Free Markets, Free People

Obama argues against letting the Bush tax cuts expire

I know, you’re going,” say what!?

A year ago, probably when Obama thought we’d be out of the recessionary woods by now and only 20% of the “stimulus” had been spent, he was questioned while in Elkhart, IN, about the economics of a tax hike during a recession.  The question was submitted by an Elkhart resident (Scott Ferguson) and asked by Chuck Todd of SNBC.  Todd asked, “Explain how raising taxes on anyone during a deep recession is going to help with the economy.”

Obama said it wouldn’t:

“Well—first of all, he’s right. Normally you don’t raise taxes in a recession, which is why we haven’t and why we’ve instead cut taxes. So I guess what I’d say to Scott is—his economics are right. You don’t raise taxes in a recession. We haven’t raised taxes in a recession.”

Absolutely true to that point.  But the larger point is the admission – “you don’t raise taxes in a recession”.

Todd riposted with “But you might for health care. You might for the high—for some of the wealthiest.”

Obama responded very emphatically:

We have not proposed a tax hike for the wealthy that would take effect in the middle of a recession. Even the proposals that have come out of Congress—which by the way, were different from the proposals I put forward—still wouldn’t kick in until after the recession was over. So he’s absolutely right, the last thing you want to do is to raise taxes in the middle of a recession because that would just suck up—take more demand out of the economy and put businesses further in a hole.

Emphasis added, but wow – exactly.  It is “the last thing you want to do” and it will “put businesses further in a hole”.

So that was then and this is now – everyone who is actually having to deal with what is going on know we’re still in a recession.  But technically, we’ve had the “two consecutive quarters of growth” necessary to claim we’re in a recovery.  The fact that the “growth” was pretty much all government spending – borrowed money – doesn’t count.  The technical definition wins out.

That means he can, with a straight face, claim that letting those tax cuts expire is OK because we’re no longer in a recession.

Of course that’s just ludicrous to anyone who has two brain cells to rub together.  It is unwise and economically the wrong thing to do.  But, as Turbo Tax Timmy Geithner has decided, when asked about those expiring tax hikes, “The country can withstand that. The economy can withstand that. I think it’s good policy.”

Is it?  Or is it good “ideology”?

Tax the rich – a liberal mantra for decades.  Take the seed corn and pass it out to those who will eat it instead of plant it.  Ensure that those of the investor class have less to invest. Put businesses in a deeper hole.  Give the money to government which can obviously spend it more wisely than can the private side.

The $787 billion dollar “stimulus”? 

Move along, citizen – nothing to see here.

~McQ

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13 Responses to Obama argues against letting the Bush tax cuts expire

  • Something that you’ll see very clearly illustrated in the last SOTUS is Obama’s practice of saying self-contradictory things in the same paragraph.  It was really quite striking in that speech, though you can hear it at other times…most often, actually.  It is an amazing thing to observe…along with the fact that nobody calls him on it.
    Ott, time for a “post-modern, multiple truths” turn through the tulips…!!!!

  • If you leave the Bush tax cuts in place then you have to get right the part the GOP didn’t while they were in the majority.
    You need to cut spending.
    If you continue to deficit spend then you are defacto raising taxes… in the future.  I seriously doubt the GOP has figured this out yet.  It is pretty darn clear the Dems haven’t figured it out.
     

    • The GOP has moved a bit on spending cuts, with YouCut, and the proposal out of Kansas to have an office that looks for laws to be repealed…ironic that, and Ryan’s proposal.
      Now, part of the problem is the GOP leaders get sucked into the ruling class, but another big part of the problem is that the MSM/public will skin, gut, and filet anyone who seriously gets specific about spending cuts. This is why Christie did not run on specifics. I do think that pretty soon, it will turn into a net positive to have specific cuts, or to run on them in general – but I am not sure if 2010 is the year. Maybe we need one state to completely fail, or perhaps a huge stimulus passed to “save” them to make everyone wake up completely. I think 2010 may end up being the signal that its okay to talk about spending cuts.

      • For decades, I’ve advocated that all Federal non-criminal law should have an automatice “sunset” provision.  It could not be re-passed in  an “omnibus” bill; it would require reconsideration and re-passage according to the rules governing any law.
        Of course, with these outlaws we have in Congress now, that could be ignored just fine, too…

  • You mean those horrible, horrible giveaways to the rich?

  • The official White House position – and technically that of most economists – is that we’re in recovery and not in a recession. Hence: letting the tax cuts expire will be not in a recession and perfectly fine economically speaking. Notice he kept repeating that phrase “in a recession.” He did that on purpose.

    • If we are entering a Japanese-style decade of low growth, does that make it different?

    • Of course he did, and if you read the post, I noted that. I also noted the driver for those “two consecutive quarters of growth” which qualifies it for a “recovery” was government – not private sector – spending. So, again as noted, technically he has an argument. In reality, no one, and I mean no one of any intelligence, believes we’re in a real recovery. Bottom line – you don’t raise taxes in a recession and he and the Democrats are about to do it. It’s one of the reasons you are hearing the propaganda about “recovery summer”.

      • So, you’re saying that Joe Biden, Erp, Barbs Boxer, Maxine Waters, etc. all TOTALLY believe we are out of the recession…TOTAL RECOVERY!!!

      • Personally I’d argue that we have to redefine recession and recovery if what they’re saying is true, because things just ain’t out of recession yet for the bulk of the public. Actually, Just One Minute Typepad had a great article recently about the divide between college graduates (4.5% unemployment on average) and those without (10.1% – official numbers).

        http://justoneminute.typepad.com/main/2010/08/it-depends-on-the-meaning-of-crisis.html

        He points out that this is worse than previous recessions even for graduates – and that men are taking it harder even as college graduates.

        Bottom line – you don’t raise taxes in a recession and he and the Democrats are about to do it. It’s one of the reasons you are hearing the propaganda about “recovery summer”.

        Yeah, that’s what I was thinking too; but nobody’s buying what they’re selling. In the end, they’ll push through a continuation of the tax cuts for everyone under Obama’s magic “rich” line and dare the GOP to expressly cut taxes only on the rich if they get power.