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Tuesday, August 4, 2009

Middle Class: When They Raise Your Taxes...

They will blame the Bush administration for it. How many times have you heard the president claim that he inherited a $1.3 trillion deficit? How many times have you heard the president proclaim that he inherited the worst economy since the Great Depression? How many times have you heard the president proclaim that the massive stimulus was absolutely necessary in bringing the economy back from the brink? How many times have you heard that TARP was necessary for bringing banks back from the brink?

Politicians blame their predecessors in order to justify their own failings. Often, it's not about justifying their actions to the voters but to themselves. Middle class tax increases are coming. It's not a matter of if but when. It may not be soon but at some point they are coming. The tax increases may not be in the form of marginal tax rate increases. It might a "value added tax" which is a national sales tax.

Here's the reality however. President Obama's economic advisors, folks like Secretary Geithner and Larry Summers, know that the deficit is unsustainable and it has to be reduced. No one seems to want to suggest cuts in spending and you can only soak the rich so much.

So, when the time is right, like when the economy has recovered enough, the tax increases will come. Let's remember that the president has already raised taxes on cigarettes to fund SCHIP. The president is a tax and spend liberal. He's taken good care of the second, and at some point, the first will take hold. When he does it, you can bet that he will blame Bush for breaking his pledge. He'll bemoan the massive deficits he inherited. He'll bemoan the horrible economy he took over and take credit for the recovery whatever form that will look like. He'll proclaim that all of the massive spending increases were necessary. Yet, it will then be time to settle up so to speak. Then, he'll tell the country that it's time for more sacrifices and the tax increases will come.

Of course, he'll be convincing himself more than the voters. The voters aren't going to accept that taxes must be raised and it's all Bush's fault. If and when the president raises taxes that will be the unofficial end of his presidency. That's because that will be his "read my lips" moment. Once that promise is broken, Obama will have no electoral support and so no legislative support either.

So, when he's trying to convince America that having to raise taxes will be Bush's fault, what he'll really be doing is trying to convince himself. I doubt he'll succeed in convincing either himself or the country.

1 comment:

susan said...

"Good to Great" was a required reading for me at my last job. One of the most memorable concepts from that book was the "Window and the Mirror" concept. Poor leaders look in the mirror to take credit, and look out the window to place the blame. Good leaders look out the window to give credit and look in the mirror to place the blame. This piece reminded me of that.