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THE PROGRESSIVE REVIEW - December 9, 2010
Obama Caves on Bush Tax Cuts
by: Nadia Prupis
truthout-Report
President Obama announced on Monday that he had reached a
deal with Republicans to extend tax cuts for all Americans,
including the wealthiest two percent - backtracking on one
of his most pivotal campaign promises. Calling the deal a
"framework for a bipartisan agreement," Obama relented in
his previous assurances that he would allow Bush tax cuts
to end and acceded to Republican opponents.
Obama's statement follows weeks of negotiations between
political parties on whether to extend or retire Bush-era
policies on income and estate tax. A Democrat-sponsored
bill that would have extended tax cuts for workers earning
less than $250,000 also died in the Senate during a
Republican filibuster. The final compromise, Obama said,
was a necessary step to help the economy recover and avoid
punishing middle-class families for a political battle.
"I'm not willing to let working families across this
country become collateral damage for political warfare
here in Washington," Obama stated. "And I'm not willing
to let our economy slip backwards just as we're pulling
ourselves out of this devastating recession."
If the bill passes, 10.5 million low- and moderate-income
families will keep their cuts through the Earned Income
Tax Credit, while the American Opportunity Tax Credit
will help eight million students continue to pay for
their college education. The bill would also secure 13
months of unemployment insurance for two million Americans.
The Making Work Pay Tax Credit, meanwhile, has been
replaced with payroll tax cuts that would lower workers'
Social Security payments by two percent for the next year,
decreasing from 6.2 to 4.2 percent in 2011.
In a press conference call before the announcement, senior
White House officials said the payroll tax cuts would
provide $120 billion in relief and is one of the "higher
impact" methods of stimulating the economy. During his
statement confirming the compromise, Obama said that
"economists across the political spectrum agree [it] is
one of the most powerful things we can do to create jobs
and boost economic growth."
Some opponents of the Bush tax cuts did not hesitate in
expressing their disapproval of the compromise. Immediately
following the announcement, Sen. Bernie Sanders (I-Vermont)
called the plan an "absolute disaster."
"Millionaires and billionaires do not need huge tax
deductions. That's the simple truth," Sanders said in an
interview with MSNBC's Ed Schultz. "If it turns out in
this deal to be two years, you can bet that that's just
the beginning. It will be extended beyond that... I will
do whatever I can to see that sixty votes are not acquired
to pass this piece of legislation."
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Senate Majority Leader Harry Reid (D-Nevada) spokesman Jim
Manley issued a neutral statement to reporters, saying,
"Now that the President has outlined his proposal, Senator
Reid plans on discussing it with his caucus tomorrow."
Speculation over potential compromises abounded in recent
weeks. Paul Krugman of The New York Times strongly opposed
any extension of the Bush tax cuts, even if it came with
a "temporary" label.
"Right now, the Republicans see themselves as successful
blackmailers, holding a clear upper hand," Krugman wrote
in a December 5 piece. "They might agree to a two- or
three-year extension - but only because they believe that
this would set up the conditions for a permanent extension
later. And they may well be right: if tax-cut blackmail
works now, why shouldn't it work again later?"
A TV ad created by the Progressive Change Campaign
Committee showed footage of Obama speaking during his
election campaign on May 29, 2007, in Iowa City, stating
that he would "allow the temporary Bush tax cuts for the
wealthiest Americans to expire."
The New York Times also pointed out Obama's statement
during an April 2008 interview with Fox News that he
would "roll back the Bush tax cuts on the wealthiest
Americans back to the level they were under Bill Clinton."
Obama acknowledged during his speech on Monday that
"everyone will find something in this compromise that
they don't like," but stopped short of recognizing that
the move breaks another of his campaign promises.
"Sympathetic as I am to those who prefer a fight over
compromise, as much as the political wisdom may dictate
fighting over solving problems, it would be the wrong
thing to do," Obama said. "It's not perfect, but this
compromise is an essential step on the road to recovery."
White House officials took a more positive approach,
calling the proposal "an excellent deal." Officials
also insisted that the tax cuts are a temporary measure
and will serve as a "central part" of the 2012 presidential
debates, but did not say whether they will be similar to
the 2008 debates on the same issue.
If the plan is not approved by Congress, taxes will
increase across the board on January 1. Looming deadlines
for other priorities, including ratification of the New
Start treaty with Russia, passage of the DREAM Act and
repeal of "don't ask, don't tell" are also at risk if the
tax impasse is not resolved.
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