Monday, December 20, 2010

Need a Plan to Rebut Calls for Permanent Tax Cut for the Rich

"Unless President Obama develops a plan to rebut calls for premature spending cuts, the tax-cut deal will not do as much good as he says it will." New York Times' Editorial published on December 19th, The Tax-Cut Deal, eloquently pointed out the compromise he made with Republicans would not help our economy much, particularly because the high cost of the little help to the poor and the unemployed, Republicans will call for more spending cuts, which will made the economy recovery more difficult.  It urged President Obama to prepare for the next showdown.  The editorial pointed out that:
In exchange for high-end tax breaks, Mr. Obama won a 13-month extension of federal jobless benefits, a modest one-year cut in payroll taxes and other temporary measures for businesses and low-income families...

New stimulus spending is undermined if it is offset by cuts in existing spending — and, in the next Congress, Republicans will clamor for immediate budget cuts. Senator Mitch McConnell, the Republican minority leader, praised the tax-cut deal last week, precisely because he believes it will begin to force spending cuts. John Boehner, the incoming House speaker, has called for a spending level in 2011 that is more than $100 billion lower than President Obama wanted, though he has not said which programs he would cut to achieve those savings.

So the fight has just begun, and only one thing is sure. Unless Mr. Obama finds his voice and develops a plan to rebut calls for premature spending cuts, the tax-cut deal will not do as much good as he says it will...

Deficits are not as pressing a problem as economic recovery. A stronger recovery must not only come first, but is the best way to begin to heal the budget. Fighting to uphold health care reform is also crucial, because, in the long run, that is key to taming the deficit...

When deficit reduction begins in earnest, tax increases and cuts in big-ticket programs — Medicare, Medicaid, Social Security and defense — will be the focus. Before that, Mr. Obama must not be drawn into nickel-and-dime cuts that will not solve the deficit problem — and will impede recovery. He made a deal with the Republicans. Now he has to get them to live with it.
That was very important but far from enough.  In two years' time, Republicans will push to have the "temporary" tax cut for the super rich made permanent, no matter what state the economy will be.  We have heard such arguments before - our economy is good, therefore we must cut taxes; the economy is in terrible shape, therefore we must cut taxes.  This irresponsible argument will be used with great directness and striking efficiency against the poetic eloquence of President Obama.

Therefore, it is pertinent for President Obama to develop a plan to rebut calls for permanent tax cut for the rich.  He needs to act now, because in last two years he has not demonstrated that he was able to win an upper hand in a last-moment parrying.  By surrendering to the Republican now, he owes the lower- and middle-class Americans this.

Bombed Bridge, III / 炸斷的橋樑之三 / Bombardierten Brücke, III
Bombed Bridge, III © Matthew Felix Sun

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