Commentary Magazine


Want Immediate Certainty and Comfort? Give Me $700 Billion

In response to Eric Cantor’s Wall Street Journal op-ed calling for current tax rates to be extended for all taxpayers “and most importantly for small businesses and investors,” the White House posted a response on its blog yesterday. Written by its deputy communications director and entitled “No Excuse for Holding Middle Class Tax Cuts Hostage,” the response argued Republicans are preventing Obama from giving “immediate certainty and comfort” to the middle class:

Under the Obama plan, every middle class family would receive the immediate certainty and comfort of knowing their [Bush] tax cuts were permanently extended. … And here’s what [the Republicans] are holding middle class tax relief hostage for: having our nation borrow $700 billion that we can’t afford to provide an average tax cut of $100,000 to millionaires and billionaires.

There is another way to phrase the issue: should $700 billion be transferred from the private economy to the government, or should the government be required to cut spending by $700 billion to allow those who earned it to invest in their businesses and the broader economy? To put it in less subtle terms: should $700 billion be transferred to the organization that runs the post office, has yet to produce a budget for the current year, was unable to forecast accurately the impact of the $787 billion it used for “stimulus,” is already spending too much, and threatens to borrow $700 billion “that we can’t afford” if the private economy won’t cough up the money?

The reference to “millionaires and billionaires” (and the much greater number of non-millionaires who would face significantly higher taxes) is a little like a spendthrift teenager arguing his generous allowance ought to be increased because Dad has the money and won’t miss it. The teenager’s argument is a bit beside the point.

The White House threat to borrow $700 billion more unless its allowance is increased comes on top of the 3.8 percent tax increase inserted into Obama’s health-care legislation earlier this year as a new “Medicare contribution” – one that, as noted here, (1) is not a “contribution,” (2) has nothing to do with Medicare, and (3) was given its misleading name to hide the fact that Obama is currently seeking his second substantial tax increase on investment income.

It is a little unclear who is holding whom hostage in this debate, but the “immediate certainty and comfort” the middle class and others desire may be not Obama’s Chicago-style bargain but rather an end to one-party government seeking more tax increases to support an “unsustainable” level of deficits its own spending has produced.