Is raising taxes in a poor economy good economics or agenda based politics?

In the days preceding the 2009 fight over extending the Bush tax rates, President Barack Obama said the following: “You don’t raise taxes during a recession.  The last thing you want to do is raise taxes during a recession, because that would just suck up…take more demand out of the economy.  And put businesses in a further hole.” {1}

Photo by Chip Somodevilla/Getty Images

In 2009-2010, Congress and the President managed to work together to extend these tax rates.  Obama now seeks to raise these taxes again, as the new January 1, 2013 expiration date on the Bush tax rates nears.  The question now is if we are still in a recession, or the weakest recovery on record, and if we continue to receive paltry job numbers month after month, why are we raising taxes on anyone if raising taxes “suck up…take more demand out of the economy.  And put businesses in a further hole.”  Is philosophical purity more important to Obama, and the Democrats, than the economy and job creation?  How many times a day do we hear a Democrat say that they want to get back to the job the American people sent them to Washington to do?  Americans wants jobs, they say.  What happened here?  Do they selectively apply this modus operandi of their “jobs based” agenda on the legislation before them, or do they believe that taking more money out of the private sector will actually stimulate growth of the private sector and thereby add jobs?  Is it more important to them that they adhere to their political philosophy than it is to help the average American out?

Some have nicknamed this new January 1, 2013 expiration date taxmageddon, and this is based on the number of tax rates ready to expire on this date that include updating an annual patch Alternative Minimum Tax.{2}  The Heritage Foundation also states that Income tax rates will shoot up, the child credit rate will be cut in half, the marriage penalty will roar back to life, the capital gains tax rate will go up, the dividend tax rate will soar, the payroll tax rate will jump two percentage points, and the death tax will be restored to its punitive past.  There will also be a uniquely pernicious additional payroll tax hike from Obamacare that will take effect to pay for that bill.{3}

The change in the President’s philosophical approach to the Bush tax rates began months ago when he began calling for Congress to allow the tax cuts to expire on millionaires, or those making one million a year.  Then, Monday, he lowered that bar to those making 250,000 a year.

Those who view this “taking more more demand in the economy” 2009 NBC interview about  are wondering what has changed?  If anything, they say, we’re in the same straits we were in in 2009, and it may even be worse. And if it’s the case that we’re in the same straits, or worse, than we were in in 2009, the question of what is more important to this administration, and Democrats in Washington, economics or philosophy must be asked.

When asked by Bill O’Reilly what was more important, Congressman Dennis Kucinich claimed that you can have both.  There was no clarification what “both” meant, but I assume it means that Kucinich and company believe that you can lower the unemployment rate by creating more government jobs, you can lower the debt by taxing individuals more, and you can spend your way out of the recession.  As any fan of the Atlanta Falcons knows, one can pursue a passionate ideal regardless of historical results, but with so many lives affected by the decisions that you make, one would think that a Congressman, or a President, would be able to put philosophical purity aside for the betterment of the whole.  The answer is that they believe that their philosophy will win out…if we’re just a little bit more patient.  President Barack Obama believes in this philosophy so much that he stated that it is the reason he decided to run for re-election.  “I would hate to see someone like a Mitt Romney, or whoever the Republican candidate is, get credit for all the work we’ve done.”

President Barack Obama has had three years to ignite this economy, and by almost every account he has not been successful at it.  His economic philosophy has added to the debt, devalued the dollar, failed to stimulate the private sector, and it has resulted in a net loss of nearly one million jobs.  Yet, on Monday he stated that he wants Congress to “take more demand out of the economy and put business in a further hole” by raising the taxes on certain individuals.

Obama, and his economic advisors, know that raising taxes on those making over 250,000 a year will only pay for eight and a half days of this current government, so why does he do it?  As liberals will tell you it’s about fairness.  Fairness is apparently more important to them than American prosperity.  An attempt to disprove this makes no sense when one compares what Obama says in 2012 compared to what he stated in 2009.  If Obama made an attempt to qualify his current statements with his former statements that would be one thing, but as we’ve seen few in the media force him to clarify his position on issues with what he’s said in the past.

Obama states that we should go back to Clinton-era tax rates.  Just the tax rates, he says, nothing else.  We had unprecedented levels of prosperity under President Clinton, and we had a 39% tax rate.  Why don’t we go back to those levels?  The first question to be asked of this line of thought is, does anyone honestly believe that the Clinton-era prosperity was due to these increased tax rates.  I don’t know, say Democrats, but it’s worth a shot.  The next question, if you believe that, is how does taking more money out of the private sector procure prosperity?  I know it’s about fairness.

Some have called former president Clinton the luckiest president in modern times.  He sat in the aftermath of the Reagan tax cuts, tax cuts that offered private businesses enough excess money to devote to research and development (R&D).  That R&D eventually produced the many products that developed and enhanced the internet, that resulted in the tech bubble that the Clinton administration prospered under, and some have argued that the Clinton era tax increases eventually popped this bubble by the time George W. Bush took office.  The next question is if we prospered under Clinton era taxes, did we also prosper under Clinton era spending levels?  If we’re going to use the Clinton model as a model of success, why do we limit our pursuit of this “successful” model to the tax increase portion of it?  Is it because we honestly believe that that portion of the model procured prosperity, or is it because that fits an agenda?





Thank you for your comment!

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.