WASHINGTON -- Many economists, and virtually the entire business community, have told the Democratic Congress that postponing a vote to keep the Bush tax cuts jeopardizes our fragile economy's future health and stability.
Businesses are thrown into uncertainty and are unable to make sound and prudent decisions about expansion plans, capital reinvestment and job creation that are vital to the economy's growth.
Whatever the Democrats decide about whether or not George W. Bush's 2001-2003 top income-tax rates will expire at the end of this year, "they should do it quickly," Mark Zandi, chief economist at Moody's Analytics, urged Congress last week.
"The uncertainty of not knowing what tax rates will be just a few months from now is adding to the collective nervousness," Zandi wrote. Delay on the tax issue is having a "discernible" impact on business decision-making, especially on hiring, he said.
But last week, House and Senate Democratic leaders ignored his sound advice and made a cold, calculated and cynical decision to postpone any vote on taxes until after the midterm elections.
Why? Because their rank and file are telling them that voting to raise taxes now in a fragile, jobless economic environment will be politically lethal for their party's incumbents in the midterm elections.
Republicans need a gain of 10 seats to take control of the Senate, and at least a dozen Democrats in highly competitive races are threatened with defeat. But the decision by Senate Majority Leader Harry Reid, who may be one of this year's casualties, and Speaker Nancy Pelosi, was a lose-lose choice for their party. Republicans pounded Democrats for postponing action on taxes, despite its damaging consequences on the economy, as well as for insisting they will raise taxes anyway in a post-election lame duck session, even if voters topple them from power.
"We will come back in November and stay in session as long as it takes to get this done," Reid spokesman Jim Manley told reporters last week. With the economy growing ever weaker, the housing industry in a freefall, foreclosure rates rising and the administration running out of ideas to turn things around, Democrats are leaving town this week to campaign without acting on the central economic issue facing the country.