Ho hum: The tax fight resumes
Obama’s Strategy to Win the Budget Fight
By Jonathan Chait, New York Magazine
In the days since the election, the outlines of President Obama’s strategy to win a favorable agreement on the deficit have grown fairly clear. All the elements of the plan were on display in his post-election press conference today.
Obama’s overarching goal is to secure an agreement to reduce the budget deficit over the next decade in a way that spreads the pain evenly, rather than forcing the middle class to bear most of the burden. That requires a significant tax hike on the rich. The way to get to that point is to negotiate with Republicans from a baseline that assumes the expiration of the Bush tax cuts on income over $250,000 a year. If Obama is negotiating for that goal, then he’s likely to wind up with a crummy deal, like the one he offered to John Boehner last summer in return for entitlement cuts and Boehner not blowing up the world economy. If Obama has that concession in his pocket, then the rest of the deal gets very easy — he can offer entitlement cuts in return for a little revenue.
That’s why Obama made the case that the Bush tax cuts for the rich not only must but will expire, saying that the only two possible options were an extension of the Bush tax cuts on income under $250,000 or the expiration of all of them. Treasury Secretary Tim Geithner and former Treasury Secretary Robert Rubin have both explained the administration’s view on this. It is possible to design a tax system on paper that cuts tax rates and raises more revenue. But actually passing a law like this is impossible. And thus tying Obama’s demand for higher revenue to a tax reform process is to bank on imaginary revenue. Obama thinks he needs to work from the assumption that the Bush tax cuts on the rich have expired, and then reform the tax code.
(More here.)
In the days since the election, the outlines of President Obama’s strategy to win a favorable agreement on the deficit have grown fairly clear. All the elements of the plan were on display in his post-election press conference today.
Obama’s overarching goal is to secure an agreement to reduce the budget deficit over the next decade in a way that spreads the pain evenly, rather than forcing the middle class to bear most of the burden. That requires a significant tax hike on the rich. The way to get to that point is to negotiate with Republicans from a baseline that assumes the expiration of the Bush tax cuts on income over $250,000 a year. If Obama is negotiating for that goal, then he’s likely to wind up with a crummy deal, like the one he offered to John Boehner last summer in return for entitlement cuts and Boehner not blowing up the world economy. If Obama has that concession in his pocket, then the rest of the deal gets very easy — he can offer entitlement cuts in return for a little revenue.
That’s why Obama made the case that the Bush tax cuts for the rich not only must but will expire, saying that the only two possible options were an extension of the Bush tax cuts on income under $250,000 or the expiration of all of them. Treasury Secretary Tim Geithner and former Treasury Secretary Robert Rubin have both explained the administration’s view on this. It is possible to design a tax system on paper that cuts tax rates and raises more revenue. But actually passing a law like this is impossible. And thus tying Obama’s demand for higher revenue to a tax reform process is to bank on imaginary revenue. Obama thinks he needs to work from the assumption that the Bush tax cuts on the rich have expired, and then reform the tax code.
(More here.)
Powered by Blogger
0 Comments:
Post a Comment
<< Home