There he goes again. More than six months after surrendering to Republican demands that this isn't the time to raise taxes in a weak, jobless economy, Barack Obama is peddling the same old snake oil medicine of higher taxes.
Last December, after Republicans crushed the Democrats in the midterm elections, largely on economic issues, Obama suddenly changed his tune and agreed to extend all of President George W. Bush's tax-rate cuts for another two years, including the top rates for the richest taxpayers. The argument that raising income taxes when the economy was on life-support turned out to be a clear political winner for the GOP, even drawing support from Democrats in Congress.
Now, seven months later, with the U.S. economy weaker than it was last December and job growth virtually at a dead halt, Obama is saying that the solution to our fiscal and economic troubles is to raise taxes on investors, employers and big corporations.
What planet is Obama living on? At one point in his Monday news conference, he said it was fair to tax more income from the wealthy because they don't "need it" and poor people do. Where did he learn this school of economics? To each according to his needs? Where have we heard that one before?
At another point in his news conference, he said wealthier people were not paying their "fair share" of the nation's income taxes. But the Congressional Budget Office said earlier this year that the richest 20 percent of all Americans pay 86 percent of all federal income taxes.
One has to ask how closely Obama studied the U.S. Bureau of Labor Statistics' June jobs numbers that came out last Friday. That report, a snapshot of the economy at the halfway point in the third year of his presidency, stunned the White House, sent shock waves through the financial markets and deflated any hope the economy is going to rebound before the 2012 elections.
In a nation of 311 million people, the Obama economy added a pathetic 18,000 jobs to payrolls in June, less than one-fifth of what administration economists had expected, and nowhere near what is needed to cut unemployment down to normal levels in this decade. That pushed the jobless rate up to 9.2 percent, while previous job growth was revised downward by a combined 44,000 jobs for April and May. The economy is creating fewer jobs than the government said it was.
Making matters bleaker, temporary employers slashed 12,000 jobs, while about 272,000 discouraged Americans stopped looking for work.
If you count the unemployed, workers forced to take just part-time jobs and Americans who have dropped out of the workforce, the real unemployment rate climbed last month from 15.8 percent to 16.2 percent, according to the BLS.
Curiously, the economy isn't getting mentioned much in the stalled three-way negotiations between the White House, the Republicans and the Democrats over how to bring down the $1 trillion-plus deficits and a nearly $15 trillion debt.
The national news media, parroting the White House line, blames the impasse on GOP ideologues and tea party-backed lawmakers for stubbornly opposing any tax increases in a budget-cutting deal to raise the debt limit.
But the Republicans' economic policy is no different now than it was last year when Obama reluctantly bought into it: You don't raise taxes in a critically weak economy that is still struggling to climb out of a de facto recession.
Yet this is the dismal anti-growth, anti-jobs policy Obama and the Democrats are urging that we adopt by raising taxes on anyone who earns more than $200,000 a year and ending a sea of business tax breaks that will only increase the tax burden on the one sector of our economy that creates most of the jobs.
The focus in the government's current debt crisis is justifiably on bringing down the rate of spending. But it must also be on boosting economic growth above the anemic 1.9 percent growth rate under this administration's failed policies. That's going to require new tax incentives to unlock capital investment, encourage new start-up firms and expand export markets.
Obama, who didn't want to get into this budget battle until it was late in the game, is operating from a position of strategic weakness on two sides.
The Democrats won't vote to reform Social Security and Medicare. That's the only issue they've got heading into 2012. And Republicans aren't about to raise taxes in an economy that is not only slowing down but is also teetering on the edge of another recession.
We got into this fiscal mess over many years, and we're not going to get out of it in a single budget bill. Obama needs to drop this class warfare fixation on raising taxes and buy into House Majority Leader Eric Cantor's offer of the 10-year, $2.5 trillion budget-cutting deal that is now on the table, raise the debt limit, and then negotiate over entitlements and pro-growth tax reform on a separate track at a later time.
It sounds like Obama is open to the idea of lowering the income tax rates by cleansing the tax code of loopholes and tax breaks that would broaden the tax base. Republicans like that idea, too.