There is a feeling in Washington—perhaps even a fear—that President Barack Obama will, as an "October Surprise," call for legislation extending most but not all of the Bush tax cuts.
With the Republicans still hashing out their agenda for the fall, the thinking goes, a push to keep taxes from going up on all but the so-called "wealthiest Americans" will throw the GOP for a loop. A fall campaign based on class warfare, some Democrats believe, should bring out enough Obama voters to blunt the impact of the tide expected to swamp the majority in the upcoming congressional elections.
So much for believing in your own rhetoric. The flaw in this logic is that the tax increases the Democrats desire most are the ones that will do the most damage to the U.S. economy, which is still, as I have written before, flat on its back. If these taxes are allowed to go up, history teaches us, the economy will go down even further.
In a bid to outflank the White House, House Minority Leader John Boehner has unveiled an agenda of his own designed to kick start the economy. In a speech delivered Tuesday to the City Club of Cleveland, the Ohio Republican identified five steps Obama could take to put an end to the economic uncertainty that is the single biggest roadblock keeping a new period of sustained and substantial economic growth from beginning.
Calling his approach "a fresh start," Boehner said his intention in putting these ideas forward was to challenge "the old ways in Washington, getting to the bottom of what drives people crazy, and then fixing it once and for all." [See which industry donates the most money to Boehner.]
"We don't just need to stop spending so much; we need to stop spending so irrationally," Boehner said in a nod to what some economists believe is Washington’s Number one problem.
Driving the point home further, Boehner attacked "the common logic among Washington Democrats," the idea that the government can stimulate the economy by spending money on projects without taking into account the fact that "even when spending is not at record-setting levels, each dollar the government collects is taken directly out of the private sector."
"This is a lose-lose proposition, plain and simple," he said. "On the front-end, Washington's investments in the economy aren't nearly as efficient because government spending decisions often put a premium on political expedience rather than sound economic policy. And, as we’re learning now, deficit spending always comes due."
Indeed, with total government indebtedness on track to equal one year’s GDP in short order, the time for decisive action to stimulate the economy, to provide real stimulus rather than a phony boost by adding government jobs, is called for. The debate Boehner’s call for reforms should ignite is a healthy one.