Democrats are playing with fire on this one.
July 18, 2012 by Dan Mitchell
Democrats have openly admitted that their top political objective is to get Republicans to give up their no-tax-hike position.
You would think, therefore, that Republicans would instinctively recognize that they should hold firm. After all, when your enemy wants you to do something, it’s not because he has your best interests at heart.
But there’s a reason that the GOP is known as the “stupid party” and this year’s tax fight may give them an opportunity to further demonstrate their ineptitude. Especially because Democrats have launched a two-pronged attack in hopes of bullying Republicans into surrender.
- Democrats are saying that there will be automatic cuts to the defense budget (sequestration) unless Republicans agree to raise taxes.
- Democrats are saying that they’ll let all the Bush tax cuts expire at the end of the year – thus screwing all taxpayers – unless Republicans agree to Obama’s class-warfare proposals to soak the rich.
I’ve already dealt with the first threat, pointing out that the defense budget still grows by 17 percent over the next 10 years with a sequester, so there’s no need to surrender to a tax hike (especially since the Pentagon accounts for 45 percent of global military spending).
As such, let’s deal with the second threat, which is actually a repeat of the fight we had back in 2010. Back then, Republicans said that extending the 2001 and 2003 tax cuts was an all-or-nothing proposition, while Democrats issued their own ultimatum and said that the rich should be hit with higher tax rates.
Republicans won that fight, even though they were heavily outnumbered in both the House and Senate. So why, given that they control the House and have many more seats in the Senate, isn’t this year’s fight an easy win for the GOP?
Beats me, but the Democrats are playing hardball, perhaps because they think a fight over class warfare is a good way of distracting voters from the weak economy.
One of the Senate’s top Democrats, Patty Murray of Washington, has thrown down the gauntlet and stated that her colleagues are willing to push all taxpayers off the fiscal cliff. Here’s some of what the Wall Street Journal opined about her remarks.
Democrats must feel really good about their election chances, because their latest campaign strategy is to say how willing and eager they are to leap off the January tax cliff. They’re all but daring Republicans to make the Democrats’ day by refusing to raise taxes before the election. …In a speech at the Brookings Institution, she declared that if Republicans won’t raise taxes on income above $250,000 before November, Democrats will gladly let all of the Bush tax rates expire at the end of the year—even on the middle class, and no matter the economic consequences.
The editors at the WSJ are mystified as to why Democrats are willing to undermine an already weak economy with an election just a few months away.
The Murray Democrats are the ones holding the middle-class rates hostage to a GOP vote to raise taxes on the affluent. …Mrs. Murray may think she’s putting Republicans on the political spot, but her real hostage is the already weak economy. Growth in the first quarter was a mere 1.9%, and economists have steadily downgraded their expectations for the second. As the tax cliff approaches, the policy uncertainty is already causing businesses to hold off on hiring and investment. Even the Keynesians at the Congressional Budget Office say that if all of the Bush tax rates expire, growth will fall close to recession territory.
Since the Democrats aren’t coming to me for advice, I’m not sure about their motives. Are they so wedded to class-warfare tax policy that they’re willing to sacrifice other goals in hopes of penalizing success?
Or are they playing a clever political game, figuring that a GOP surrender on taxes will generate so much discord on the right that it will more than offset any electoral downside of a weaker economy?
I suspect the answer to both questions is “yes,” but mostly to the second question. Which is why this Lisa Benson cartoon is an appropriate way to conclude this post.
P.P.S. If you somehow think that higher taxes are necessary because it’s impossible to otherwise balance the budget, I hope you’ll change your mind when you learn we can balance the budget in just 10 years if politicians merely limit spending increases to 2 percent annually.