A few months ago, Paul Krugman noted that allowing taxes to rise on the middle class during these tough economic times would be bad.
Now, he seems to have a change of heart…sort of.
Democrats have tried to push a compromise: let tax cuts for the wealthy expire, but extend tax cuts for the middle class. Republicans, however, are having none of it. They have been filibustering Democratic attempts to separate tax cuts that mainly benefit a tiny group of wealthy Americans from those that mainly help the middle class. It’s all or nothing, they say: all the Bush tax cuts must be extended. What should Democrats do?
The answer is that they should just say no. If G.O.P. intransigence means that taxes rise at the end of this month, so be it.
In his column this morning, Krugman suggests the Democrats should reject any compromise and just allow the tax cuts to expire. (He also seems to not realize that the decision to make the middle class cuts permanent was not a “compromise,” but rather part of Obama’s campaign promise)
Think about the logic of the situation. Right now, the Republicans see themselves as successful blackmailers, holding a clear upper hand. President Obama, they believe, wouldn’t dare preside over a broad tax increase while the economy is depressed. And they therefore believe that he will give in to their demands.
Well, yeah, even you said it would be terrible if taxes went up on the middle class, Paul. That’s why he has to give in to their demands.
But while raising taxes when unemployment is high is a bad thing, there are worse things. And a cold, hard look at the consequences of giving in to the G.O.P. now suggests that saying no, and letting the Bush tax cuts expire on schedule, is the lesser of two evils.
Paul is talking about politics here. He says it’s much worse to let the GOP win this argument because it they will continue to blackmail Democrats (because they won’t blackmail us anymore if we let the cuts expire?), and thus this is the better option.
then, he says, Obama would have to pin the blame on Republicans.
So Mr. Obama should draw a line in the sand, right here, right now. If Republicans hold out, and taxes go up, he should tell the nation the truth, and denounce the blackmail attempt for what it is
So basically what Krugman is saying is that Obama has to reject a deal and allow what he even said would be a terrible policy that he admits would keep unemployment .1%-.3% higher and then somehow blame the Republicans for letting it happen, all the while completely destroying the decades-old conventional wisdom that tax hikes are always Democrats’ fault, all because he needs to look “strong.”
Because I’m sure when taxes go up in January, middle class Americans all across the land are going to go “That’s ok Obama, at least you stood your ground.” And I’m sure the hundreds of thousands of people who will be unemployed because of the tax cuts expiring will stand up and say “It’s totally cool Obama, at least you stood up to the Republicans, and don’t worry about not getting the unemployment extensions. It’s better I live in a box than you be perceived as weak”
And what happens when the ire of tax hikes turns dramatically against Obama and he goes down, leading to President Thune and the GOP Congress making those cuts permanent ANYWAY in 2013?
Oh, of course, the fault will be with “the messaging”