The duel over tax breaks
President Obama has just kicked off round two of the tax-cut debate — and that means it’s time for some big-picture perspective on the duel of ideas that will characterize this campaign.
The GOP won round one back in the 2010 lame-duck session, when hard-bargaining Senate Republicans made extension of all the Bush-era tax cuts the price of progress on the president’s other priorities. With that extension set to expire at year’s end, Obama now hopes to use the issue to portray himself as the champion of the middle class and to paint the GOP as concerned primarily with protecting the well-to-do — all while changing the campaign subject from another disappointing month of job creation.
Thus on Monday, the president called on Congress to extend the breaks for those making less than $250,000 for another year, even as the White House vowed to veto any bill that also extends the breaks for incomes above that level.
This is obviously a political maneuver. Yet it’s also a legitimate way to highlight the two parties’ competing political priorities and economic ideas. Obama believes the economy is suffering from inadequate demand, and that the best way to create jobs is to put money into middle-class pockets so consumers will spend more, which will, in turn, cause businesses to hire more to produce more products.
Republicans profess to see the unemployment problem as one that must be solved by restoring private-sector confidence, in part by providing a tax climate that induces business executives to invest more in plants and equipment and to increase hiring. Contending that the route to recovery runs through entrepreneurs and small-business types who earn upwards of $250,000, the GOP insists that the Bush tax cuts must also be extended for those incomes as well.