Tax Cuts

I have to say, although I have been a total fan and supporter of Obama thus far, I don't get the thinking on the issue of the extension of the tax cuts.

The Democrats hold the cards on this one.  Unless a bill is passed by both the House and Senate and signed by Obama, the Bush tax cuts will automatically expire.  Obama has the ability to say to the Republicans (politely and diplomatically, of course): Pass my preferred bill or there will be no bill, and if the tax cuts expire because you Republicans refuse to vote for a partial extension, then you will be blamed for the tax increase that will result for 95% of the taxpayers.

Republicans and their trusted sidekick, Fox News will, of course, blame the Democrats.  But surely, some organization on the left can do an ad campaign accurately stating that you, the viewer, will have your taxes go up because the Republicans refused to vote for an extension of the tax cuts for nearly everyone.  It's a relatively simple message which will strike home.

If it were up to me, I'd move the dividing line up from $250,000 per year to $500,000 per year, so that everyone above that line would have an increase in the marginal rates.  Schumer's proposal today to move the line up to $1,000,000 has the virtue of making a better bumper sticker, but I suspect will result in substantially lower tax revenues.

This is one time that the Democrats don't need to worry about a filibuster or about losing a handful of centrist Democrats.  As I said, the Administration holds all of the cards here.  This position can be sold easily to the public and will shore up support on the left for Obama.  To me, it seems like the clearest winner of a position that he can have.