Victory, Immortal Fame! So cries the last warrior standing, ironically right before he himself dies, after defeating his surrounding army. The warriors of the mythical army, raised from serpent’s teeth planted in the ground, are tricked by Jason into battling each other. So ends this humorous battle in Argonautica.
Not so different was the media coverage of the passing of the Bush tax cut extension. After Obama defeated his fellow Democrats in passing this extension, the media hailed it as a much needed victory for the White House.
Wait. What?
If you read Obama’s Tax Cuts of 2010, you shouldn’t be too surprised. In fact, the only thing that should surprise you is exactly how much of the Republican agenda Obama acquiesced to in this tax rate extension. I predicted back in October, 2009 that Obama would extend the Bush tax cuts for at least the middle class, and that he would herald them as tax cuts instead of merely extensions of the Bush tax rates. But at the time I figured it would come at the cost of no estate tax fix, higher rates for upper income earners, and other built in tax hikes. Instead, this “White House victory” looks more like something from the last 8 years that supposedly “got us into this mess in the first place”.
The question then, if this is truly a White House victory, is if Obama has become a born again Capitalist. The tax extension doesn’t just extend Bush tax rates for two years, it also gives a generous estate tax system that increases the exemption from $1 million to $5 million and lowers rates to 35%. It also gives businesses of any size 100% bonus depreciation on new asset purchases in a tax gift to huge corporations. And lastly, it replaces the Making Work Pay Credit with a 2% across the board cut in Social Security taxes.
The 2% Social Security cut was Obama’s answer to the expiring Making Work Pay Credit and is perhaps the greatest evidence of either a change of heart on Obama’s part, or a total victory on the Republican’s part. In 2010, the Making Work Pay Credit will give families making less than $40,000 a credit of $800, while denying families making more than $175,000 any credit. It was a perfect Liberal tax cut. It was even poorly administrated.
On the other hand, the 2% Social Security cut is an across the board flat cut that is easy to administer and has no AGI cap. So in 2011 a family that makes less than $40,000 will actually be paying more taxes, while a family with a working husband and wife who make $200,000 combined will get a tax cut of $4,000. This year they would have no tax break. This non-progressive change is a White House victory?
The 2010 tax rate extension was an acknowledgment by the left that the policies of the last 8 years did not get us into this mess. The Bush tax cuts got us out of the last mess and just might work this time too. How they can claim that this Republican victory was anything else is beyond me.
The only thing the Democrats got out of this deal was not having to pay for the next unemployment benefits extension. But in the end, Obama found it easier to defeat his own majority party than to take out the minority Republicans. The result? Your taxes aren’t going up next year no matter who you are. And just as expected, Obama is saying it is because of him.
The Conservative Constitutionalist Movement 