The lead headline in the New York Times this morning read, "Next Big Battle in Washington: Bush's Tax Cuts."
The Bush tax cuts of 2001 and 2003 are due to expire at the end of this year.
This being an election year both parties obviously will be maneuvering to develop a strategy they believe will be most advantageous to them in November, while casting aspersions toward the other side.
With the issue being tax cuts, it is hard to imagine Republicans repealing any cuts, even for the highest wage earners, traditionally their most favored constituency.
For Democrats, it should be a no brainer. Continue the tax cuts for the middle class (those earning less than $200,000) while restoring taxes to the pre Bush era levels for those above $200,000 ($250,000 for couples).
Two per cent of American households are in the highest tax bracket (which would be taxed at the higher, pre Bush era rate starting next year). Traditionally, the rich don't vote for the Democrats. What is there to lose for the Democratic majority to let the Bush era tax cuts for the rich expire in December?
Certainly, those in the middle class need no tax hikes and in an election year with this great recession, it is unimaginable for that to happen.
But for the rich, does anyone believe they pay their fair share (except for them of course)?
The highest income levels in America pay less in taxes than any of their counterparts in any other country in the world. Add in tax shelters, off shore tax havens, foreign bank accounts, reduced taxes on dividends, capital gains and estates, the rich in America receive all but a free ride.
The canard that tax cuts for the rich stimulate the economy and add jobs is a hoax perpetrated by them and their sycophants in Congress.
When factories close in the U.S. (while these corporations receive tax breaks to move their operations to 3rd world countries) only the American worker gets stiffed while the corporate executives continue to live high on the hog.
Getting back to the Republicans in Congress, they will portray the Democrats as "tax and spend" regardless of what the latter actually do. As Republicans are so fond of screaming about the size of the federal deficit, how can they justify increasing the deficit (an estimated $2 trillion) if all the Bush era tax cuts remain in place indefinitely? But facts never seemed to get in their way before and this paradox should be no different.
Lastly, though tax cuts and the deficit will be the focused issues this fall, the supreme irony is the 800 lb. gorilla in the room all these political blowhards (Democrat and Republican alike) ignore, which is the bloated defense budget. It accounts for well over $700 billion yearly in fiscal (government) spending and contributes mightily (and unnecessarily) to the nations exploding debt.
That's really where the focus on reducing the nation's debt should be. But of course, cutting the defense budget won't even be part of the discussion. They'll all be mum on that one.
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