Clinton urges extension of tax cuts
On January 1st, taxpayers will see a heavy tax increase, which some are calling “Taxmageddon.” This significant contraction could have negative effects on our economy. In fact, the Congressional Budget Office (CBO) said last week that raising taxes would send the economy back into a recession. And now even former President Bill Clinton says that the tax cuts should be extended, at least temporarily:
Former President Bill Clinton on Tuesday jumped into the debate over how to handle the looming expiration of historically low tax rates paid by nearly every American, putting him somewhat at odds with fellow Democratic President Barack Obama.
Clinton, speaking on the cable television program CNBC, said Congress may have to temporarily extend all of the low tax rates that expire at the end of the year to give lawmakers more time to come up with a plan to cut deficits.
The remarks came as the Obama campaign was trying to raise doubts about Romney’s record in the private sector.
The tax cuts were first put in place under former President George W. Bush. Obama extended the rates for two years at the end of 2010, after Democrats suffered huge losses in congressional elections.
Now, Obama and Democrats want to let some of the lower tax rates expire for the wealthiest Americans. Clinton’s comments could undercut that position.
“They will probably have to put everything off until early next year,” Clinton said on Tuesday.
The purpose of extending the tax cuts in 2010 was to avoid any hit on a struggling economy. Today we have a lower unemployment rate, though many workers have left the labor market altogether. James Pethokoukis notes that if the labor market were the same size now as when Obama took office then the “unemployment rate would be 10.9%.”
Economic growth is very slow; the slowest of any post-recession period since the Great Depression. But looking at those important economic indicators, It’s difficult to see what has changed in the last 18 months.
Temporarily extending these tax cuts isn’t going to do much to motivate businesses to hire in the short-term. We’re seeing that now. There is just too much uncertainty in the economy and everyone, including businesses, are bracing themselves for the looming tax hike.
Clinton, who has hilariously undercut Obama a couple of times in the last weeks, at least somewhat understands the situation. Obama, on the other hand, seems determined to take away any incentive for Americans to work, which is exactly what the CBO says that increasing taxes will do, or for employers to create jobs.