Beginning with the first Presidential debate, I have felt that the Obama/Biden campaign have not really taken the best path in countering Romney's proposal to cut taxes for the so-called "job-creators." I have made a few comments about it, but today other Kossacks urged me to write a diary about it, so here goes.
There was a diary earlier about how Stephen Colbert destroyed Romney's tax plan "with one simple question." Colbert's question about the Romney tax plan to cut taxes even for the top 1% was this:
"Why cut their taxes?"
That's the question that President Obama should be asking Mitt Romney, and he should be prepared to discuss why Mitt's plan won't do what Romney claims it will. Don't argue just about whether we can afford the tax cut. Simply put, Obama must make the case that tax cuts will not lead to more hiring.
Obama and Biden have not asked the question "Why?" on tax cuts, and they haven't really laid out the argument on why tax cuts won't work.
Romney/Ryan keep insisting that the tax cuts will provide jobs, and the standard Obama/Biden response is that 'we can't afford it" and "the rich don't need it". That's the wrong answer -- the wrong argument to be having.
To counter the Romney plan, Obama proposes ending the Bush tax cut for the wealthy -- to hike the rate on those earning over $250,000 (or on those earning over one million dollars, as VP Biden seemed to be saying in his debate with Rep. Ryan). The GOP candidates reply that the resulting tax hike would cost jobs, which is in contrast to their plan to create jobs with tax cuts.
The candidates on both sides end up arguing about how many businesses would actually be affected by and how wealthy they might be. This is having the debate on the Republican's turf. They're setting the terms for the debate, and they're making their tax cut sound at least plausible. The debate ends up being the GOP tax cut stimulus plan vs. the Democratic plan for more tax fairness and more government revenue. A lot of people will respond positively to the GOP side of that debate.
The right question isn't whether we can afford a tax cut for the rich, or even whether that would be fair. The right question is why would we want to cut their taxes -- what would that REALLY accomplish?
When that becomes the question for debate, the right answers emerge, because the Romney plan is predicated on two demonstrably false premises.
The right answer/argument is to challenge Romney/Ryan on why they are even making their argument on tax cuts. Obama and Biden need to make the argument that even if tax cuts provided more money to businesses -- and it isn't clear they would provide more money if the cuts are being offset by eliminating tax breaks -- the tax cuts won't create jobs.
Businesses don't hire employees just because they suddenly have more money lying around. They don't even necessarily avoid cutbacks if they have more money. Those decisions are based on demand for products or services. If they need a certain number of employees to meet demand -- if they will increase revenue and become more profitable by having more employees to service their clients/customers-- then they will hire or keep employees.
I listened to Murphy/McMahon debate, and the Dem candidate made this argument...sort of. Not as a theoretical point, but he blasted McMahon for taking advantage of a $10 million tax break and laying off (I think it was) hundreds of employees. He pointed out that her company reported about $46 million in profits last year, but they could have held on to the employees and report lower profits ($38 million, I think he said).
That example makes the point that paying lower taxes doesn't equate with the number of jobs...but Murphy failed to bring that home by making the point that this undercuts the argument for lower taxes. He was trying to launch a personal attack about Ms. McMahon and her lack of commitment to providing middle class jobs. There is a much larger point to be made about the supposed link between tax cuts and jobs.
Obama and Biden haven't even questioned the Romney premise in any way. That's where the argument needs to be...where it will be won. Democrats have to argue that the tax cuts would actually hurt the economy if the cuts mean the gov't has to cut back on spending which actually could boost demand. More importantly the Democrats have to point out that there is no reason to think the cuts will lead to more hiring. At best, the cuts will simply lead to higher profits, which may mean higher dividends paid to wealthy folks who own shares or who own the companies.
The other fallacious premise is the one Stephen Colbert's was highlighting. I made this same argument in comments here when Romney began talking about a revenue neutral tax cut. Obama tried to get at this, but he was trying too hard to say that Romney would put the load on the middle class, which Romney kept saying he would not do. Maybe he will, maybe he won't. What Obama could do was grant for the sake of argument Romney's assertions that he won't hit the middle class. This would mean that Romney will be, with one hand, taking back from the rich what he will be giving the with the tax cuts he offers with the other hand.
If Romney is promising to cut deductions and other tax breaks for the wealthy, then they will not have any more money to use to create jobs. In fact, the "job-creators" will have even less incentive to make new hires. If they can't use the new hires to claim deductions or write-offs for business expenses, then the economic bar for any new hires must be even higher. They must generate that much more revenue or the company will be even less likely to make the new hires.
Economic growth leads to new jobs, not the other way around. We can't just put more money in the pockets of the wealthy and expect they will hire more employees. They already have plenty of disposable income -- more than they had when Obama took office, and yet the jobs numbers haven't increased to keep pace. More to the point, tax cuts won't create economic growth or more jobs. Only steady, growth-oriented fiscal policies will do that.
Challenge Romney on this. Say we can't afford the cuts. Say they will be unfair to the middle class. Those are good points, but the President must also make the argument that the cuts won't do what Romney is claiming.
A little bonus: Stephen Colbert asking "Why cut their taxes?":