In the end, when the invisible "summer recovery" never materialized and Republicans took control of the House and six seats in the Senate -- and even Democrats said "this is no time to raise taxes" in a weak economy -- Obama caved. He agreed to extend the Bush tax cuts for two more years, acknowledging that higher taxes would hurt the fragile economy.
Now, with the economy once again slumping and flirting with recession, Obama is calling on raising taxes on small businesses, investors, retirees who live off capital gains and dividends, and millions of other Americans who do not consider themselves rich.
But many economists, and some Democrats on Capitol Hill, say an extension of all the Bush tax cuts is called for in a still-anemic economy, at least until a full-scale rate reform can be enacted. Raising taxes now on anyone is out of the question.
Here's what would happen if Obama were to let the tax cuts expire at the end of this year:
The 10 percent income tax rate for low-income earners would return to 15 percent; the 25 percent rate would jump to 28 percent; the 28 percent would rise to 36 percent; and the top 35 percent would soar to nearly 40 percent.
That's only the beginning. The marriage penalty against two-earner couples would rise sharply. Families would see the $1,000 per child tax credit shrink to $500, and the 15 percent tax on dividends and capital gains would increase to 20 percent or more.
Letting these tax cuts expire at the end of December would be a massive body blow to an economy that has never really recovered and is still in terrible shape.
The Federal Reserve has sharply lowered its economic growth forecasts for the rest of this year to a new low of 2 percent, and says unemployment is going to stay in the 8 percent-plus range this year and next.
And yet here is the president telling the nation Monday that the best medicine for a weakening economy is to raise taxes on job creators and capital investment that is the mother's milk of a prosperous economy.
Obama has been campaigning in swing states voicing his own frustration about why his spending stimulus policy hasn't worked.
"(B)ut boy, things are still tough out there. Change hasn't happened fast enough. ... I get frustrated, too," he said in Ohio last week.
The problem isn't Bush's tax policies. If there is any life left in the economy, it is to some degree helped by lower tax rates on a still-struggling nation, trying to get back on its feet.
Obama, whose knowledge of what makes the economy work wouldn't fill a thimble, still thinks that more spending is the cure-all and that tax cuts "drove us into the ditch" and caused all of our present problems.
He should read the report by Harvard economists Alberto Alesina and Silvia Ardagna, who studied stimulus policies in 21 countries undergoing economic problems. Their conclusion: "Fiscal stimuli based upon tax cuts are more likely to increase growth than those based on spending increases."
For the past 41 months, unemployment has been above 8 percent, and the economy is clearly in a nose dive. Obama's job approval polls have sunk into the mid-40s.
The Washington Post reported Monday that 54 percent of Americans and 60 percent of independents they polled "give Obama negative marks" on the economy.
Brace yourself, because the economy is only going to get worse until we have a new president and new policies.