decided the rich are more important to them than the middle class. That could be a game changer, and potentially the only thing to save the Democrat party.
  
  Just for a reference, the cost to extend the tax cuts for everyone is $3.8 trillion. The cost to extend them for just the bottom 98% is $3 Trillion.
  
  People have floated a 2 year compromise, but that is off the table from the White House's standpoint because then it becomes an election year issue again as well as fueling the "uncertainty" narrative we have seen for the past 2 years over anxiety that the cuts would expire.
  
  I am fascinated to see how this plays out because it is a high stakes game of chicken where both sides stand to lose tremendously potentially but neither seem apt to blink anytime soon.
• CenterBHSFan

  

  So, between 3% and 3.8%, where's the improvement?
  
  Bunch of jokers, actually, to even play that game.
• ptown_trojans_1

  

  I actually am with Peter Orzag and yesterday's column. It makes some sense to extend them just two years given the flat economy.
  http://www.nytimes.com/2010/09/07/opinion/07orszag.html?_r=1&ref=opinion&pagewanted=all
  
  Also, on Morning Joe this morning, Joe was speaking with David Axelrod and threw out the idea of pretty much no-capital gains taxes and Axelrod liked the idea for investment. So, maybe the White House is not so dead set.
• Prescott

  If Obama thought that keeping the Bush tax cuts would benefit the country he wouldn't do it. The tax cuts have Bush's name attached to them and Obama would never give the impression that Bush or any other Republican had done something right. Obama wants the country divided.
• Mr. 300

  

  Hmmm, keep the cuts and let those that have it keep more of it, and then guess what they do with it? Why they spend it? What a novel idea.
• QuakerOats

  "The Bush-era tax cuts for the rich" ...................... the tax cuts were actually for ALL who paid taxes.
  
  If obama does not extend the tax cuts, it will be the final straw in proving his preference for a radical socialist/marxist ideology over free market private enterprise.
  
  Change we can believe in .............
• BGFalcons82

  

  QuakerOats;475671 wrote:If obama does not extend the tax cuts, it will be the final straw in proving his preference for a radical socialist/marxist ideology over free market private enterprise.

  
  Sorry to disagree, Quaker, but that final straw was laid on him a long time ago. He's carrying bales of the stuff now
• ptown_trojans_1

  

  QuakerOats;475671 wrote:"The Bush-era tax cuts for the rich" ...................... the tax cuts were actually for ALL who paid taxes.
  
  If obama does not extend the tax cuts, it will be the final straw in proving his preference for a radical socialist/marxist ideology over free market private enterprise.
  
  Change we can believe in .............

  
  I wouldn't go that far. It only reverts back to the taxes of the 1990s, which were not bad. But, given the flat economy, taking away money that could be invested in the next two years may not be a smart policy.
• IggyPride00

  

  I actually am with Peter Orzag and yesterday's column. It makes some sense to extend them just two years given the flat economy.

  I read Orzag's column yesterday, but I don't really see what it helps in reality. They either need to be made permanent, or let to expire now.
  
  We have heard for 2 years now that business isn't spending over "tax uncertainty." How are the next 2 years going to be any different than the last 2 when we will be right back in the same boat of "the rich" not spending because they are waiting to see how the Presidential election turns out to see if the tax cuts are extended again or not.
  
  What I am interested to see is if Dingey Harry pushes for a vote on extending all tax cuts for the bottom 98% before the election or not as a last ditch effort to change the mid term election narrative if (as expected) the Republicans filibuster it because the top 2% are not included in the extension.
• bases_loaded

  

  Since when does how much money the government steals from us "cost"? It isn't our fault pork spending has stretched us beyond our means. I'm consfused as to why its our burden to pay for the study of frog fucking habits in new Mexico's lower west side.
• BCBulldog

  

  At this point, Obama has no right to rule out anything. He wrote a lot of checks with his promises two years ago, that his performance has been unable to cash.
• I Wear Pants

  Mr. 300;475662 wrote:Hmmm, keep the cuts and let those that have it keep more of it, and then guess what they do with it? Why they spend it? What a novel idea.

  Has that been working the whole time these tax cuts have been in place?
• jmog

  I Wear Pants;475793 wrote:Has that been working the whole time these tax cuts have been in place?

  
  Actually yes, until the housing market crashed the system, the tax cuts were helping the economy grow quite well.
• IggyPride00

  

  jmog;475795 wrote:Actually yes, until the housing market crashed the system, the tax cuts were helping the economy grow quite well.

  
  It was all artificial growth though based on a bubble. Once the bubble popped all the jobs went away as fast as they came which is why we literally ended the decade with as many jobs as when it started.
  
  I am not sure what exactly the policy prescription is to promote sustainable growth, but we have been in this constant boom/bust cycle that is really getting old.
• Paladin

  This is hilarious.
  
  Rs started two wars and made no provision to pay for either of them
  
  Rs passed prescription drug plan and made no provision to pay for it'
  
  Rs cuts taxes and made no provisions to pay for it.
  
  Obama ran two years ago on cutting back on tax cuts for the rich so we would start PAYING for the excesses and now he's the "bad" guy?
  
  I welcome the debate and will enjoy the Rs arguing against giving tax breaks for the middle class while demanding the Super Rich gets their's. It should be good !
• I Wear Pants

  See, if Obama was merely not extending the tax cuts I'd be happy. But he has also spent a shit ton just like the Rs did.
• Paladin

  He inherited a huge deficit and spent $$$$$$$$$$$ trying to stimulate jobs & save the economy. The point is, that all costs $$$$$$$$$$ and its time to start paying. The top 2% can afford it and thats the place to start.
  
  Let the argument begin in Congress.
• jmog

  Paladin;475832 wrote:He inherited a huge deficit and spent $$$$$$$$$$$ trying to stimulate jobs & save the economy. The point is, that all costs $$$$$$$$$$ and its time to start paying. The top 2% can afford it and thats the place to start.
  
  Let the argument begin in Congress.

  That's so retarded its funny.
  
  He has ran up the deficit higher than Bush ever dreamed. Was Bush dumb for his deficit? Absolutely. Is Obama even more retarded for his much higher deficit? Absolutely.
  
  If only Obama's "stimulus" had really done anything job wise instead of just wasted a trillion here and there.
• jmog

  IggyPride00;475804 wrote:It was all artificial growth though based on a bubble. Once the bubble popped all the jobs went away as fast as they came which is why we literally ended the decade with as many jobs as when it started.
  

  
  That's an opinion, sure, but not fact.
• BCBulldog

  

  Paladin;475832 wrote:He inherited a huge deficit and spent $$$$$$$$$$$ trying to stimulate jobs & save the economy. The point is, that all costs $$$$$$$$$$ and its time to start paying. The top 2% can afford it and thats the place to start.
  
  Let the argument begin in Congress.

  
  And how has that worked? We already are in a double dip downturn in the housing market and the overall economy is teetering toward a double-dip recession. He promised that the unemployment rates would be better and the economy would begin to recover with his last spending fiasco. Now he wants to again go against proven methods for recovery and attack the people who already pay the vast majority of the taxes?! Sure, the rich can afford to pay more in taxes. Especially if it is just a return to the pre-Bush tax cut rates. However, that doesn't fix the giant sucking hole that Obama and his Congress's wasteful spending has created. The first course of action is to cut spending to balance the budget. Until they can figure out a way to do that, they should not touch the current tax code.
• BoatShoes

  ptown_trojans_1;475654 wrote:I actually am with Peter Orzag and yesterday's column. It makes some sense to extend them just two years given the flat economy.
  http://www.nytimes.com/2010/09/07/opinion/07orszag.html?_r=1&ref=opinion&pagewanted=all
  
  Also, on Morning Joe this morning, Joe was speaking with David Axelrod and threw out the idea of pretty much no-capital gains taxes and Axelrod liked the idea for investment. So, maybe the White House is not so dead set.

  
  I agree with this....extending the tax cuts for everyone until we can get the economy going....but then again, I'm a liberal who doesn't mind deficit spending. (Thought it's a shame IMO that we ran deficits during boom times and now are saddled with already low taxes, low interest rates and a massive debt in a recession when you're supposed to deficit spend, if ever). Watching far right guys beg for massive deficits is, well, baffling ..."Obama's deficits are out control OMG, OMG, now please for the love of God socialist don't let my massive-deficit-creating tax cut expire..mererrr fdassfjkjj!" wtf???
  
  Then again...I tend to think the uncertainty about the tax rates....whether they're going to go up or down might be what's contributing to the uncertainty in business planning. So, perhaps it's best just to go for a raise on the top 2% right now and just get it out of the way and have those folks know what they're going to have for the next 10 years or so...Not sure.
  
  I disagree on the 0% capital gain rate though and would rather see a reduction in the corporate tax rates and perhaps even a raise in the capital gain rate. a 0% capital gain rate in my opinion encourages clients to divest rather than plow E and P back through their corporations where they will back taxed at our high corporate tax rate. With a 0% rate, a rational investor can pull out his Earnings and Profits at no tax and then invest them in a burgeoning economy like India and then get FTC's to boot on that income.
  
  If the Capital Gain rate (and the qualified dividend rate) is at say, 28% around what it was after Reagan's Tax Reform Act of 86, and we had a lower Corporate tax rate (relative to our personal income tax as in Germany or Japan) at say 25% or even 18%, the investor, IMO, is encouraged to plow the E and P back into the corporation after the corporate tax to shield it from the capital gains tax. Then, if it's plowed back in, then people will be hired. It also preserves our income tax but is closer to being a consumption-like.
  
  I really believe that in this economy and with the expanding world economy, the system we have, a high corporate tax rate and a low capital gains rate encourages divestment from businesses effectively connected to the U.S. and subsequent investment in new markets. I see it daily. a 0% CG rate just adds fuel to the fire. Countries like Germany, the world's largest exporter, have low corporate tax rates relative to their Personal Income and CG taxes and the profits their companies make are plowed back into the business.
  
  Just my two cents...
• Ty Webb

  

  He's doing the right thing here....no one should have a problem with what he's doing
• BoatShoes

  jmog;475882 wrote:That's so retarded its funny.
  
  He has ran up the deficit higher than Bush ever dreamed. Was Bush dumb for his deficit? Absolutely. Is Obama even more retarded for his much higher deficit? Absolutely.
  
  If only Obama's "stimulus" had really done anything job wise instead of just wasted a trillion here and there.

  
  No...Obama's deficit should have been twice as high...the stimulus did nothing because it wasn't large enough....he should have had twice the reductions in tax liability for Americans and twice the active spending on infrastructure and other things but he couldn't because we've racked up trillions of dollars of debt during good economic times and it would have been politically more-toxic than the Porkulous Package was (even though it was 1/3 tax breaks which conservatives are suppose to like when they cook up their deficits).
  
  Since Reagan we have spent like drunken sailors during good economic times instead of keeping our debt low so we could deficit spend to get ourselves out of a recession....but heck, in the late 90's you had economists running around saying that bad recessions were a thing of the past so I suppose I don't blame them.
  
  Obama's stimulus was not enough and every Neo-Keynesian like Paul Krugman who agress with the idea in principle will tell you it wasn't enough.....but how can you create a stimulus package that will load 2 trillion dollars onto the debt when for the last ten years Congress manufactured a Tax Cut that loaded Trillions of dollars onto our debt, when we were already running deficits...
• BoatShoes

  jmog;475795 wrote:Actually yes, until the housing market crashed the system, the tax cuts were helping the economy grow quite well.

  
  The economy was growing after the 9/11 recession without the tax cuts which should not have been passed to create huge deficits during good economic times...and all of that growth went to the top 5% of Americans and the rest of Americans still have essentially they same wages they had in 1990.
• BoatShoes

  BCBulldog;475892 wrote: The first course of action is to cut spending to balance the budget. Until they can figure out a way to do that, they should not touch the current tax code.

  
  See...no, no, no, no. This should have been done during good economic times....not now but we're stuck between a rock and a hard place because we've got 13 trillion in debt.