NEW YORK (
) -- The latest powerful voice to weigh in on the battle over the Bush tax cuts for the wealthiest Americans was Treasury Secretary Tim Geithner. On Sunday morning, the weekly time of rest for God but breakfast of non-stop morning sound bites from the political powers that be about the world they would like to create -- at least until the next election -- Geithner said that he agrees with President Obama that the Bush tax cuts for the top of the American citizen food chain should be eliminated and such a move won't hurt the U.S. economic recovery.
Geithner said on
that ending tax cuts for the 2% or 3% of the highest-earning Americans, was "the responsible thing to do." Geithner made the deficits argument, as expected, saying, "We need to make sure we can show the world that we're willing as a country now to start to make some progress bringing down our long-term deficits."
Towards the end of last week, ignoring opinions expressed by fiscally conservative democrats that the Bush tax cuts should be extended, House speaker Nancy Pelosi added her powerful voice to the Bush tax cut executioner's song.
It's not just a debate about tax cuts for the wealthiest Americans being part and parcel of a political class that bends over backwards, while opening up the federal vault, to assuage its richest constituents. It really comes down to an argument over whether tax cuts will help to spur consumer spending and keep the economy on pace in its attempts to put the double-dip recession fears to rest, or do nothing more than add a big heap to the already piled high federal deficit -- as much as three to four trillion dollars more.
Just as Geithner said that eliminating the Bush tax cuts for the wealthiest was the responsible thing to do for deficit cutting purposes, the deficit argument has its flip side too. Republicans tried to block the extension of jobless benefits last week -- though it was passed -- with the argument that the federal deficit was already way too large to justify an extension of jobless benefits without a concurrent trimming of the other federal budget items. Not among those items to be trimmed, however, in the Republican economic theory of the moment, was the portion of Bush tax cuts for the wealthy.
It's really an old argument, as old as Ronald Reagan's rosy scenario for the U.S. economy based on the trickle-down theory. Republicans -- and, more generally, supporters of extending the Bush tax cuts for the wealthiest -- have seized on recent economic uncertainty and a drop in consumer spending among the most affluent Americans as proof that eliminating the Bush tax cuts would be the worst move for what Federal Reserve chairman Ben Bernanke referred to last week as an "unusually uncertain" economy.
The Bush tax cuts as a political powder keg -- it was a campaign promise of President Obama to eliminate the tax cuts for the wealthy -- is finally becoming the political issue of the moment, with health-care reform in the rearview mirror, comprehensive energy legislation again an issue that the government has decided to punt on, and the jobless benefits battle over.
Thus, with the battle over the Bush tax cuts coming to a head in Washington over the past week, we asked
readers where they weigh in on this issue -- to pick their deficit poison, so to speak:
Do you think the government should allow the Bush tax cuts for the wealthy to expire at the end of 2010?
The response from readers of
showed that even among a demographic that is decidedly white, male and affluent -- yes,
invisible readership does look much like the actors used in commercials for Viagra or life insurance -- extension of the Bush tax cuts was won the vote ... but not by a massive margin.
Approximately 61% of survey takers said the Bush tax cuts need to be extended "so the benefits can trickle down."
This finding was set against the 39% of survey respondents who agreed with the notion that the Bush tax cuts are "a boondoggle and a major contributor to the deficit" and should be eliminated as President Obama and his administration have said they plan to do.
Amid the transformation of the federal deficit into a pawn for the latest round of political sound bites, though, there's still room for healthy skepticism, or middle ground, for those who think that the battle over the Bush tax cuts will do about as much to save the U.S. economy as trimming top pay packages of Wall Street top brass or firing BP CEO Tony Hayward.
In the end, the recovery of the U.S. economy won't live or die on the ultimate fate of the Bush tax cuts. There are plenty of more of Gheitner's "responsible things" left for the government to do that will set the direction of this country for decades to come. And President Obama's political legacy won't be made on this decision, though it's sure to be an election season staple of attacks from both sides of the aisle.
There is no mistaking the alarming facts of the federal deficit: In data released last week -- at least partially a political gambit -- the White House says the government is now borrowing 41 cents of every dollar it spends. The extension of jobless benefits is a sad indicator that the unemployment issue isn't going away -- regardless of your view of jobless benefits as a deficit-linked issue. Unemployment is expected to average 9% next year, and Federal Reserve chairman Ben Bernanke said there are years, plural, of high unemployment to come. The budget deficit will be $1.42 trillion this year, the White House said, and -- showing its political cards -- argued that it's because tax revenues are still slumping as the economy limps along.
Meanwhile, while the voices were at a record decibel-level last week fighting over the Bush tax cuts, comprehensive energy legislation, as one example, died with a whimper.
-- Written by Eric Rosenbaum from New York.
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