Hot off the wires from the New York Times is the story that President Obama will state in tomorrow's speech his unequivocal opposition to extending the Bush tax cuts for the wealthy:
WASHINGTON — President Obama on Wednesday will rule out any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.
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Mr. Obama’s opposition to allowing the high-end tax cuts to remain in place for even another year or two would be the signal many Congressional Democrats have been awaiting as they prepare for a showdown with Republicans on the issue and ends speculation that the White House might be open to an extension.
This is good news, and this was partly because of the op-ed written by President Obama's former budget director, Peter Orzsag, in favor of extending the Bush tax cuts for the rich for an additional two years.
The White House came out strong in their pushback against Orzsag's op-ed in the New York Times, as you can see in this press conference by Robert Gibbs below:
And from the rest of the story in the New York Times are further details on the making the R&D credit permanent and extending corporate write-offs on capital investments:
Politically, however, the president is, in effect, daring Republicans to oppose the plan, in that way proving Democrats’ contention that they will block even their own ideas to deny Mr. Obama any victories. And by proposing business tax breaks that, according to nonpartisan analyses, would do more to stimulate the economy than extending the Bush tax rates for the wealthy, Mr. Obama hopes to buttress Democrats’ opposition to extending those rates.
However, these corporate tax cuts wouldn't create jobs to the extent that President Obama's $50 billion in infrastructure spending would, and Robert Reich illustrates just why:
In sum, Obama’s proposed corporate tax cuts (1) won’t generate more jobs because they don’t put any cash in worker’s pockets (as would, for example, exempting the first $20,000 of income from the payroll tax and making up the difference by applying the payroll tax to incomes over $250,000); (2) will subsidize companies to cut even more jobs; and (3) will cost $130 billion — money that could better be spent helping states and locales avoid laying off thousands of teachers, fire fighters, and police.
So why is Obama proposing them? To put Republicans in a bind. If they refuse to go along he can justifiably say they have no agenda other than obstruction. After all, the only thing they’ve been arguing for is lower taxes. On the other hand, if Republicans agree to support these corporate tax cuts, Obama can claim a legislative victory that will help Democrats neutralize their opponents in the upcoming elections.
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But this cynical exercise could backfire if Republicans call Obama’s bluff and demand the corporate tax cuts be put on a fast track and get signed into legislation before the midterms.
More troubling, Obama’s whopping proposed corporate tax cuts help legitimize the supply-side dogma that the economy’s biggest obstacle to growth is the cost of capital, rather than the plight of ordinary working people.
And as for the rumors of the payroll tax cut, it turns out that that proposal is dead in the water according to the White House:
Mr. Gault and other economists questioned why the administration was not proposing a major payroll tax cut to spur hiring. The White House considered the idea, officials said, but dismissed it in part because it would reduce revenues to Social Security and Medicare.
The White House is wrong on dismissing the payroll tax cut because as Robert Reich wrote earlier, the revenue loss could be made up by applying payroll taxes to incomes above $250,000. I hope that this doesn't mean that a payroll tax increase would be dismissed out of hand, or left out of the recommendations by the deficit commission. If that is the case, then it would explain why the White House refused to consider a payroll tax cut since it would've required an increase in payroll taxes for incomes above $250,000.
With that said, I am very glad to have President Obama come out against extending the Bush tax cuts for the wealthy, and with the initial $50 billion in federal spending for infrastructure. Now, that would definitely create jobs, but as to what number of jobs will be created, remains to be seen. Tomorrow's speech by President Obama should be very interesting and worth watching.