By Joseph Picard: Subscribe to Joseph's RSS feed
July 26, 2010 4:30 PM EDT
With the Bush tax cuts, enacted in 2001 and 2003, set to expire at the end of the year, whether to extend them for all or part of the populace promises to be an issue in the upcoming mid-term elections. While most Republicans favor an extension of all the tax cuts, Democrats, in general, want to let the cuts for the wealthy die away while extending the cuts for people earning less than $250,000 a year. But at least two Democratic Senators have recently said that they support an across-the-board extension, which fact may make it difficult for the majority party to have its way.
The Republican position was expressed today by the spokesman for Rep. John Boehner, R-OH, who is House Minority Leader.
"Rep. Boehner opposes Washington Democrats' plan to raise taxes on American families and small businesses," said Michael Steel, Boehner's communications director. "The last thing we need in a struggling economy is the largest tax hike in history."
Senate Minority Leader Mitch McConnell, R-KY, recently said that allowing the tax cuts to expire was tantamount to raising taxes.
Senators Kent Conrad, D-ND, and Evan Bayh, D-IN, have come out in support of extending all the tax cuts.
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"Senator Conrad is in favor of extending all the expiring tax cuts for now," Sean Neary, Conrad's director of communications, said today."However, after the economic recovery has solidified, in approximately 18-24 months, he believes the Bush tax cuts for the wealthy - not the middle class - should be sunsetted in an effort to address the nation's deficit and debt."
Boehner and McConnell are up for re-election this November. Conrad is not, and Bayh is retiring from the Senate.
Alan Greenspan, the former Federal Reserve Chairman, who originally favored the Bush tax cuts, is now for letting all the tax cuts lapse.
Greenspan explained that the nation has to "come to grips" with the problem of escalating deficits and, because the tax cuts have greatly contributed to the deficit, they should be let to expire, so that the government can capture and use the revenues.
Democrats are under pressure from their President to keep cuts in place for middle-class Americans.
President Obama has pledged not to raise taxes on those making less than $250,000. He does not want to back down on such a promise, especially in this mid-term election year, and especially when Republicans, led by McConnell, are already raising the specter of a tax increase.
Keeping the middle class tax cuts in place, while eliminating those for the wealthiest Americans, makes economic sense, at least in the short run, said Chuck Marr, director of federal tax policy studies for the Center on Budget and Policy Priorities.
"The higher tax cuts are simply unaffordable and they should be sunsetted," Marr said. "We should take that money and channel it to policies that have more potential for job creation. It's an unsustainable fiscal task without removing the tax cuts for the wealthy."
Marr noted, however, that studies have shown that the American middle class currently has the lightest federal tax burden in U.S. history.
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