WASHINGTON -- Hillary Clinton has vowed throughout her presidential campaign to raise taxes on the richest Americans, but now the New York senator says she will postpone the tax hikes until the economy recovers.
Clinton's temporary retreat from her long-sought plan to raise taxes on the wealthiest taxpayers is surprising in and of itself. That she is basing her decision on the belief that higher income tax rates would further undermine a weakening economy is an unexpected bow to pro-growth, supply-side economics and the underlying rationale for President Bush's across-the-board tax cuts.
"She would let the two top rates go back up to their previous levels under President Clinton, though she's not for doing that now," said Gene Sperling, senior economic adviser to Clinton's campaign.
I asked Sperling why the former first lady, who has made bashing Bush's tax cuts the centerpiece of her presidential campaign, is she backing away from them now, even if only temporarily?
"She just thinks that we are at a point where we are bordering on a recession, and you want to do everything you can to inject demand into the economy right now," he replied.
"She would let the two top rates go back up to 36 percent and 39.6 percent when (the Bush income tax cuts) expire in 2010," he said.
Sperling, who was President Clinton's White House economic adviser, says something else that is equally revealing: Hillary Clinton has no intention of repealing any of the other Bush income tax cuts.
How many times have we heard Democratic leaders denounce the Bush tax cuts in toto as if they all were unnecessary? You never hear them say, we don't like the top rate cut, but cuts for taxpayers in all of the other tax brackets are needed and we'd keep them.
"The senator is for extending the (Bush) tax cuts for families making under $250,000," Sperling told me.
All of this begs the question: If cutting taxes across every income level, including the top two brackets, helps strengthen the economy when it is weak and skirting a recession, then wouldn't their retention continue to do that?
If, as Sperling said, Clinton wants to keep the lower tax rates in force throughout the economy's downturn to help it recover and grow stronger, why not make them permanent? Why take them away? Healthy economies always need plenty of consumer spending, savings and investment.
The only reason, of course, is that Clinton needs this money to pay for all of the programs she intends to establish to expand government's nanny role in every nook and cranny of our daily lives.
A nearly 40 percent tax rate on the top income earners can rake in a lot of revenue, but what will that do to the economy's long-term growth?
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