The president’s decision to extend the Bush-era tax cuts for the wealthy last fall was the biggest fiscal blow that the middle class has experienced in recent times.
President Barack Obama’s deal with Republican lawmakers was unpaid for and will cost the government $858 billion. The tax cuts and unemployment benefits extension will not do much to stimulate the economy or relieve the burdens of the middle class.The legislation merely gives the Democratic president a campaign talking point. Obama will be able to say he cut your taxes, but he cannot say that he did right by the economy.
President George W. Bush chose to create these temporary tax cuts at a time where he had inherited a budget surplus. The money was flowing in, people were at work and in the meantime the housing bubble was quickly growing, soon to burst. However, the country’s fiscal situation was substantially brighter and the bill was sellable to the American people. Bush made the wrong decision to create these tax cuts, but at least they were not permanent. The sunset should have occurred during President Barack Obama’s tenure as president, but it didn’t.
The economic crash of 2008 was a wakeup call for this country. We were spending too much and saving too little. We couldn’t keep behaving the same way and expecting prosperity to continue. Big business had gotten far too large and the wealthy had been running away with the vast majority of U.S. wealth and income growth. In fact, income growth between 1980 and 2005 wascharacterized by dramatic increases in wealth for the highest percentile of incomeearners, while the middle class staid put fiscally. In his book,Unequal Democracy, Larry Bartels of Princeton University shows that U.S. residents who fall within the 99.99th percentile experienced growth that increased their income by the fivefold1. Bartels calls it the new “Gilded Age,” comparing it to the time of robber barons and extreme income inequality of the past. General equality amongst economic groups pretty much ceases to exist.In 2008 it was timefor vast economic reform, but those changes would never come.
Instead, Obama gave into the demands of the other side. Beaten down by the results of the midterm election results, which were not unexpected or unusual for a first term president, Obama compromised when he didnot need to. He laid down to Republican demands and accepted a mantra that has not worked and will never work. Trickledown economics hadn’t worked the first time that the Bush tax cuts were passed and it won’t work this time. The rich overwhelming benefit from them, while the middle and poor classes are hung out to dry. They wait for opportunity and income that will never come because it is already lining the pockets of millionaires. The wealthy are not investing just like everyone else and history shows that a tax cut will not encourage them to do so.
What is the point in granting an individual demographic such significant cuts when they are not using the money? They are not saving the economy and that cash will just float around and gather interest somewhere. It is time that government officials take a greater interest in ensuring that problem gets fixed, instead of trying to buy reelection through tax cuts. Obama should have been that official, but it looks like the American people will have to wait.
Brynne Schweigel 