Hesitation By Some Democrats Not To Roll Back The Bush-Era Tax Cuts

[caption id="" align="alignleft" width="240" caption="Bush enacted tax raises in 2001 and 2003, and the Dems are considering keeping them; photo credit: Beverly & Pack"][/caption]

We all remembered President Obama promised not to raise the taxes of anyone making $250,000.00 or less. Candidate Obama also promised to get rid of the Bush tax cuts - which the current top rate is 35% , and to raise the Capital Gains on equity sales. This position of rolling back the Bush tax cuts was a line drawn in the sand by the President and the Democrats against the Republicans, but now the Wall Street Journal is reporting that there are chinks in the Democratic armor.

Senator Ben Nelson (D., Neb.) and Kent Conrad (D., N.D.) are not holding the fort on the Democrats promised to roll back the Bush taxes – these two Democrats believe that it is not prudent to roll back taxes in an era of a recession. The wayward Dems further argue that they are thinking about the deficit, intimating that tax increases, even on the rich, would be counterproductive to get out of the lingering recession, and, apparently, believing in the Republican thinking that such an increase stifles job growth.

The Bush tax breaks enacted in 2001 and 2003 are expected to expire in 2011, and if President Obama and the Democrats were to get their wish of raising the top tax rate, it would go from 35% to 39%. Republicans and many small businesses' position is that it would hurt the latter… preventing them from hiring employees. Along with the two Democratic Senators mentioned above, some half a dozen House Democratic members are saying the same thing, that it is not wise to raise taxes in an economic down turn.

Underscoring this tax debate is the coming mid-term elections – everyone is testing the waters to see how the public feels about this pending expiration of the Bush tax cuts. I do not know which argument will win out and convince the public, but we will know shortly. If one sees no movement on the roll back of the Bush-era tax cuts before November, then one can assume that the Democrats blinked. We are told by the Congressional Budget Office that if there is a one year extension, it would cost $115 billion.