Don't Believe Obama's Deathbed Conversion On Tax Cuts

After borrowing money, printing money and raising taxes (or "fees" if you believe the text of the Obamacare legislation), Obama now says he wants to give Americans a tax cut.  Some speculated that even Obama realizes his stimulus programs didn't work and is now pursuing solutions within the Austrian school of economics.  This view was shattered when Obama took to the road touting the necessity of a second stimulus.  Although he hypes the tax cut portion of it, there is also 50 billion dollars for infrastructure repair (didn't we already designate a 767 billion dollar stimulus for "mostly" infrastructure repair?  Those roads must be in terrible shape!). 

And even when it comes to tax cuts, Obama has decided to extend them only to the middle class regardless of the fact that filers in the top 3 percent are responsible for generating 50 percent of small business income.  While this would still help the poor and middle class by reducing their tax bill, it would do nothing to improve the economy which would them exponentially more than a tax cut alone.  In fact, since Obama's tax cut is really only a middle class only extension of the currently active Bush tax cut, high earners actually face a tax hike.

Senior citizens might be some of the hardest hit by the new tax structure, according to Heritage.  While the Medicare Advantage supplemental program will be done away with in part to move $500 billion out of Medicare and into Obamacare, subsidies to similar plans will be cut forcing premiums up.    Ninety-one percent of all Medicare beneficiaries have some kind of supplemental coverage.  While seniors costs will go up, their income may decline due to the dividend tax rate rising (as referenced previously in End The Recession By Taxing The Rich).  The taxes are projected to drop the value of stock prices by 211 billion dollars.  Seniors hold the most stock of any demographic group and are most likely to hold high dividend stocks which are perceived as lower-risk. 

Regardless of his motivation, Obama deserves at least a little credit for proposing the extension of tax cuts but when the alternative is raising taxes in the midst of a recession the amount of credit is small indeed.    Although more an idealist than a pragmatist, even Obama saw the political repercussions of not extending the tax cuts.  Let's just hope a Republican House can hold his feet to the fire after November and force him permanently into a pragmatic mindset.