Obama May Finally “Get It” on Economy – We Can Still Hope
J.D. Foster /
Barack Obama made a big deal throughout the campaign and after that he wanted to raise income taxes on the rich by reversing the reductions in upper rates enacted under President Bush in 2001. Lower rate advocates have argued all along that lower rates are better for the economy, whereas raising the individual income tax rates again from 35 percent (which is already too high) to 39.6 percent or higher would hurt the economy. By proposing higher tax rates, Obama and his allies explicitly discounted the economic effects. Rumors in Washington suggest the President, facing persistently high unemployment, may have been mugged by reality in the immortal words of Irving Kristol. Obama may have come around to a more conservative position in favor of lower rates, at least for now.
Last year my colleague, Bill Beach, and I argued for a pro-growth alternative to ineffective, debt-laden fiscal stimulus. Senator Jim DeMint (R-SC) led the fight in the Congress for stimulus that would work, but congressional leadership and Obama chose instead to pass a $787 billion debt hike masquerading as stimulus. The centerpiece of any effective pro-growth proposal was obviously to delay for some number of years the increase in tax rates that would otherwise occur with the expiration of the 2001 tax relief. (more…)