Jan 05 2009

Cut from what?

Category: economy,media,Obama,taxesharmonicminer @ 10:37 am

Doing its usually spectacularly incompetent job of reporting comprehensible information, the AP says that Obama supports $300B tax cut plan

President-elect Barack Obama, commencing face to face consultations with congressional leaders Monday, is embracing an unexpectedly large tax cut of up to $300 billion. Obama said the country faces an “extraordinary economic challenge.”

Besides $500 tax cuts for most workers and $1,000 for couples, the Obama proposal includes more than $100 billion for businesses, an Obama transition official said. The total value of the tax cuts would be significantly higher than had been signaled earlier.

The huge question, completely unaddressed by the AP in its report: what is the “starting line” from which the tax cuts will be calculated?

Is the tax cut going to take the current situation, with the Bush tax cuts still in place till 2010 or so, as the starting line from which to do further tax cutting?  Or are the tax cuts only to be calculated from the state of play after the Bush tax cuts expire?

Keep in mind that it is the Democrats who have always called it a “cut” in spending when the actual increase in spending is simply reduced from what had been planned.  Only in Washington DC Democrat-speak can you call it a “cut” when you’re increasing spending by 2% instead of 4%.

Is this really going to be a tax “cut”?  Or is this Dem-speak for less of a tax increase than they had planned?  And is it going to be calculated from the lower tax rates in force under Bush?  Does this mean the Bush tax cuts are going to be extended, with new cuts in addition?  The AP may be forgiven for not having answers to these questions, but to pretend the questions aren’t there by ignoring them is risible.

Of course, to report on this would require reporters who actually understand the subject, and who want us to know what’s going on, and aren’t just shilling for Obama during the honeymoon.  Obama had better move fast:  the honeymoon isn’t going to last forever

UPDATE:  This report from the Wall Street Journal is more comprehensive but still does not mention the fate of the Bush tax cuts when their current authorization expires in a year or so.

UPDATE: One of my more cynical emailers suggests that there will be NO real tax cuts of any duration (maybe very short term only), because he expects that the Democrats will let the Bush tax cuts expire shortly, so that they can take credit for “cutting” taxes that would stay lower if Democrats simply made the Bush cuts permanent.  This seems possible to me, given the nature of Washington doublespeak.

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