The Washington Times - September 20, 2010, 11:51PM

Democrat’s are hauling out the same Keynesian economic persuasion tactics, hoping to have their cake and eat it too in the latest tax battle on Capitol Hill. Former President George W. Bush’s tax relief for all income levels are set to expire at the end of the year. Democrats have seized upon the opportunity to instigate class warfare by claiming that extending the Bush tax relief to those making $250,000 or above would not reduce the deficit and not make much of a difference in improving the economy, but liberal rhetoric is simply not backed up by history.

Senator Claire McCaskill, Missouri Democrat, told me that the country experienced “negative job creation” following Mr. Bush’s tax cuts in 2001 and 2003, but six quarters after President Bush’s 2003 tax cut, the GDP grew at an annual rate of 4.1 percent. Additionally,307,000 jobs were gained. What exactly has the Democratic passed stimulus bill done?


The unemployment rate was at 7.7 percent when President Obama took office. It is now at 9.6 percent. Yet liberals like Senator McCaskill complain that President Bush’s unemployment rate that remained at 5.5 percent for the majority of his term is something to be ashamed of. Keep in mind, Mr. Bush contended with the aftermath of 9/11 and the war on terror in two different countries, and his administration managed to keep a relatively low unemployment rate.

While liberals like to at least imply that the top three percent are the ‘wretched’ wealthy Americans who do not deserve any tax relief, defining who exactly is wealthy is a usually a no-no subject to breach. For example, last week on Capitol Hill, Senator McCaskill and a reporter’s exchange went something like this:

Reporter: What about the $300,000 threshold where the tax cuts kick in? Do you think the $250,000 threshold is appropriate differentiating where the middle class is?

McCaskill: I think the fact that we’re only hitting 3 percent of the tax payers means its just about the right number.

Reporter: Is $200,000 rich?

McCaskill: I don’t know what is “rich.” I think 3 percent is just about the right number.  

Apparently, Senate Majority Leader Harry Reid, Nevada Democrat, knows what rich is, but all of a sudden, the Democrats don’t want to talk about those making just the six figure threshold who will be adversely affected by not extending all of the Bush era tax cuts. Democrats like Mr. Reid only want to take swipes at those dirty millionaires and CEO’s.

“It is unconscionable for Senate Republicans to hold middle-class tax cuts hostage in order to secure more tax giveaways for millionaires and CEOs who ship American jobs overseas,” Mr. Reid said. “Today’s declaration by Senate Republicans means they are willing to raise taxes on the middle class and small businesses in the middle of a recession.”

While Senator Reid beat up on millionaire executives, Senator Sheldon Whitehouse, Rhode Island Democrat, and Senator Jeff Merkley, Oregon Democrat, held a press conference last week to discuss their thoughts on the tax debate.

Liberals have an interesting pattern of isolating certain groups who gets the goodies in a particular piece of legislation (in this case the middle class and small businesses only), so when I asked both Senators how larger businesses could find ways to start hiring more in the private sector, it appeared that Mr. Whitehouse and Mr. Merkel could not help themselves but bash bug businesses and only talk about their small business legislation.

“The difference between Democratic and Republican plan has been characterized as a difference between tax relief for the middle class and tax relief for the rich,” said Mr. Merkley. “In fact, the Democratic plan provides tax relief for every working American, and if you earn $250,000 that relief is substantially more than if you earn 200 and so on down the chain, but at about $7000. So a person earning far more than $250,000 will still get $7000 of relief.”

Senator Whitehouse said, “As we deal with corporate taxes, the focus is going to be on trying to make sure the corporate tax structure is one that no longer awards businesses to take American jobs and move them overseas.”

However, the Democrats own legislation is only making it more expensive for American companies to keep their businesses in the country. The Obama administration and Democrats on the hill would gladly give an unfair advantage to foreign businesses instead. Is it any wonder American businesses are looking overseas to remain competitive? Joseph Mason points out in a NY Post piece last week:

By repealing the tax credit US-based companies claim on the taxes they pay abroad, Obama’s “stimulus” plan would effectively double-tax American businesses — driving investment to foreign competitors that don’t face the same tax burden. Indeed, if such proposals are truly a response to the safety and environmental concerns set off by the Gulf incident, then dual-capacity changes should be taken off the table. After all, the change would benefit BP, a foreign-owned company.

Our coasts and borders are made less safe by policies that give advantages to foreign companies. For example, today Chinese oil companies, with access provided by Cuba, are drilling closer to Florida’s shores than any US firm. Oil companies in such countries as China and Russia aren’t held to the same environmental and safety standards as our domestic industry — yet these are the very firms that Congress would be granting a competitive global advantage.

Finally, Chairman of the Banking Committee Barney Frank, Massachusetts Democrat, spoke to reporters on the hill about the tax debate. He told a reporter the Bush tax cuts were not made permanent, because the GOP wrote it up to with the intention to make them permanent eventually.

“They weren’t written to expire at the end of this year. They were written to be permanent in a tricky way so they [the GOP] could get around the budget,” he said. “The Republicans didn’t want to live up to the budgetary impact of what they were doing, so they took something that they intended to be permanent and thought that would force us to do it, and that’s why they voted them to expire.”

This is not exactly how things went down between 2001 and 2003, though. While Republicans would have preferred to have seen the Bush tax cuts be permanent, they also could not have predicted they could attain 60 Republican votes needed in the Senate that would have made the tax relief permanent. It should be noted that Republican Senators Chafee and McCain both voted against the 2001 and 2003 Bush tax cuts. Instead, Congress passed it through reconciliation, which would only require 51 votes to pass the legislation. 

Tax debates today are not that different from previous tax legislation battles in Washington, but over 31 House Democrats presently, fearing for their own re-election prospects, are beginning to defect over to the Republican side of the aisle this time around, which makes one wonder who these Democrats were fighting for all along.