Well ok, he's not exactly wrong, his aim is just a bit off. In his NYT column from today Paul Krugman calls on Obama and the Democrats to call the Republicans bluff and let all of the Bush tax cuts expire.
I have been doing the same thing for a few weeks now, on various sites in comment sections and in a diary here back on November 14.
In that diary I pointed to the arguments being made by James Kwak over at The Baseline Scenario to let the cuts expire. Kwak also puts the onus on Obama.
Mssrs Krugman and Kwak both put forth sound economic reasons why the tax cuts should simply be allowed to expire, but they both call on Barack Obama to lead the way in killing them.
This is wrong-headed. Obama simply will not fight to kill off these tax cuts. He simply doesn't believe they should be allowed to expire and I don't believe he ever did. Including the cuts for just the filthy rich.
At this point it is obvious the only way the Bush tax cuts will expire is if the House of Representatives kills them off. They alone have the power, and the votes, to do the right thing here.
While Krugman and Kwak have sound economic reasons for letting the cuts die, I personally believe it also makes good political sense; it will help re-energize a Democratic base that is very close to outright revolt for one thing. I also firmly believe that if the House were to do this now that while yes, the Republicans would attack them viciously for it, two years from now the voting public, with the collective memory of a box of rocks, will hardly remember it at all. And after all, we aren't talking raising marginal rates by a huge amount here. The average American will probably not even notice the couple hundred bucks a year it would cost them. And the Republicans will viciously attack Obama and the Democratic Party as tax and spenders regardless.
Most importantly, allowing these tax cuts to be extended now will set the stage for much larger cuts to middle class benefits in the future. As Krugman says:
America, however, cannot afford to make those cuts permanent. We’re talking about almost $4 trillion in lost revenue just over the next decade; over the next 75 years, the revenue loss would be more than three times the entire projected Social Security shortfall. So giving in to Republican demands would mean risking a major fiscal crisis — a crisis that could be resolved only by making savage cuts in federal spending.
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I don't need to explain how an already demoralized base will react when Obama, joined by the Republicans and a large number of Democrats turn around and cut Social Security and other programs the middle and working classes count on to survive just ahead of the 2012 election.
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As cynical as I have become over the last decade, I don't actually believe Nancy Pelosi and the House Democrats will do the right thing here. But even at this late date they still have the opportunity to do so. I figure I might as well give it one more try.
My gut tells me that not only are the Bush tax cut extensions already cooked in, but so are the Social Security and other middle and working class entitlement cuts yet to come. I have never wanted more to be wrong in my life.
But in failing to kill the tax cut extensions, and thus ensuring massive benefit cuts in the future, the Democrats will destroy their own party. Maybe that really is exactly what Obama, and his fellow travelers in the Democratic Party have set out to do.
Nancy Pelosi and the House Democrats have one final chance to head off that catastrophe.
I hope they have enough sense, and courage, to do the right thing to take that chance.