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Boehner Better Cave: Obama Plan Better for Economy

By caheidelberger on 2012.12.06

P&R laments that Republicans appear bound to cave on the fiscal cliff negotiations. You're darn right they're going to cave: Speaker John Boehner realizes the Grover Norquist wing of his party is on the wrong side of a national election and popular support for higher taxes on the wealthy as part of responsible budgeting.

The GOP is also on the wrong side of economics:

...studies have shown that lowering the tax rate for small businesses is not the best policy option for encouraging owners to do more hiring. The Congressional Budget Office concluded that even though some small businesses would benefit from an extension of the Bush tax cuts this would not create more jobs in the current economy. The study found that while the cuts would increase after-tax income for these businesses, this alone is not a strong incentive for hiring because small business production is mostly governed by demand for their products. Instead, CBO concluded that the more efficient way to stimulate economic activity would be through extending the Bush tax cuts for low- and middle-income families and not letting that potential demand leave the economy. Allowing the rates to expire for the top two brackets and extending the rest would be the most cost effective way for the federal government to increase growth and jobs per dollar of cost [Ben Peyton, "Claim that leaving top 2% out of Bush Tax Cut extension will hurt small business – Not True," Innovation Ohio, 2012.11.20].

Small business owners don't need tax breaks for the 2.5% of them who face the top two tax rates. They need increased demand. You get more demand per dollar by sending money to the bottom brackets, because those folks need certain items in a way that the rich folks do not. That's an argument not only for focusing tax breaks on the lower brackets but also for protecting the social programs like food stamps, unemployment support, and Medicaid that protect lower income folks and their purchasing power.

Let the conservative abstractionists and obstructionists squawk: Speaker Boehner knows President Obama has the power and the plan... the right plan for America.

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10 Comments

  2. Rorschach 2012.12.06

    Republicans are just bad with economics. I think their "defend the rich against all others (while hating gays and immigrants, and subjugating women)" act is really wearing thin, especially with young voters. If the GOP keeps it up they are going to have a very, very bad election year in 2014.

    The GOP itself is standing at the cliff with its tea party folks trying to push it over. Boehner has a bunch of unreasonable people to manage even as he seems to have reasonable instincts himself. His caucus won't keep him on as speaker much longer.

  3. Douglas Wiken 2012.12.06

    The Republicans were intent on denying Obama a second term and in the process nearly destroyed the US economy and credit ratings. Now they are intent on destroying the Obama legacy. Ironically, their retrograde obstructionism may show up historically as a factor in increasing the Obama legacy by comparison to the partisan hacks of the GOP.

    I am starting to suspect that many Americans were aware before the election that what Obama Administration did to fix the economy after Bush mis-management was working. Car sales are now shown to have been up significantly.

    The GOP attack Obama whatever it costs plans have generated economic uncertainty that has and will probably cost the very rich more than a tax increase ever would have or will.

    GOP is wedded to zombie economics and mythology camouflaged by irrelevant social issues designed to generated fear and uncertainty in the minds of those afflicted with religious superstition.

  5. Stan Gibilisco 2012.12.06

    "Caving" would not only be best for the country at this point, but it would be the best long-term strategy for Republicans, even the tea-party types, to whom the concept "losing a battle to win a war" seems entirely alien.

    I mean, sheesh, it's not like Obama is demanding that we go back to a top-tier tax rate like they had during, say, the Nixon administration.

    If we actually "hit the cliff" my concern would not be taxes but the effect it could have on my actual income. I might end up paying less tax if we hit the cliff, because a whole lot of people would slash discretionary spending, such as buying books.

  6. Taunia 2012.12.06

    Saw that Larry, and thanks.

    Vicky Hartzler, Missouri's version of Noem, is going to the House Budget Committee, which is odd because she voted just like Huelskamp and Amash who were aborted from it, although she's much more easily bought. Cha-ching.

  7. Bree S. 2012.12.06

    Interesting that you know who can be bought.

  8. caheidelberger Post author | 2012.12.06

    Jana, heck of a link! Lots more small business owners would be hit by cuts to Medicaid and medicare than would be hit by tax increases on the highest brackets.

    Stan, we most certainly do not want to lower your taxes by reducing the number of people buying books. Maybe we should simplify economics by trading Gross Domestic Product for Gibilisco Domestic Product: if Stan's making money, life is good. If not, we need new policies!

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