Finally, President Obama has awakened to at least a part of Taxmageddon as it barrels down on American taxpayers next year and drags down job growth this year. Was he previously unaware of it? Did he just decide it matters, given the recent pattern of weak job growth?
So the debate is joined. House Republicans initiated the debate by announcing a vote to extend all the tax policies from 2001 and 2003. Now the President has spoken, which is new, and proposed to extend the tax policies for some and raise taxes on others, which is old hat.
Senate Majority Leader Harry Reid (D–NV) apparently heard the same alarm clock, as he quickly reacted by announcing a July vote in the Senate, as well—so much for the conventional wisdom that nothing happens until the lame duck session after the election.
Obama says this is no time to raise taxes on struggling middle-class families. Certainly can’t disagree there. Middle-class families are struggling—struggling to find jobs, struggling with pitiful wage gains if they have a job, struggling to stay in their homes, struggling to rebuild their savings.
Also old hat is that, in the face of an economy struggling to create jobs, Obama wants to raise taxes on—you guessed it—job creators. This is a case in point demonstrating that the President has no concept whatsoever of how a private economy works.
Let’s keep this simple:
- Raises taxes on energy, and you get less energy production. Obama seems to get this one—but only because it aligns with his environmental agenda.
- Compel people to buy health insurance by threatening higher taxes if they fail to comply. Obama gets this, too, but only because it fits with his agenda of government-based health care.
- Raise taxes on job creators and get—trick question: more or less?—job creation.
So Obama says he at least doesn’t want to raise income taxes on middle-class families. Where’s his call to prevent a second massive tax hike on the middle class? Where’s his call to prevent a two-percentage-point increase in the payroll tax on January 1? For a family making $50,000, that’s a $1,000 tax hike. It may not sound like much to the “wealthiest Americans, folks like myself” as Obama riffed, but $1,000 is a lot of money to a middle-class family.
In 2011 and in 2012, President Obama made a big deal demanding that congressional Republicans cooperate in preventing the same payroll tax jump then. What’s changed? Certainly not the unemployment rate, and certainly not the state of family finances.
Was the payroll tax cut particularly good policy when Obama first proposed it? No. Did it help the economy? Not particularly. Then why extend it? Because that family needs that $1,000 in payroll tax relief.
This payroll tax hike is a big part of Taxmageddon. Obama and Congress both need to hear this alarm clock, wake up, and get busy avoiding a payroll tax hike insult to the middle class’s injuries of stagnant wages and high unemployment.