Dan Holler

“Mr. President, on the fiscal cliff, two years ago, sir, you said that you wouldn’t extend the Bush-era tax cuts, but at the end of the day, you did. So, respectfully, sir, why should the American people and the Republicans believe that you won’t cave again this time?”

Although CNN’s Jessica Yellin came under fire for asking the question, she posed the very question congressional Republicans should be asking. Instead, as The Heritage Foundation’s JD Foster explains, many on the right are “beginning with the presumption that a tax hike is inevitable.”

President Obama’s response to Yellin is revealing:

“Well, two years ago, the economy was in a different situation. We were still very much in the early parts of recovering from the worst economic crisis since the Great Depression. … But what I said at the time is what I meant, which is this was a one-time proposition. … But what I'm not going to do is to extend Bush tax cuts for the wealthiest 2 percent that we can't afford, and according to economists, will have the least positive impact on our economy.”

If the situation is different today, it is only because future growth looks even more uncertain. According to the Congressional Budget Office (CBO), economic growth during the first three years of this “recovery” is 9% below what America has experienced in past recoveries. Not only that, but the economy is experiencing less growth in 2012 than in 2010. During the first three quarters of 2012, the economy grew an average of 1.8%, whereas it grew at about 2.4% in 2010.

We also know President Obama has long record of breaking promises. During a television interview in March of 2008, he declared, “we’re not paying enough taxes to the government.” A couple months later he told Wolf Blitzer, “I want to eliminate the Bush tax cuts.” Fast forward to December 2010, liberal columnist Ari Berman proclaimed, “Obama caves on tax cuts.”

President Obama’s claim we cannot “afford” not to increase taxes is also suspect. As Foster notes, “revenues will return to normal as a share of the economy as the economy improves.” Ironically, the President acknowledges his plan would have a negative impact on the economy. He said extending the tax rates in question will “have the least positive impact on our economy.” Notice, he did not say extending them would have a negative impact, just the “least positive.”

Words have meaning, and the President’s defensive response to Yellin reveals caving is not out of the question. But to force President Obama into a position of weakness requires negotiating from a position of strength, something that seems foreign to many in Congress.

Instead of talking about the right way to raise revenue, we should focus on spending. Again, Foster: “Spending and spending alone – both the Obama spending surge and the entitlement wave now building – produces these deficits.”

As Congressional Republicans search for common ground – compromise is out, common ground is in –they are showing a lot of leg on taxes, while insisting on entitlement reform in return. Not surprisingly, they are being rebuffed. After President Obama met with labor leaders, National Journal reported Democrats shut down talk of entitlement reform.

None of this should come as a surprise. The Left has never wanted less spending. When Berman accused President Obama of caving in 2010, he went on to lament that we’d be spending “$60 billion a year on tax cuts for millionaires and billionaires rather than, for example, a national infrastructure plan that would rebuild America and put people back to work.”

Last week, I debated Cornell University professor and New York Times columnist Robert Frank. He explained that the “extra money that we manage to raise if the tax rates go back up on the top earners will not compromise economic growth because it will be spent on other things that we don’t now have money to do, like fixing the roads.” Senator Chuck Schumer (D-NY) also echoed the desire for a Keynesian stimulus.

Will President Obama cave? It is too early to tell, but if he does not, Republicans in Congress may very well end up signing off on tax increases, stimulus spending and superficial entitlement reform.


Dan Holler

Dan Holler is the Communications Director for Heritage Action for America. Previously, he held numerous positions at The Heritage Foundation, most recently he was the Senate Relations Deputy. A Maryland native, he is a graduate of Washington College.