Defending Tax Cuts for Super-Rich Is the GOP’s Waterloo

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Waterloo Battle

Letting the tax cuts for the super-rich expire while keeping the rates for the working class offers President Obama a political opportunity to satisfy progressives, co-opt the populism streak in independent voters, and differentiate Democrats from Republicans, Sen. Kent Conrad (D-SD) notwithstanding. The White House signaled Sunday it’s ready for this fight.  –

By Peter Gorenstein at TechTicker:

The countdown has begun. The Bush tax cuts don’t expire until the end of the year but Fox Business News has begun airing “countdown” segments, as of late, claiming the end of tax cuts will lead to the “Largest Tax Hike Ever.”

Hyperbole?

Certainly, but taxes will be a major issue on the campaign trail this midterm election. President Obama says he wants to keep the tax cuts in place for all except the top 2% of households earning above $250,000 annually. Republicans say allowing the cuts to expire as scheduled would hurt small businesses that file individual tax returns.

Even Democrats are conflicted.

As reported in the San Francisco Chronicle, Obama economic adviser Christian Romer and her husband David recently published a report claiming: “tax increases appear to have a very large, sustained and highly negative impact on output” while “tax cuts have very large and persistent positive output effects.” 

Romer later seemingly switched positions, writing in a blog, “extending the high-income tax cuts would provide very little job creation in 2011.” …

Treasury Secretary Timothy Geithner … (m)aking the rounds on the Sunday talk show circuit last weekend, said since the end of tax cuts would only effect 2-3% of the population they would help shrink the deficit without hurting the recovery.

On ABC This Week Geithner said: “We need to make sure we can show the world that we’re willing, as a country, now to start to make some progress bringing down our long, our long-term deficits… I do not believe it would have a negative effect on growth.”

The countdown continues but the debate has just begun.

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