President Obama negotiated a deal with the Republicans regarding the current tax rates. The President definitely has a horse in this race because he wants to be a two-term President. Many of the Democrats currently voting in Congress will not be there in January, so it could be said that they don’t have a horse in the race. But having or not having a horse in this race is not a qualification for voting on the issue. It is generally understood that if a deal is not reached on this matter and taxes go up in January, the economy will stumble badly.
What is the problem? It is a philosophical difference of opinion. Regarding the estate tax, hasn’t the money that anyone inherits been taxed at least once already? If it is the form of dividends and certain other assets, it has already been taxed twice! Unless you support redistribution of wealth, there is no reason to tax it again. Isn’t part of the joy of being a parent being able to leave your children something to help them on their way?
Whatever the sticking point, The Hill is reporting that the House Democratic Caucus has rejected the deal that President Obama has brokered with the Republicans on taxes. This is a non-binding resolution. What the Democrats want is to renegotiate the tax deal President Obama negotiated with the Republicans.
The thing to remember here is that what is being discussed here is not a tax cut–all it would do is keep the tax rates the same. If you are not changing the tax rates, how can the Democrats complain that it would be too expensive? Well, actually it’s the compromise parts of the bill that will actually cost money. All the Republicans wanted to do was extend the current tax rates, the President added the additional thirteen months of unemployment insurance–that costs money. The President also negotiated to add the two percent cut in payroll taxes–that also costs money. Extending the current tax rates does not cost money–it does not change anything. The Republicans agreed to spend the money to keep the current tax rates; the Democrats added spending in order to allow the Republicans to keep the current tax rates. Everyone played the roles they were expected to play.
Pop up some popcorn and stay tuned. This is going to be interesting!