Democrats push for tax cuts they once opposed
Democrats seeking a deal to avert the year-end
“fiscal cliff” are trying to etch into stone the signature economic achievement
of Republican President George W. Bush by permanently extending tax cuts enacted
during his tenure.
President Obama has put the extension of the tax cuts for most Americans at
the top of his domestic agenda, a remarkable turnaround for Democrats, who had
staunchly opposed the tax breaks when they were written into law about a decade
With Obama leaving his Hawaii vacation for Washington Wednesday evening
and lawmakers returning Thursday, the main dividing line between Republicans
and Democrats has come down to whether tax rates should increase for top earners
at the end of the year, when the Bush-era tax cuts are set to expire. While
Republicans want to extend all the cuts, Democrats are pushing to maintain lower
rates on household income below $250,000. Those lower rates significantly reduce
the taxes of nearly all American households that earn less than $250,000 — and
many who earn more, even if tax rates are allowed to increase on income
above that figure.
While it is increasingly unlikely that the two parties will reach an
agreement to avoid the fiscal cliff before Jan. 1, it is all but certain that
their ultimate deal, whenever it comes, will make permanent the lower rates for
R. Glenn Hubbard, dean of the Columbia Business School and an architect of
the Bush tax cuts, said it is “deeply ironic” for Democrats to favor extending
most of them, given what he called their “visceral” opposition a decade ago.
Keeping the lower rates even for income under $250,000 “would enshrine the vast
bulk of the Bush tax cuts,” he said.
Democrats say they have reconsidered their opposition to the Bush tax cuts
for several reasons. The cuts were written into law from 2001 to 2003 after a
decade in which most Americans saw robust income growth. Over the past decade,
by contrast, median wages have declined, after adjusting for inflation, amid a
weak economy. Allowing tax cuts for the middle class to expire would further
reduce take-home pay.