By John A. Farrell, Thomas Jefferson Street blog
I suppose it is a mark of Democratic ineptness or complacency that, a year after Congress passed one of the biggest tax cuts in U.S. history, President Audacity still found the need to inform us of this fact in his State of the Union address. Republican partisans may have preferred an across-the-board tax cut, or a gift to corporations, or the Paris Hilton Honorary Estate Tax Repeal Bill, rather than targeted tax cuts for working families. But there is no denying the fact: The Democratic stimulus bill gave middle-class families a huge tax break.
And there is more--much more--tax relief to come. It's getting lost in the cacophony again, but Obama's proposed budget has $2.7 trillion in tax cuts for middle-class families, working folks caring for children or elderly parents, college students, small businesses and investors, research and development--even cellphone users--over the next 10 years.
Another fact: That much-maligned stimulus bill, along with the hated bank bailout loans, also did what economists (including those who were advising the Bush administration, which initiated the stimulus process and the bailout loans months before Obama took office) said they would. They stabilized an economy in free fall. The banks have even begun to pay us back.
And yet another fact: This smart bit of pump-priming was no radical, loony, Democratic idea. With the exception of some Western European countries like Germany, where the social welfare system is already a perpetual stimulus machine, our international competitors (i.e., China) opted for a Keynesian fix to the worldwide depression as well. It has been a standard economic prescription for a century.
The great fourth quarter report that the U.S. economy got last week may not immediately translate into job growth or higher family incomes, which are always lagging indicators that a recession is over. But it was good news nevertheless. Remember where we were in the fourth quarter of 2008? We might actually have some money to buy those iPads when they're available this spring.
But, OK, the Obama tax cuts and stimulus package did exacerbate the debt problem that he inherited from the Tom DeLay generation of Republicans--which dropped the pay-as-you-go policies of the Clinton-Gingrich years to finance two wars and the biggest expansion of Medicare since LBJ with the government credit card.
And, due to the failure of the Democratic message machine (from smugness, or maybe just exhaustion), the need for the new red ink that the Bush-Obama rescue packages added to the national debt was poorly explained, went undefended, and became an invitation for Republican demagoguery.
But it is not that the GOP has offered any better ideas. As I take it, from the Republican rhetoric of the last year, the party's proposed cure for the accumulating debt is to chop taxes for the rich, preserve wasteful Medicare spending, show up at the ribbon-cutting ceremonies for local pork projects, and increase the Pentagon budget--somehow, magically, without adding to the deficit.
And now, as my colleague Peter Roff warns, the Democrats have a not-so-secret plan to raise taxes!
Well, in this case, we can't fault the Democrats for hiding their light under a bushel. There is nothing remotely secret about what Democrats campaigning in 2004, 2006, and 2008 proposed to do with the expiring Bush tax cuts. You would have to have been traveling on the Starship Enterprise, visiting distant galaxies for the last eight years, to find it surprising that Obama wants to extend only those tax cuts that benefit families earning under $250,000 a year.
It's been Democratic Party policy for all that time, shouted from the rooftops, written into party platforms, loudly advocated at debates. The Democrats have been upfront, loud, and honest about their plan to close the gap between what the government takes in and what it spends: Tax the rich. You may be rich, and not like it. You may have ideological problems with any form of taxation. You may just not like Barack Obama. But the choice has been clear, and in the 2006 and 2008 elections, the voters overwhelmingly endorsed the Democratic approach.
Final Fact: The federal debt that's been accumulated by the two parties is so stunningly huge that tax increases are inevitable. If you don't believe this, get Scotty to beam you up, and move to another planet. It is pick-your-poison time. The Democrats, for all their political ineptness, deserve a little credit for 1) recognizing this, 2) leveling with us, 3) aiming the first round of tax hikes at those who have most benefited from the accumulated debt, and 4) having the guts to actually do something, as opposed to just saying "No."
By levying higher taxes on the wealthy, and at banks, hedge fund managers, and multinational corporations that ship U.S. jobs overseas, Obama would raise $1.5 trillion in new revenue in his budget to close the deficits over the next decade--even after cutting middle-class taxes and taxes on small businesses by $2.7 trillion.
Level with yourself. Are you really worried about the national debt? Then put your money on the table: Call your Democratic senator or representative and ask them to reduce the size of your expected tax cut, and use the money to close the deficit instead.
There is a reason why the House Republicans, at their televised (except on Fox) question session with Obama last week, kept begging the president to stop calling them naysayers. The American people may be angry right now, but they know demagoguery when they see it, and they don't much like the fact that the Republicans are not offering solutions. (If you don't believe me, just check the poll numbers for congressional Republicans.)
Scott Brown was a great win. So were the New Jersey and Virginia statehouses. But the GOP has at least as much to fear from the anti-incumbent mood (phone home, John McCain) as their foes--and maybe more, if the Democrats and Obama get their act together.