[We will be live-blogging the Rose Garden speech, which is scheduled for 11:50 AM ET.]
Obama's proposal draws a sharp contrast between him and the Republicans, including GOP presidential nominee Mitt Romney, who have argued not only for making those tax cuts permanent but reducing taxes even more in a move that would give the wealthy yet another break that has reduced their rates by half over the past 30 years.
In addition to reducing federal revenue and increasing federal deficits, the cuts have also contributed heavily to income inequality. The percentage increase in after-tax income for those households earning $40,000-$50,000 annually, according to the Urban-Brookings Tax Policy Center has been 2.2 percent, while those making a million dollars or more have had their income increased by 6.2 percent. In dollar terms that is $860 a year versus $128,832 a year.
What did we get for those cuts? They did not spur growth above the long-term average. Most of the money went to the one percenters and job growth was pitiful.
In the wake of Republicans winning a majority in the House of Representatives in 2010, the administration made a deal to keep unemployment benefits flowing by extending the tax cuts for another two years. They expire again in December, and, given the sluggish growth of the economy, the fear is that suddenly returning to the pre-Bush tax rates could, depending on one's point of view, bring on a new recession or worsen the one that many people say has never gone away no matter that the official verdict is that it ended 37 months ago.
Despite the damage those cuts have done to the economy over the past decade, Republicans are determined to double-down, making the Bush-era cuts forever and adding still more cuts, again giving the biggest slice to the wealthy. They are pressing what all members of one party and some members of the other party have sought, a comprehensive tax reform that rewards the rich and gives a couple more turns of the vise on everybody else.
Everybody knows no permanent tax reform is happening, at the earliest, before 2013, with the GOP hoping their man will be in the White House to ram more cuts for the most affluent Americans through the Congress. Along with these, of course, will be cuts in spending, further trashing the physical and social infrastructure.
For now, the one-year extension is the right move, both economically and politically. The bigger fight has to wait.