Americans will be hit with $4.5 trillion in new taxes within six months. Unless Washington does something to stop it, “taxmaggedon” will have a devastating impact on the economy. President Obama is counting on it.
The White House has carefully crafted this looming showdown with Republicans to keep alive the campaign narrative that only the president is fighting for working and middle classes, by calling for hikes on “the rich.” Mr. Obama was blindsided on Tuesday when former President Clinton called for a temporary extension of current tax rates, including for those who make more than $200,000. The GOP was quick to exploit the Democratic squabbling.
On Wednesday morning, House Speaker John A. Boehner and Senate Minority Leader Mitch McConnell made a joint appearance to press the issue. “Extending all of the current tax rates for at least a year is really important if we’re going to help job creators gain a little more confidence and put Americans back to work,” said Mr. Boehner, Ohio Republican. “Even Bill Clinton came out for it - before he was against it. And then Larry Summers, the president’s former economic adviser, this morning came out in favor of this.”
Mr. McConnell negotiated the December 2010 deal with the White House to extend all the George W. Bush-era tax rates. “The argument the president made in agreeing to do that two years ago was that the economy needed it. The growth rate now is actually slower than it was in December of ‘10,” said the Kentucky Republican. He added that another extension would provide the time needed for a complete overhaul of the tax code.
While Republicans are unified, Democrats are stepping all over themselves. Mr. Clinton has done a 360 on Mr. Obama. On Monday, the 42nd president showered praise on the 44th before their ultra-rich, ultra-liberal supporters at three Manhattan fundraisers.
Not 24 hours later, Mr. Clinton cut the legs out from under Mr. Obama’s central campaign issue, telling CNBC that all current tax rates - not just those that apply to the middle class - should be temporarily extended in order to “find some way to avoid the fiscal cliff, to avoid doing anything that would contract the economy now.”
By evening, Mr. Clinton realized he was in trouble with his wife’s boss and tried to backpedal. Mr. Clinton’s office clarified that the former president wanted to raise taxes on the wealthy, but he just didn’t think it could be done before the election. Too late.
When asked about Mr. Clinton’s remarks, Lawrence Summers - a former Treasury secretary and top economic adviser to both Mr. Clinton and Mr. Obama - responded, “we’ve got to make sure that we don’t take gasoline out of the tank at the end of this year.” Further damage control was needed when White House Press Secretary Jay Carney said a few hours later, “I don’t believe that’s what Larry Summers said.”
The momentum is now on the side of those who want to boost the confidence of businesses and investors. Congressional Republicans should expedite a tax-cut extension bill now, not stall until after the election.
Emily Miller is a senior editor for the Opinion pages at The Washington Times.