Bush Economic Hands Skittish On Obama Tax Deal: 'I'd Take Gridlock' Instead

[sasha031]

Source: Huffington Post

WASHINGTON -- President Obama may not be able to shake the legacy of his predecessor's economic policies, succumbing to the "trap" they put in place with respect to tax cut policy, as former Bush political hands gleefully noted.

But among the economic advisers that staffed the pervious White House, the consensus on the deal that Obama cut to extend the current rates for at least two more years is decidedly mixed, if not somewhat sour.
Andrew Samwick, a Dartmouth professor who served as Chief Economist on the staff of the United States President's Council of Economic Advisors from July 2003 to July 2004, posted a little noticed column earlier this week under the less than subtle headline: "If This Is Working Together, I'll Take Gridlock."

In it, Samwick copped to finding himself with some strange bedfellows when it comes to his cynicism over the deal. "I am with Stan on this tax cut deal. And Paul Krugman, for that matter. I repeat my view that the Bush-era tax cuts should expire on schedule. The New York Times reports the two-year cost of this tax cut package at $900 billion. What is amazing is how little we have learned in three years."

For the $900 billion cost of keeping tax rates in place -- and extending other provisions elsewhere -- Samwick added, the country could have gone a long way towards, say, improving the $2.2 trillion gap in infrastructure repairs. In terms of getting the nation's fiscal house in order, that investment would have been wiser.

Read more: http://www.huffingtonpost.com/2010/12/09/bush-economic-hands-skitt_n_794477.html

[TwilightGardener]

1. The Trap--well laid for Obama. Go ahead, Obama, let all the cuts expire.

We won't scream that you broke your campaign promise to 98% of the country and say you raised taxes, just like Democrats always do. Gridlock is good, just let it go...

[Fearless]

2. The article has nothing to do with Obama.

[TwilightGardener]

3. In honor of new DU civility rules, I will only say:

Read the first words of the article.

[Fearless]

4. It has nothing to do with him.

This is politicking regarding the lowering of the national debt. Which is why these pols and Krugman agree. The fact that they try to make him a part of this argument is their own prerogative, but it exists without him as well.

[TwilightGardener]

5. It has everything to do with Obama. This is his battle. You cannot

separate him from the decision on the tax cuts. What a bizarre argument we're having, I'm done.

[Fearless]

7. The argument is philosophical not political in nature.

The argument on the political side is not what the article is describing. Have a nice day though. :hi:

[No Elephants]

12. LOL!

[JDPriestly]

8. The tax cuts were initiated at a time in which Greenspan and the Bush

economists thought our problem was a deficit SURPLUS. The Bush administration wanted to put money back into the private sector thinking that the government had too much.

The ideal is, as with so many things, to get the right balance with regard to the amount of money that goes to the private sector with the amount that goes to the public sector and, within the private sector to also get a balance between the amount of money in the hands of people who can invest (we call them the rich or the wealthy) and the people who use virtually all their money for their daily needs (the poor or middle class or consumers).

At this point, we have a tremendous imbalance. Too much of the private money is in the hands of the investors -- who don't know what to do with it, how to make money with it because there is not enough money in the hands of the people who use virtually all their money for their daily needs the poor or middle class or consumers.

Back when they were passed, Bush's advisers thought the tax cuts made sense because they thought it would stimulate the economy and put money in the hands of investors.

Now -- the investors got the money and we got the housing bubble, the derivatives, investments that, as Buffet explained, proved to be weapons of mass financial destruction. Frustrated investors started gambling in the hope of high returns.

The money in the private sector was apportioned in an unhealthy way. The poor, middle class or consumers do not have enough to give incentives to investors or returns on investment.

It would be economically unwise to allow the tax cuts to continue because we will continue to have an economy that is out of balance.

If the economy is permitted to reach a better balance between the money in the hands of the poor, middle class and consumers on the one hand and the investors on the other hand, then we can all start working again.

Extending the tax cuts would, in my estimation, lead to another dip in the recession. It might take a few years, but the imbalance will ultimately end in too much investment money and no where for it to go, no where that is productive an makes money for investors.

[TwilightGardener]

9. But if one's goal is to stimulate the economy right now, or at least keep

from sliding back into recession, with wage stagnation and high unemployment ongoing, wouldn't it be more of a balance to let the middle and lower classes keep their money? In that perspective, I can understand Obama's original plan to only let taxes go back up for the wealthy, especially since you're arguing that the rich have got more than enough, and nowhere productive to spend it, until the middle classes and lower classes start boosting consumer demand? Regardless, politically it's just a killer to let the taxes simply go back up for everyone.

[JDPriestly]

10. Yes. It would be best just to keep the cuts for the middle class.

And I think that the House passed a bill to that effect. Unfortunately the do-nothings in the Senate cannot get anything, not even that passed. So, we will end up with no tax bill at this time.

The tax bill should have been on the table before last November's election.

One person is to blame: Harry Reid.

He is a good guy, but he needs to step down from his leadership position. He just has not managed to get much of anything through the Senate. The Senate job is too demanding for him. The mess we are in on the tax bill is strictly the fault of poor, inept, slow management in the Senate. This should have been negotiated before the November election.

The Cat Food Commission was a dumb waste of time. And it took some of Obama's best people out of the election campaigns because they were too busy fumbling away on the Cat Food Commission. Oh, what a bunch of bunglers.

[SteveM]

6. From his porch in a palmetto flat, the ol' Cracker looses a quart of tobacco spew...

onto the fronds, already sagging like World Series bunting from previous efforts, and declared (for free!) an essential truth:

"Dem bank' in charge."

[blackspade]

11. Obama needs to let the cuts expire.

Otherwise he owns this debacle.

[No Elephants]

13. Obama has no responsibiliy whatever for anyhing undesirable.