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Even for Middle Class, Tax Cuts Dig Deficit Deeper
That left a defensive Boehner telling CBS’s “Face the Nation’’ on Sunday, “If the only option I have is to vote for some of those tax reductions, I’ll vote for them . . . But I think that’s bad policy . . . we’ve got to cut spending.’’
But lest you think Obama is “winning’’ and Boehner is “losing,’’ the context of all this must not be forgotten. America will lose no matter what. Obama is still upholding one of the most regressive Republican fiscal policies in modern times. Boehner complained Sunday that the Democrats “haven’t reached out to us for the last 20 months.’’ But Obama more than reached out as a candidate. Looking for that sweet center of middle-class appeal, he promised, “If you make $250,000 or less, we will not raise your taxes. We will cut your taxes.’’
The cost of the 2001 and 2003 Bush tax cuts has been enormous and will continue to corrode the American economy.
In 2008, in the middle of the presidential campaign, the Center on Budget and Policy Priorities said that the Bush tax cuts “have been the single largest contributor to the emergence of substantial budget deficits in recent years.’’ The center said the tax cuts added about $3 trillion to deficits between 2001 and 2007.
Making them all permanent, as the likes of Boehner would prefer, would cost the Treasury $4.4 trillion over the decade, including interest on the federal debt, the center said. The Tax Policy Center of the Brookings Institution and the Urban Institute said that while Obama’s pledge to cut taxes was less than presidential rival John McCain’s, Obama’s plans would still boost the federal deficit by $3.6 trillion by 2018 (McCain’s would have increased the debt by $5.1 trillion).
While Obama is saying that repealing the tax cuts for the most wealthy Americans will add $700 billion back to the Treasury, that only begins to whittle away at the $4 trillion value of the cuts. Moreover, there is no evidence that tax cuts did anything to boost either the economy or personal wealth. According to the Center on Budget and Policy Priorities, median income in 2006 was $1,300 below its level before the 2001 cuts.
Yet, taxes are such a third rail in American politics that Obama felt he had no choice but to act Republican even as he was wooing liberals with his stances on Iraq and the environment. There has never been an honest discussion about what the tax cuts, even for the middle class, will cost us in the long run.
Last week, the new World Economic Forum’s global competitiveness index found the United States to be slipping in global competitiveness, with a major reason being our huge deficits. Ending the tax cuts for the wealthy now is only a first step. Ending the notion that tax cuts are good at all is the next.