Middle of the Road
Sept. 27, 2010

Extending the Bush tax cuts

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Rep. Mike Rogers: Scott, I wanted to continue our dialogue regarding finding middle ground on legislation and policies that affect folks across Alabama's Third District. As you know, Congress recently went back into session and the hot topic is whether or not President Bush's tax cuts from 2001 and 2003 should be extended. Without action by Congress, these tax cuts will expire at the end of this year. If that happens, it will amount to a $3.8 trillion tax increase.

Let's face it, in this stalled economy with steady, high unemployment rates, folks across the Third District and everywhere in America cannot afford more taxes. I personally believe the tax cuts should be extended, especially to help get the economy back on track. However, President Obama and the liberal Democratic leadership in Congress don't seem to agree.

I hope, as Congress returns to Washington, D.C. from a lengthy district work period, members will come back to town familiar with how their constituency feels about tax cuts. I know that's a lot of what I heard while I was home. It is my hope that we will be able to hold bipartisan discussions and extend these tax cuts for a while.

Scott Wright: Good to share this space with you again, Rep. Rogers.

After our last exchange in July, I was under the impression that you and I at least agreed on the need to reduce the nation's ever-expanding budget deficit. Why the sudden about-face, especially for an ill-advised “tax cut” that you and I both know will end up costing future generations of Americans much, much more than it can ever benefit us in the short term?

Rogers: Scott, we do agree on reducing the deficit – it is just that we disagree on how to get there. President Obama and the Democratic leadership have gone out of control with their spending, with no results. The $787 billion stimulus bill got us nowhere.

I don't think punishing hardworking American people by raising their taxes while they are already hurting is the best way to recoup the funds the Democrats put on the nation's credit card.

Wright: Congressman, as I'm sure you are aware, the Bush “tax cuts” were passed at a time when the U.S. Treasury had a surplus and economists were predicting trillions in growth over the coming decade. But that was ten years, two foreign wars, and a deregulated banking industry meltdown ago.

Talk about punishing the American people! Thank you, sir. May we have another?

Congressman, you and I can debate whether George W. Bush or Barack Obama has done more damage to this nation's economy from now until Vanderbilt wins the Rose Bowl and we'll still disagree. But surely you cannot argue that piling additional debt onto future generations is a good idea?

Actually, you've already answered that question. In July, you wrote in our Middle of the Road column that deficit spending to grow the economy “works only if Congress passes the right kind of pro-growth policies.” Well, the Congressional Budget Office, former Fed chairman Alan Greenspan, and just about every economist I can find with an Internet blog says that extending the Bush “tax cuts” is flat wrong.

Perhaps I'm not as much of a liberal as your chief of staff (hello, Marshall) thinks I am, because I agree that extending those “tax cuts” is a bad move. What most perplexes me right now is why in the world you don't agree with me.

Rogers: Scott, there are just as many reputable economists who say the opposite. For example, in a recent CNN article, Sean Snaith, economics professor at the University of Central Florida, wrote that the Bush tax cuts should be extended for all income levels.

Here's the bottom line, in my mind. I believe – as I'm sure you do – that the best policies for Congress to pursue to help the economy are those that can help families keep their hard-earned money to spend as they see fit, that empower small businesses to grow, and that create jobs and reward hard work and success.

Along the same line of thinking, allowing the tax cuts to expire would amount to a $3.8 trillion tax hike on families and businesses. Not good. Here is some of what could happen: The child tax credit will be slashed in half, the marriage penalty will be reinstated and the 10 percent tax bracket will be eliminated.

Back in Cherokee County, I know folks are hurting and I know they are living on strict budgets. People are scared. Business owners are uncertain about the direction of our economy. Congress could have taken some lessons from these hardworking people, but instead have been spending like maniacs.

We need to provide everyone with some level of economic certainty, no matter their income, when it comes to taxes. Congress has done so much, so quickly, that the least it should do is ensure that hardworking American families will not see another tax increase. Not now.

Wright: Congressman, in closing I'll begin by saying that I have once again enjoyed tossing the political football with you.

First off, to be clear about President Obama's $787 billion stimulus bill, Americans are much better off than they would have been without it.

In fact, according to columnist Robert J. Samuelson in the Sept. 27 edition of Newsweek, Princeton economist Alan Binder recently estimated that without the stimulus package “gross domestic production would have dropped 12 percent instead of 4 percent, and 16.6 million jobs would have been lost instead of 8.4 million. Unemployment could have hit 16 percent.”

That's a long way from nowhere, Congressman.

Let's get back to the Bush “tax cuts.” I see where you are coming from with your concerns about not punishing struggling families. But as you warn against the Congress “spending like maniacs,” you continue to trumpet the addition of trillions of dollars to the nation's debt, the consequences of which even George W. Bush knew would eventually sink the ship of state unless his “tax cuts” were allowed to expire. You're worried about economic uncertainty, but that simple fact sounds to me like a frightening bit of certainty, unless we stop the spending.

I suppose William Niskanen, former chairman of the libertarian Cato Institute, was right when he wrote in 2006 that conservatives long ago chose to forego their core ideology of using tax cuts to starve the government of funding. Between 1981 and 2005, Niskanen wrote, tax cuts actually led to more, rather than less, government spending. The consequence of this realization for conservatives, he added, “substantially reduced the traditional Republican concern for fiscal responsibility.”

And so here we are. Grab the scissors and Scotch tape, Congressman, because here's an admission I never thought I'd utter in a million years: George W. Bush was right, at least about creating his "tax cuts" with an expiration date. If you think American families are struggling now, just watch what happens when China decides to collect on the debt we're going to owe after borrowing another $4 trillion. I believe Greenspan said it best: “I am very much in favor of tax cuts, but not with borrowed money.”

As Congress readies an extension of the Bush accounting sleight-of-hand for sometime later this year, I reiterate: It's plain wrong. The country cannot afford this so-called “tax cut”. More importantly our children and grandchildren can't, either.

Congressman, as you so eloquently wrote of future generations in your final sentence of our July debate: “We owe them better”.