Sunday, November 11, 2012

In The Spirit of Compromise

Obama and Boehner have made post-election comments stating forthrightly that they are both "open to compromise."  The President insists on higher "tax rates" for everyone whose incomes are in excess of $ 250,000.  The vast majority of such taxpayers have incomes well below $ 1 million per year, but the President labels them "millionaires and billionaires."  You wonder why  he doesn't lower the threshold to $ 100,000, since the label doesn't match the reality anyway.

Boehner has offered a true compromise. He will agreed to tax changes that promise "higher revenues."  That is a significant change in the Republican position.  Alas, there is zero change in the Obama position.  Higher "tax rates" for "the wealthy," as Obama puts it, will lower tax revenues and stunt economic recovery.  That doesn't bother the president, so long as he wins the rhetorical war.  The election shows that you can, in fact, fool (a slim majority of) all the people some of the time and some of the people all of the time.  Hopefully, Lincoln is right.  Hopefully, Obama will not be able to fool all of the people all of the time.

So look for another sterile debate and much posturing.  The Republicans would be foolish to relent on the "tax rate" issue.  Tax rates need to be lowered not raised.  The only reason the Clinton years were not an economic disaster when rates were increased was the one time event of the "tech bubble."  Remember that one.  From the mid 1990s to 2000, the US economy was propelled by the beginning of the commercialization of the internet.  The tech bubble, not higher taxes, is what propelled the economy in the Clinton years.