Big carrot; small stick.
Yesterday President Barack Obama proposed a huge tax benefit to business. He asked Congress to let businesses charge off 100 percent of money spent on new equipment for the next two years and to make permanent tax credits to cover research and experimentation expenses.
The two benefits add up to about $130 billion a year. Both would go straight to the bottom line of industries and other businesses and stimulate the entire economy by increasing the demand for industrial equipment and boosting the industrial research that creates new products and jobs.
The president also asked for a $50 billion infrastructure bill to build bridges, needed highways and other public structures while creating thousands of high-paying jobs in the hard-hit construction industry.
The Congressional Budget Office ranks the re-search tax break and enhanced depreciation schedules as among the most efficient ways to bolster the economy. Both in-centives to business firms have a long, successful and normally bipartisan history. Both would create new and lasting jobs over the middle term.
That was the carrot the president offered in his speech on the economy Wednesday. In a normal year, Congress would have welcomed the initiatives. Passage would have quickly followed.
This is not a normal year. It is a bitterly partisan election year; a year in which Republicans loudly reject every proposal that the administration makes, even those which past Republican congresses and presidents have supported with enthusiasm.
Rather than applaud the president for offering U.S. business and industry billions in incentives to grow and prosper — an initiative as Republican as George Bush or his dad ever concocted — the GOP leadership rejected them and called instead for making the tax cuts for the most wealthy 2 percent of the population permanent.
It was a move deliberately made to start another fight. The president campaigned on a promise to allow the tax cuts for the super rich to expire at the end of 2010. He has repeated the pledge over and over and did so again Wednesday night. He insists that the money-saving restoration of the pre-Bush tax on the rich is needed to curb deficit spending. Restoring the tax on the top brackets to that in place under President Bill Clinton would produce about $700 billion in additional income, reducing the deficit by that amount.
IT IS TRANSPARENTLY specious to argue that taxing those who earn more than $250,000 a year at the level it was just 10 years ago would slow the recovery. Under Clinton, the economy was booming, unemployment was half today’s rate, the federal budget had a surplus, the national debt was declining.
Democrats should look forward to the arm-wrestling to follow. To oppose Obama on these economic growth proposals, Republicans must argue against their own ideas; against proposals that have been headliners on Republican platforms for decades. They must also face nonpartisan economists who contend that extending tax breaks for the super rich would not stimulate the economy as much as the Obama business incentives would.
But this is to consider the ideas on their merits. Nothing of the kind is going to happen — at least not before the November elections. Between now and when Congress ad-journs to go at electioneering full time, Republicans need only gum up the works until the votes are counted and the stage is set for the next session.
Perhaps by January, Re-publicans and Democrats alike will remember that giving U.S. businesses and industries incentives to expand create jobs and grow the economy — and then decide, when they go back to Washington, to call the ideas bipartisan and pass them into law.
— Emerson Lynn, jr.
