In a bold move to the right, President Obama proposed a series of Republican type business tax cuts that would not have been the first choice of anyone on the left, in addition to a tax cut for workers earning less than $250,000 per year.

Boehner’s best move would have been to embrace the business tax cuts as well as the personal tax cuts, declare victory, and claim it was voter rejection of the ‘liberal agenda’ that caused the President to break ranks with the left and join the conservative cause, etc. And I’m sure he could have spun it far better than my feeble attempt.

Instead, Boehner fell into the trap, as he rejected the entire pro Republican agenda proposal, and opened himself and the Republican party up to a crushing condemnation of his position by a President who was back to his teleprompter led candidate form.

Looks like a major political blunder to me. While Obama’s proposals can be said to fall short of the mark, there was precious little the Republicans should have been objecting to. Now Boehner is stranded in no man’s land, regrouping and groping for a position that makes sense. (Reminds me of the Arafat’s public relations disaster when he rejected a far more than generous offer from the Israelis.)

Unfortunately, Obama took advantage of and reinforced the anti deficit fear mongering and added to that fear mongering, claiming he didn’t extend tax cuts to the rich because the govt. needs those dollars for deficit reduction. This further sets us up for higher unemployment down the road and has already limited any fiscal response to levels that will keep US unemployment ‘high for long.’

Now the Democrats are hoping that the numbers between now and the election show a double dip is not in the cards, and that things have slowly turned, which is very possible.

Even so, there’s a good chance it’s too late to stem the anti incumbent tide.

Obama Blasts GOP, Boehner on Economy and Taxes

September 8 (AP) — President Barack Obama strongly defended his opposition to extending Bush-era tax breaks for the wealthiest Americans on Wednesday and delivered a searing attack on Republicans and their House leader for advocating “the same philosophy that led to this mess in the first place.”

Obama said the struggling U.S. economy can’t afford to spend $700 billion to keep lower tax rates in place for the nation’s highest earners despite a call by House Minority Leader John Boehner and other GOP leaders to do just that.

Speaking in the same city where Boehner, an Ohio Republican, recently ridiculed Obama’s economic stewardship, Obama said Boehner’s policies amount to no more than “cut more taxes for millionaires and cut more rules for corporations.”

Obama’s comments came as the administration rolled out new proposals designed to re-ignite a sputtering recovery, including new tax breaks for businesses and $50 billion for U.S. roads, rails and airports.

“Let me be clear to Mr. Boehner and everyone else. We should not hold middle class tax cuts hostage any longer,” the president said. The administration “is ready this week to give tax cuts to every American making $250,000 or less,” he said.

Actually, Obama and other Democratic leaders want to extend the tax cuts except for individuals making over $200,000 a year—or families earning over $250,000. The sweeping series of Bush tax cuts expires at the end of this year unless Congress renews them.

Obama went after Boehner—who would probably become House speaker if Republicans win control of the House in November’s midterm elections—directly by name.

In Boehner’s remarks on Aug. 24, Obama said, the Republican leader offered “no new ideas. There was just the same philosophy we already tried for the last decade, the same philosophy that led to this mess in the first place.”

Ahead of Obama’s speech, Boehner offered his own proposals on Wednesday, saying in a morning broadcast interview that Congress should freeze all tax rates for two years and should cut federal spending to the levels of 2008, before the deep recession took hold.

“People are asking, ‘Where are the jobs?”‘ Boehner said, calling the White House “out of touch” with the American public.

Obama gave one of his strongest pitches yet on allowing the Bush tax cuts to expire at the end of this year for wealthy Americans but allowing them to remain in place for everybody else.

Republicans, and even some Democrats, have suggested that it was no time to raise taxes on anybody, given the fragile state of the economy.

The debate is an unwelcome one for dozens of vulnerable Democratic incumbents just weeks before Election Day. Already, a handful of Democrats in conservative or swing districts, such as Reps. Gerry Connolly in the northern Virginia suburbs of Washington, D.C., and Bobby Bright in southeastern Alabama, have come out publicly for extending all the cuts—at least temporarily.

Still other embattled Democrats, wary of alienating middle-class voters, are siding with Obama. In central Ohio, for example, Rep. Mary Jo Kilroy has said the tax cuts for higher earners should be repealed, but middle-income people should see no tax increases.

Obama acknowledged that the recovery that began in late 2009 had slowed considerably.

“And so people are frustrated and angry and anxious about the future. I understand that. I also understand that in a political campaign, the easiest thing for the other side to do is ride this fear and anger all the way to Election Day,” he said.

“The middle class is still treading water, while those aspiring to reach the middle class are doing everything they can to keep from drowning,” Obama said.

Polls have shown a steady slippage in Obama’s approval ratings and an accompanying rise in Republican prospects for winning House and Senate seats in November.

In his speech, Obama outlined plans to expand and permanently extend a research and development tax credit that lapsed in 2009, to allow businesses to write 100 percent of their investments in equipment and plants off their taxes through 2011 and to pump $50 billion into the economy for highway, rail, airport and other infrastructure projects.

He also renewed a pitch for a small business package that has been stalled in the Senate because of Republican delaying tactics.

Of the debate over the expiring Bush tax cuts, Obama said, “I believe we ought to make the tax cuts for the middle class permanent. These families are the ones who saw their wages and incomes flatline over the last decade—and they deserve a break. And because they are more likely to spend on basic necessities, this will strengthen the economy as a whole.”

“But the Republican leader of the House doesn’t want to stop there. … He and his party believe we should also give a permanent tax curt to the wealthiest 2 percent of Americans.” Obama said these taxpayers were “folks who are less likely to spend the money” to help the economy grow, a notion disputed by Republicans and conservative economists.

Even Obama’s former budget director, Peter Orszag, has said that while he prefers Obama’s proposal to impose the higher taxes on the wealthy, getting such a formulation through Congress in this politically charged time might be extremely difficult. Orszag suggested a compromise—extend all the tax cuts, but just for two years, and then let them all expire.

Obama is strongly opposed to such a deal, White House officials said.

11 Responses

  1. Obama speaks with forked tongue and the voters know it. Drive through most nice subdivisions in America and you are in the land of $250,000 per year household incomes. These same families are now paying close to $100,000 in taxes at all levels. Obama considers these people millionaries while in fact many of them are living payday to payday. Boehner is right on target for a first step that is easily comprehended by the voters. Extend the Bush tax cuts and reduce federal spending to 2008 levels.

  2. That was no “trap” and Boehner didn’t fall for anything. The Republicans are going to win big in November and Boehner is making sure of that by opposing anything that would help the economy right now. He would be a fool to agree to a plan that would boost growth and confidence seven weeks before his party is expected to win by a landslide.

    Once the Republicans take control, assuming they do, then they will start to look at ways to stimulate the economy, but not before. Their downfall is likely to be their belief in deficit reduction and pandering to the voters on this. Congress will surely pass a balanced budget amendment and this will surely tank the economy to a degree far worse than anything we have experienced under Obama so far. That’s why I am going to aggressively short any stock market rally that comes after the midterms.

    1. Mike, I expect a clash in the GOP between the tax-cut-deficits-don’t-matter (Laffer) crowd, and the fiscal conservatives (most of the TP’ers) that want to balance the budget. They cannot have it both ways, and the Laffer crowd is well aware that balancing the budget will tank the economy.The only way they could do this is through vicious cuts to social programs, as well as the military, and I don’t see that happening. The GOP will not have the needed supermajority to stop filibusters or override a veto. So they are going to have to battle it out among themselves, if the they take power.

      To put it simply, they have an accounting problem to resolve.

      1. Tom/Mike,

        I listened to Obamas speech on radio and it did include plenty more references to deficit reduction, export growth, same thing we have come to expect from him and his 2 stooges: Larry & Timmy.

        In GOP, Palin, Ryan, Cantor, Boehner, Kasich, Toomey, etc, Ive listened to them all and they are 150% politically invested in debt doomsday imo so I dont see how they can do an about face on this and save face.

        The one leader they (GOP) have that is most with Laffer is Dick Cheney and I understand he is not well after his latest heart surgery this summer (small pump installed). He was one bright spot in GOP for me potentially on deficits but I dont know if he is well enough to lead at this time. I havent heard anything out of Romney lately.

        Hands are dealt for November at this point I would agree.

        We have to hope for a bipartisan tax cut after election to sustain deficits…my fingers are crossed.

        Resp,

  3. Agreed. There was no trap, and barely anybody is listening to Obama’s quacking anymore (or Boehner’s for that matter — barely anybody even knows who he is yet). I disagree, however, that the Republicans are obstructing tax cuts and stimulus because they’re worried that they may help the economy recover over the next seven weeks. Whatever happens between now and the elections is already baked in the cake. Nothing that Congress can do right now is going to change perceptions of the economy that quickly.

    In reality, the fight over extending the Bush tax cuts is a game of chicken. If the Republicans give in, marginal tax rates jump up on incomes over $250K, and there is almost no prospect of lowering them again unless Obama is turned out in Jan 2013. By holding middle class tax cuts hostage, they may be able to get what they want — lower marginal tax rates for everybody. Of course, Obama is also holding middle class tax cuts hostage because, well, um, I don’t know why exactly. Because we can’t afford it and because wealthy people don’t spend? If they don’t spend then giving them a tax cut is a freebie for the rest of us. They’ll work harder but won’t increase aggregate demand. Pretty good deal if you ask me.

  4. It doesn’t matter if the numbers show a double dip is not in the cards.

    When you fall off a cliff, you need to get back up fast.

    For millions and millions of Americans, it’s going to feel exactly like a recession for a very long time.

    1. Right. The new normal of 9.5% unemployment is not going down so well. You can tell us till your blue in the face that there’s not gonna be a double dip, or that the economy is growing or what have you. But when you know lots of folks on unemployment, you’re not impressed.

  5. As for Rep strategy, don’t forget Starve the Beast. That relies on the myth that the debt constrains gov’t spending. Cheney, et al., may not believe it anymore, but the Dems still do. Look for an attack on social spending and –while they say they want to create jobs –, labor. Remember, the Rep idea of a jobs program is to force people on welfare to find employment, and to lower the minimum wage to hellp them do so.

  6. Remember, the Rep idea of a jobs program is to force people on welfare to find employment, and to lower the minimum wage to hellp them do so.

    Right. They have been embarrassed often enough getting caught hiring illegal help on the cheap. Now they want to be able to hire legal help on the cheap, while having their own taxes cut.

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