In a transparent effort to pre-empt Republican arguments about tax cuts, President Obama unveiled a proposal today for a one-year cut for all Americans making less than $250,000 per year. While calculated to play well with his faux working class campaign rhetoric, the president’s plan makes no economic sense. Implementing a massive tax increase on those with the capital to invest it and therefore create jobs is not the sort of thing that will help a flagging economy. Nor will it do anything to stem the bleeding that creates job reports such as the one released last Friday that illustrated the country’s unemployment problem. But, as James Pethokoukis writes at the American Enterprise Blog, the president’s dare to Congress to pass such a plan or to implement a simpler tax code is pure political baloney.
As Pethokoukis points out, had he really wished to push through a simplification of the tax code, he could have endorsed the Simpson-Bowles Commission recommendations. More to the point, Obama’s predilection has always been to eliminate all the Bush-era tax cuts, including those on the middle class. If he is re-elected, he may well implement his promise of the continuation of the current rates on those making less than $250,000. But the significant element of this stance is that he is not promising to keep them for his entire second term but only for the first year.
The key point here is the same one that concerns those who worry about American foreign policy in a second Obama administration: flexibility. Just as the president will be able to implement more “flexible” policies that may please Russia and displease Israel, so, too, he is more likely than not to do what he has always planned on doing if re-elected: raise everybody’s taxes.
Indeed, once his job-killing health care bill is implemented in the next four years and the economy is mired in the doldrums without the White House putting forward any ideas other than to spend more, the president will have no choice but to raise taxes. And because soaking the rich will only get him so far, the middle class he is currently romancing is certain to be next in line.