I‘ve been writing about the Bush tax cuts on this site for quite a while, talking about whether or not they'll be renewed. We also looked at whether they'll be renewed for all taxpayers, or if they'll be allowed to expire for higher income individuals.
Earlier this year it looked like they would be renewed, but only for some. Obama talked about how he would like to renew the tax cuts for middle class and lower income groups, but how he wanted them to expire for those making more than $250,000. At the time, they may have been able to do just that since the democrats ran both the House and the Senate.
Since then no action has been taken on the tax cuts, and if something isn't done soon in the lame duck session of congress, the tax cuts will expire altogether for everyone.
Last night, however, Obama's senior White House adviser David Axelrod said that the President would be willing to consider an extension of the tax cuts for everyone.
Bush Tax Cuts To Be Extended For All?
So what brought about Obama's change of heart, and why is he willing to consider extending the tax cuts for high income individuals as well? It may have had something to do with a recent election where the Democrats lost their majority in the house, and saw their lead in the Senate diminish.
In an interview with the Huffington Post on Wednesday, White House Senior Adviser David Axelrod seemed to open the door to the extension of the cuts for American households making more than $250,000 a year, citing the political reality that has resulted from the loss of Democratic seats in Congress in last week's midterm elections.
Extending tax cuts for the top income bracket had previously been a red line the administration refused to cross. “We have to deal with the world as we find it,” Axelrod said in the interview. “The world of what it takes to get this done.
“There are concerns,” he said about Congress continuing to kick the issue down the road by passing temporary extensions for wealthy Americans each time the issue emerges. “But I don't want to trade away security for the middle class in order to make that point.”
So it sounds like Obama, realizing that the makeup of Congress has changed making it tougher to get through his legislative priorities, is now willing to do some things he may not have wanted to. If he wants the tax cuts extended for the poor and middle class as he promised, he'll have to make a concession on extending them, at least temporarily, for high income earners as well.
Republicans are obviously happy about this as they have pushed extending the tax cuts for all for some time. On the other hand, the Republicans would like to make the cuts more permanent as well.
A spokesman for likely House Speaker John Boehner praised Axelrod's position in a statement:
“Republicans made a pledge to America to permanently stop all of the tax hikes scheduled for January 1st. We're glad to see that the President's most trusted advisor now agrees with this course of action, and hope he and the President will show leadership by convincing Speaker Pelosi to stop these tax hikes permanently in the upcoming lame duck session,” said spokesman Michael Steel.
Will The Bush Tax Cuts Be Extended?
So now we have Obama saying that he will approve extending the cuts for everyone – even if only temporarily for some of them. But the question remains, will the leaders in his party agree to this as well? Some have already come out saying that they aren't in favor of this, and don't want to extend them for the wealthy (as they define wealth).
So what do you think? Will the bush tax cuts be extended in the lame duck session? Will it be done permanently, or on a temporary basis only? What do you think they should do? Tell us your thoughts in the comments.
UPDATE: The day after I wrote this President Obama backtracked on this a bit saying that he may not want to extend them for high income individuals. So we're back where we started. We'll see what happens!
We are failing to connect the spending and the revenue, and extending the Bush tax cuts without a balanced expense cut is irresponsible.
Please read my blog.
http://www.wealthvest.com/blog/wade-dokken/expiration-of-the-bush-tax-cuts-and-the-great-recession/
Wade Dokken
President, WealthVest Marketing
Good coverage Mr. Money. I think the tax cuts should be extended – especially as we continue to recover from the recession. But…will they actually be extended?? I hope so, but you never know with politics. I think the pressure will be to extend them probably cause it to happen, but we’ll see shortly I suppose.
Like your articles! Is it safe to assume that if the tax cuts are extended (in any form) that this will also include the capital gains tax staying at 15% vs. 20%???