Fox News is reporting the President has signaled a willingness to extend the Bush tax cuts, which are currently set to expire in 2011. As is usually the case, these signals were confusing, coming as they did through White House senior adviser David Axelrod. Until now, the President and his Party have adamantly insisted that extending tax cuts for the people who actually pay all the taxes is utterly unthinkable, but now they might be willing to entertain a temporary extension for top earners, since raising taxes in a recessionary economy is a terrible idea.
“We don’t want that tax increase to go forward for the middle class … But plainly, what we can’t do is permanently extend these high income taxes,” Axelrod told the Huffington Post. What he meant was that permanently extending lower income taxes is plainly undoable. Extending high income taxes is the entire point of the Democrat Party’s existence.
In a weekend radio address, the President said the country cannot “afford” tax cuts for millionaires and billionaires, by which he meant people making over $250,000.00 per year. (Hey, four years of that makes you a millionaire, and you’d be a billionaire in just four thousand years.) This rhetoric about “affording” tax cuts is based on the tedious leftist assumptions that all income properly belongs to the government, and decreases in tax rates equal decreases in government revenue. The first is an insult to free people, and the second is demonstrably false.
No one is better at demonstrating this than superstar economist Arthur Laffer, who restated his crucial insight in a June 2010 editorial for the Wall Street Journal: “People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.” In other words, people change their behavior to avoid high tax rates, and these changes generally have negative effects on the economy. Soaring tax rates leave the government with a larger slice of a rapidly shrinking pie.
Liberals approach the Laffer Curve roller coaster with trepidation, since it utterly destroys their primitive economic beliefs. There is nothing they would prefer to discuss less than increased Treasury revenue following tax reductions upon the middle class and evil rich. Leftist politicians know Laffer is right, of course – the empirical evidence supporting his work is a matter of public record. They pretend otherwise right up until tax-and-spend politics leaves the economy teetering on the edge of depression. Someone obviously ran through Economics 101 with our hopelessly unqualified President, and explained massive tax hikes in 2011 might make his 2012 re-election campaign a little difficult, by which they meant terrifying.
Obama could also use a little triangulation assistance from aggrieved liberals. His talk of extending tax cuts for the cruel demons who earn over $250k per year has the Left as seasick as the passengers of the Carnival Splendor. Boston University law professor Cornelius Hurley told Politico that “caving on the high income tax-cut issue guarantees that he will attract an intra-party opponent from the progressive wing of the Democratic Party.” Heaven forbid President Obama should find himself thrown into that briar patch.