Mark Knoller from CBS News reports this morning that President Obama, in a statement in the Rose Garden, “will stress his budget’s top objective is to boost the economy and create jobs.” To do that, he’ll have to contradict what he previously described as “the consensus among people who know the economy best.
Obama’s budget will raise taxes by nearly $600 billion, through a variety of provisions mostly targeting the wealthy – including a 28 percent cap on deductions for the top 2 percent of earners and a requirement that “millionaires” pay at least 30 percent of their income in taxes.
How will raising taxes boost the economy? It won’t.
In fact, Obama not long ago argued that raising taxes in a fragile economy would dampen growth, hurt business and create unemployment. His warning came on January 29, 2010, when Obama attended a House Republican retreat in Baltimore.
"I am just listening to the consensus among people who know the economy best. And what they will say is that if you either increased taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a destimulative effect and potentially you'd see a lot of folks losing business, more folks potentially losing jobs. That would be a mistake when the economy has not fully taken off."
The economy that Obama worried about in early 2010 was coming off of a fourth quarter growth rate of 5.6 percent. Three years later the economy is growing at .4 percent. If Obama thought it was unwise to raise taxes with the economy growing at 5.6, why is it imperative to do so with the economy growing at .4 percent?
It's an argument Republicans might want to make.