Our guest blogger is John Podesta, President and CEO of the Center for American Progress Action Fund.As President Obama heads back from Asia, he faces another important week with Congress set to rejoin the debate over whether to extend expiring tax cuts.
Republicans are holding needed middle-class tax cuts hostage in order to give the richest two percent of Americans bonus tax relief in 2011. Republican leaders like to trot out the argument that extension of cuts for the wealthiest is an important tool that will help create jobs.
It’s not. It’s TARP 2, or more Tax Assistance for Rich People. And their rote rhetoric does not obscure the fact that CBO’s analysis of tax policies ranked tax cuts for the wealthiest dead last in terms of its potential to stimulate job growth. It is a highly inefficient, and devastatingly expensive, way to attempt to spur job growth and help our economy’s nascent recovery.
As the White House staff settles on a strategy for the tax cut debate, they should consider an idea put forward by Sen. Mark Warner (D-VA). He has suggested that rather than extending the tax cuts for the top two percent, Congress consider a number of business tax cuts that would be far more likely to spur job creation and more sustained economic growth. He proposed a range of possible business tax cuts to create jobs, but my favorite is a temporary tax credit against payroll taxes. That is a direct way to reduce the costs of businesses hiring new workers, and I hope the White House includes this idea in whatever proposal it puts forward for consideration at next week’s bipartisan Congressional meeting.
The kinds of ideas put forward by Sen. Warner combined with middle class tax cuts and extending unemployment insurance are far sounder as temporary measures to aid economic recovery compared to Republicans’ push to make all the Bush tax cuts permanent. We obviously cannot afford to do that, but as a temporary measure to help American workers and our economy there are better measures than TARP 2 bonuses for millionaires.