Why would the president oppose raising taxes when economic growth was 5.6 percent but propose raising taxes when it’s at 1.9 percent? When it’s politically advantageous to be seen as raising taxes on the rich.
If there’s another answer to that question, it’s not obvious – or not obvious to me, anyway. But that’s precisely what Barack Obama has done.
On January 29, 2010, with an economy he described as “somewhat fragile,” Obama said that the “consensus among people who know the economy best” was that raising taxes was one of two ways to damage the economy. At a House Republican retreat in Baltimore, Maryland, Obama rejected a Republican proposal to freeze spending at pre-stimulus levels and warned against the “destimuluative effect” of tax hikes.
"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." [Emphasis added.]
The “somewhat fragile” U.S. economy was then coming off a fourth quarter in 2009 that had seen economic growth at a robust 5.6 percent – a pace that the New York Times described as a “roaring growth rate,” while noting that it was expected to slow. (The first quarter of 2010 would show growth at 3.2 percent.) Unemployment was higher but headed rapidly in the right direction. The rate in January 2010 fell 0.3 percentage points, from 10.0 percent to 9.7 percent.
Economic growth in the first quarter of 2012 was a meager 1.9 percent and many economists are projecting even slower growth in the coming months. Job growth has been weak, too. In the first three months of 2012, the U.S. has averaged more than 200,000 new jobs a month; in the most recent three months, the average has plummeted to just 75,000 per month The unemployment rate is headed in the wrong direction, ticking up to 8.2 percent last month, and the possibility of a double-dip recession looks more likely with each passing day.
If the president thought the economy was “somewhat fragile” in January of 2010, does he think it’s stronger today? His vice president recently argued that for the “millions and millions of Americans” who are unemployed the current economic situation feels like a “depression.” And yet the same president who warned against the damaging effects of tax hikes back then now argues that increasing taxes on the rich will make “the country as a whole stronger.”
Contradictions don’t come much stronger than that.
It’s not the first time that Obama has made the case against raising taxes in difficult economic times. In August 2009, Obama said raising taxes in a recession is “the last thing you want to do” because it “would just suck up – take more demand out of the economy and put business further in a hole.”
We are left, then, with this very peculiar set of circumstances: A president who not only seems to understand the economic damage that raising taxes will cause but who has himself twice warned against raising taxes in a fragile economy.
The president regularly complains that Republicans are putting politics over the national interest. But he’s proposing policies that he’s said—on more than one occasion—will hurt the economy.
Who’s putting politics first?