Premonition, or good sources?
Today i read a story in the New York Times that I was absolutely thrilled by, but politically it scared me a little. The article discusses the Obama administration weighing tax reform. The treasury department is supposedly looking at options to get rid of a number of deductions and lowering the marginal rates to split the difference and keep payments equal while broadening the tax base in order to raise more revenue. This is long overdue, and I don’t see why Bush wasted tax law on simply lowering marginal rates while keeping a complex and expensive tax system. And when I say expensive, I mean it. It cost around $11 billion to collect taxes in 2008. David Brooks predicted this in his column last Friday. So, was it premonition or did he happen to speak with Timmy “turbo-tax” Geithner at some point? As this is coming out at this point early in the year, with few actual details I fully believe that this could be a major part of the State Of The Union if Obama decides to run with this. Politically this might be a very good thing for Obama, which is why politically this scares me. I want tax reform to succeed, however if Obama gets this through with Republicans and a decent amount of his party on board he has something good to run on in 2012. This could be his Clinton moment. I do not want Obama to win in 2012. The G.O.P. does have their own hand to play in this game though, and that would be Hauser’s Law. Since revenue has historically always been just below 19% of GDP regardless of tax rates, the G.O.P. needs to stand strong on any tax reform achieving revenues of 19% of GDP in the simplest way with the lowest marginal rates possible. Also, the Republicans need to shut up about the Bush tax cuts the second the two year extension is signed by Obama. Kevin Hassett of the American Enterprise Institute says to forget the Bush tax cuts in a column from Bloomberg News. “The fact is, if we extend the Bush tax cuts, it locks in the status quo. Earth to Washington: The status quo stinks. With the economy still limping forward, much more significant fiscal- policy medicine is in order.” Amen brother. Republicans keep complaining about Obama talking about Bush. Republicans should take some of their own advice and forget that destructive administration ever happened. Also, they should erase all legislative history of that administration, but that’s for a later post. The biggest reason for the Republicans to shut up about Bush tax cuts is they need to get a jump on Obama when it comes to tax reform. They need to have a framework ready before S.O.T.U time comes around, so they have Obama coming to them on their terms, not the other way around.