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Iowa congressional delegation should oppose Obama's tax cut deal

BY DI EDITORIAL BOARD | DECEMBER 10, 2010 7:10 AM

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Any UI student will tell you procrastination is never a good option. Congress is learning that message the hard way, because the Bush-era tax cuts are set to expire at the end of this year.

President Obama and lawmakers in Washington have had ample time to end President Bush's irresponsible tax policy and form a better one, but the issue has been kept on the back burner.

Obama recently made a deal with Congressional Republicans to extend the tax cuts for all income brackets for two years. In exchange, the GOP agreed, among other things, not to block the extension of the deadline for termination of unemployment benefits. On Thursday, House Democrats voted to oppose the compromise; Democrats in the Senate should do the same.

In addition, Iowa Sens. Charles Grassley and Tom Harkin should join Sen. Bernie Sanders, I-Vt., in filibustering Obama's compromise. We have already come out against the extension of the tax cuts for upper-income Americans, and our position remains the same. Extending the tax cuts for the wealthy would have little benefit for the American economy and would substantially increase the deficit. In addition, it would be callous to give the rich further tax breaks while millions of ordinary Americans are suffering.

Proponents of keeping all of the cuts argue that allowing the top earners to continue to pay lower taxes would stimulate the economy, because the wealthy will have more money to spend. But 25 percent of the cuts would go to the top one-half of 1 percent of Americans; studies have shown that people in that group save a large amount of the money they receive from tax cuts, thus providing little stimulative effect for the economy. In addition, the cuts would substantially increase the deficit — the tax deal costs more than the stimulus.

Whether Sanders' filibuster will be successful is questionable but not unlikely. Sixty votes are required to break a filibuster in the Senate, and if Iowa's senators both voice their opposition to the plan, the filibuster's chances would improve.

"It's the end of the session, so incentives to compromise diminish," University of Iowa political science Associate Professor Douglas Dion said. "It's tough to figure out who has the most to lose from this scenario."

The new compromise is not a deal, it is a concession. Obama argues that the benefits make the deal worthwhile. The GOP threatened to block all of the tax cuts if the rates for the top earners were not preserved. Obama said he feels the current situation made the deal necessary, arguing that Republican leadership's acceptance of an extension of jobless benefits and payroll tax cuts is a huge boon for the country.

But Obama is negotiating from the position of a president with a majority in both houses of Congress. Even when Republicans gain control of the House next January, Obama will still wield the veto pen. The irresponsible deal he made with Congressional Republican leadership doesn't help the middle class and poor; it is simply the result of poor leadership and negotiation on his part.

Finally, it is interesting that politicians in Washington continually cite government debt as a chief concern, yet advocate a policy that requires borrowing a large amount of money to further enrich the affluent. Harkin and Grassley can take a stand against governmental fiscal irresponsibility by joining Sanders.

Democratic lawmakers need to draw a line in the sand and oppose these tax cuts for the wealthy; Obama has clearly acquiesced already.


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