President Obama announced yesterday that he wants to extend the Bush tax cuts for many Americans – but only for one year. There was no mention of his previous policy of making the tax cuts permanent for those making less than $200,000.
Looking carefully at Obama’s exact words, he carefully hedged his support for extending the middle-class and lower-class tax cuts – ” not when so many folks are just trying to get by” and “Not when so many folks are still digging themselves out of the hole”.
If Obama really believes that the deficit should be reduced by tax increases, while spending programs are protected, he has no choice but to raise taxes on the middle class. Taxes on the wealthy are already so high that the Federal government cannot squeeze much more from them.
A few years ago, liberal pundit E. J. Dionne said that the reason for increasing taxes on the wealthy was to make it possible to then raise taxes on the middle class – i.e. only after sticking it to the wealthy might the middle class be reconciled to accepting a tax increase. Democratic Minority Whip Steny Hoyer has suggested that the middle class might have to give up the Bush tax cuts, and former OMB Director Peter Orszag has openly called for full repeal. Obama seems to be nearly ready to join them – but only when the election is over.