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Why not extend Obama's stimulus tax cuts?

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By E.J. Dionne Jr.
Monday, September 20, 2010

In any athletic contest, winning teams play their own game and force the other side to play that game, too. The same being true in elections, it's remarkable how timidity leads Democrats to fight this year's campaign on Republican terms.

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Nowhere is this more obvious than on taxes, where the entire debate revolves around what to do about the cuts enacted under George W. Bush. Almost no one is talking about extending the progressive tax cuts that were included in President Obama's stimulus program. Nor are we discussing the impending death of a pro-work public assistance program that, for a rather modest sum, has helped provide jobs to 250,000 low-income Americans.

At least on the Bush tax cuts, Obama has drawn a clear and sensible line. He's said that Congress should extend the reductions for the middle class but not those for families earning more than $250,000 a year.

For the life of me, I don't get why some Democrats are so afraid of this vote. Substantively, most of the 31 House Democrats who signed a letter last week urging House Speaker Nancy Pelosi to chicken out of this fight claim to be deficit hawks. Why, then, add $700 billion to the deficit for the purpose of continuing a tax program that disproportionately benefits millionaires?

And politically, why shouldn't Democrats dare Republicans to vote against extending middle-class tax cuts and then have to explain that they opposed them because not enough money was going to the rich?

But notice that this entire battle is being framed around Bush's proposals. The parts of the Obama stimulus program that never get discussed -- one reason it may be so unpopular -- are its many tax reductions.

John Podesta, president of the Center for American Progress and White House chief of staff under President Bill Clinton, noted the Obama tax cuts also expire at the end of this year: "I don't understand why we're only talking about extending George W. Bush's tax cuts, which are heavily skewed to help the wealthiest Americans, yet no one's discussing President Obama's cuts, which are exclusively focused on middle-class families."

I don't understand it, either. The stimulus included not only the broad Making Work Pay tax cut that gave most families an $800 refundable tax credit but also the child tax credit and the earned-income tax credit, which were especially helpful to lower-income families.

If the child tax credit isn't extended, 7.6 million children who get the benefit through their families would lose it entirely, and the credit would be reduced for an additional 10.5 million children. The biggest losses, according to the Center on Budget and Policy Priorities, would be among families earning $12,850 to $16,333, many of which include a parent working full time for minimum wage. Also set to expire are expansions of the earned-income tax credit that have helped working families that include 14.9 million children.

Tell me again: Why is it more important to preserve millionaires' tax cuts than to continue helping these far more vulnerable Americans? Why are Republican leaders who argue that failing to extend all of the Bush tax cuts would constitute a tax increase not saying exactly the same thing about the Obama tax cuts? Is it blind ideology, an exceptional solicitude for people with very high incomes or the fact that Obama's cuts were packaged into the dreaded stimulus?

Perhaps the biggest scandal of all -- especially after last week's Census Bureau finding that one in seven Americans is living in poverty -- would be to allow the expiration of an emergency fund included in the stimulus to subsidize jobs for low-income parents and young Americans.

The program will end on Sept. 30 unless the Senate joins the House in passing an extension. States have used more than $1 billion from the fund to work with businesses to provide jobs, and this innovative approach is particularly helpful to communities hit hardest by the downturn. It embodies a value every conservative campaigns on: that the best anti-poverty program is a job.

Pelosi, at least, finally started talking late last week about the need to extend the Obama tax cuts. And you have to hope that Senate Republicans will let the jobs-fund extension through, since it's hard to think of a more Republican approach to alleviating poverty.

But you also have to ask why Democrats didn't try long ago to move any of these items to the center of the debate. Why cede so much attention to the ideas of George W. Bush?

ejdionne@washpost.com

More Post Opinions: Economists Alan Blinder, Mark Zandi and others debate what to do about the Bush tax cuts. The Brookings Institution's William Gale explains five myths about the Bush tax cuts. The Post's Ruth Marcus on why the Bush tax cuts should be allowed to expire.


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