Let All Bush Tax Cuts Lapse

[babylonsister]

http://www.boomantribune.com/story/2012/7/2/105538/3112

Let All Bush Tax Cuts Lapse

by BooMan
Mon Jul 2nd, 2012 at 10:55:38 AM EST


I am encouraged to see signs that prominent Democrats are openly contemplating letting all of Bush's tax cuts expire rather than cutting a deal with the Republicans during the lame duck session between November's election and the new Congress that will be seated in early January.

When we discuss the Bush tax cuts, we tend to focus only on the cuts for the rich because those have the most impact on the deficit and are the least sensible and most unnecessary. Focusing on the rich also enables us to have some small prayer of raising revenue in our current political environment. Yet, the Democrats cannot even unite on raising taxes on those making $250,000 a year.

It will be far easier to let all the Bush tax cuts lapse. This can be done easily. All Obama has to do is refuse to sign any deal or any short-term extension during the lame-duck. On the first of January 2013, the government would instantly get a $3.7 trillion boost on their books. This would free Congress up to redo the tax code in an more equitable way. In the worst case scenario, Romney would be in charge of this and would enjoy majorities in both houses. He might be able to use the budget reconciliation process to enact another Bush-like temporary (decade-long) tax cut, but it's unlikely that that would would work with the budget deficits we're facing. Bush had surpluses and still needed Dick Cheney to break the tie in the Senate for both his 2001 and 2003 tax cuts.

However, if, as now seems likely, Obama wins reelection, he will be in a great position to influence the new tax code. If Congress does nothing, everyone who pays taxes will see their taxes go up. Having won a second term, the president will have at least some initial political clout. And we've seen recently that the GOP will fold when put in a bad position, like letting student loan rates double or letting the payroll tax holiday run out.

snip//

Still, unless we want to travel on a constant Grover Norquist-fueled downward trajectory on federal revenues, Obama needs to take this opportunity to let all rates lapse. No one in Congress will have to do a thing. And that's probably the only way anything smart can get done in Washington DC these days.

[dtom67]

1. 'tis true...

this is the most important step in finally getting us out of the Bush economy.
long overdue as well

[russspeakeasy]

2. The dems will cut a deal.

They won't stand up and they won't sit down.
It's in their nature to be picky, fussy and paranoid.
I really, really, want to hear what The Prez has to say specifically on this issue.

I do not want a 45 minute lecture, just: "let them expire, or don't let them expire"..

[Wounded Bear]

3. I sure hope you're wrong....

I'll pay more. They should, too.

[russspeakeasy]

4. I hope I'm the wrongest I've ever been.

[1StrongBlackMan]

5. I was going to write that I don't see that happening ...

But as I began writing, I realized that the Democrats would have nothing to lose. If President Obama wins re-election, and the Democrats move to let them expire ... he's a lame duck; who cares that the gop will whine that he went back on his campaign pledge not to raise taxes on those earning under $250K? And the same thing applies when he wins, except he will have Democrats ... on this site ... as his biggest critics.

I would love for the Democratic Caucus, in both Houses of Congress, to introduce on November 1st, legislation that would kill the tax cuts for those making more than $250K, but preserving them for those under that mark. That would give the Democrats a huge bargaining advantage, come January 1st.

[babylonsister]

7. Thank you; nothing to lose is the message; let's hope

most Dems can find their spines. In the current climate, it's very possible.

[Igel]

6. Let's repeat 1937.

Let's cut spending.

Let's raise taxes. Again.

And let's increase reserve requirements. Again.

The only thing left is to restrict the flow of capital. Woo-hoo! A hefty round of protectionism for all.

If we do it right, we can stage another 1931.

[HopeHoops]

8. I'd be cool with that.