On Obama and Taxes: Simpler is Better
As the president said, "The last thing to do is raise taxes in the middle of a recession."
9:45 AM, Sep 17, 2010 • By STEPHEN F. HAYES
At this point, conventional wisdom suggests that it will be difficult for Republicans to force and win a vote before the midterm elections on extending tax cuts for all Americans. The main obstacle is the Senate, where Republicans would have to get 19 Democratic votes. There are now five Democratic senators on record favoring the more comprehensive extension that Republicans want. And there are several more who have not yet declared but might reasonably be expected to join Republicans if the issue were brought to an up-or-down vote – Mary Landrieu, Blanche Lincoln, and Mark Warner.
While the numbers suggest it’ll be difficult to score a legislative victory – at least before the election, it’s certainly possible to score a political one. If Democrats skip town and avoid a vote altogether, one of several options Democratic leadership is reportedly considering, Republican candidates can argue that their opponents did nothing to prevent a massive tax hike.
Forcing a vote on extending all of the tax cuts is better, even if it means Republicans first have to vote against extending the tax cuts that Barack Obama and his fellow Democrats are seeking. Democratic strategists are telling their candidates that they will win politically if they block “tax cuts for the rich.” Republicans should take that bet. Public polling varies on this – an AP poll out yesterday suggested that more people favor cutting taxes for everyone than favor the more limited Obama tax cuts, other polls differ. But Republicans are generally trusted on taxes more than Democrats. And cutting taxes means less Washington – something that is a powerful argument in this political environment.
So we’ve got a game of Washington chicken. But Republicans are not consistently using their best argument.
Simpler is better.
Last summer, NBC’s Chuck Todd asked President Obama a question that he’d gotten from Scott Ferguson of Elkhart, Indiana. “Explain how raising taxes on anyone during a deep recession is going to help with the economy.”
Obama conceded the point: “Well—first of all, he’s right. Normally you don’t raise taxes in a recession, which is why we haven’t and why we’ve instead cut taxes. So I guess what I’d say to Scott is—his economics are right. You don’t raise taxes in a recession. We haven’t raised taxes in a recession.”
Todd interjected: “But you might for health care. You might for the high—for some of the wealthiest.”
Obama did not dispute Todd’s claim that he would raise taxes. Instead, he focused on the timing of the coming tax hike: “We have not proposed a tax hike for the wealthy that would take effect in the middle of a recession. Even the proposals that have come out of Congress—which by the way, were different from the proposals I put forward—still wouldn’t kick in until after the recession was over. So he’s absolutely right, the last thing you want to do is to raise taxes in the middle of a recession because that would just suck up—take more demand out of the economy and put businesses further in a hole.”
The taxes “wouldn’t kick in until after the recession” is over.
But is the recession over? We haven’t had two consecutive quarters of negative GDP growth, so despite the dramatic slowing of economic growth in last two quarters, the president could be correct that the recession will be over when he raises taxes.
But what do the American people think? In a USA Today/Gallup poll out yesterday, 82 percent of those surveyed said they believe the U.S. is still in a recession, with just 16 percent saying we’re not.
So why isn’t every Republican who talks about tax cuts using Obama’s own words in every public comment they make? “You don’t raise taxes in a recession.”
How can the White House answer this? They can argue that they’re not really raising taxes but simply letting the old tax cuts expire. Or they can explain that we’re not technically in a recession.
And that’s exactly what White House spokesman Robert Gibbs did when he was asked about this on Thursday – he argued that we’re not technically in a recession. With 82 percent of the country holding a different view, that’s not likely to be a winning argument.
Gibbs was asked about this again last Friday. He said: “I wouldn’t argue a recession – I would argue obviously that the president was making that statement in August of 2009.”
By focusing on the president’s comments, Republicans force the White House either to disclaim them altogether or explain that we’re not in a recession. Neither of those is a good option because, as the president said: “The last thing to do is raise taxes in the middle of a recession.”