From The Grio – President Obama is in yet another political fight for his life. This time it’s over whether or not to dump the Bush tax cuts for the rich. GOP leaders are virtually unanimous on retaining the break, and many Democrats with a bad case of election jitters show terminal signs of caving on the breaks. Their defection would leave Obama twisting in the political wind on the issue. But Obama must dig in hard on this one. The breaks must go, and the reasons why aren’t hard to find.
The rich are already rich, and they don’t need the money. The GOP leaders counter with the tired and discredited supply side argument. That the tax breaks are not about lining the bulging pockets of the rich, but insuring that the rich have surplus money to create jobs, expand businesses, and buy lots of consumer goods. The line is political pandering to greed. There are too few of the wealthy that benefit from the Bush tax cuts to create the kind of massive consumer demand that creates jobs and grows businesses. There’s no evidence to support the notion that the rich reflexively play the role of good wealthy and corporate citizens and plop their surplus tax break dollars into job creating investments.
The banks are a near textbook example of this nonsense. They got billions from the taxpayer floated bailout, and they have been Scrooge like in their lending. The Wall Street whiz boys are even worse. They reaped a bonanza from the Bush tax cuts and still nearly crashed the economy. Estimates are that the banks and corporations have hoarded nearly two trillion dollars of profit made possible to a degree by taxpayer bailout dollars. Yet small and medium sized businesses wither on the vine for lack of business loans. The proof of this is the current job growth figures for the past year, while the rich padded their accounts, the net job growth has been relatively paltry. Some studies show that since Bush passed not one but two colossal tax cuts, there’s been an overall decline in the much vaunted job growth in the private sector. Economists agree that the nation must create 150,000 jobs, that’s new jobs, at the absolute minimum each month to keep pace with the job attrition and population increase. The figures haven’t come anywhere near that.
There’s another compelling reason to get rid of the Bush tax cuts for the wealthy, One that ironically the GOPscreams about. It’s the deficit. Obama and Treasury Secretary Timothy Geithner have repeatedly warned that the nation simply can’t afford to retain the cuts for the rich. They will cost the treasury $700 billion. That kind of Treasury hit ultimately means even more slashes, cutbacks and elimination in and of funding for education, health, energy, and public works programs to state and local governments, all of which create jobs. Now the politics of why the wealthy should not get another dime from the tax breaks.