David Frum

12.10.12

Rejecting the Journal's Plutocratic Tax Advice

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Bill Kristol is right, and the Wall Street Journal is wrong.

The Journal proposes that congressional Republicans can force President Obama to agree to preserve the Bush tax cuts for upper-income earners by holding hostage other things the president wants.

The problem, of course, is that the president's wish list is highly politically popular, while the Republican wish list is not.

Kristol correctly observes that the Journal's advice will end by placing Republicans in opposition to a middle-class tax cut - and thereby underscoring and confirming the president's advantage as the champion of the middle class against a pro-plutocracy GOP.

[T]hink for a minute about the implications of what the Journal seems to be saying. The Journal editors believe that after January 1, when taxes will have gone up for everyone, House Republicans will block Democratic legislation that would cut taxes—that would restore the lower 2012 rates for the vast majority of taxpayers, fix the Alternative Minimum Tax, and for that matter would probably offer a compromise on dividends and the death tax better than what will be the new dividend rate of 39 percent and death tax of 55 percent with a $1 million exemption.

Will Republicans really oppose such legislation? President Obama will be beating the drums for this tax cut. Senate Democrats will pass this tax cut. If Senate Republicans vote against it, it won't be "Senate Democrats running for re-election in 2014" who will have a tax hike on their resumes. It will be Senate Republicans who will have voted against cutting taxes. And if House Republicans block such legislation, it will be they, and they alone, insisting on higher taxes.

Of course they won't. Republicans will fold with lightning speed after we go over the tax cliff on January 1. Which is why the third of the Journal editorial's three key paragraphs is moot. If we go over the cliff, there won't be damage to Obama's chances of second-term success. Quite the contrary. What Republicans will have done is to make Democrats the party of tax cuts and Obama a president fighting for economic growth.

As I say, it won't happen. Most Republicans will go along soon after January 1 with what will now be the Democrats' tax cutting agenda. If the House Republicans now follow the Wall Street Journal editors over the cliff, the only effect, I'm afraid, will be to turn a manageable tactical retreat in December into a panicked strategic rout in January.

Bill Kristol was of course a leading media advocate of the selection of Paul Ryan as Mitt Romney's running mate. Kristol's defection from the pro-plutocracy wing of the GOP is an interesting indicator that, yes, change is in the air.