The tax cut proposals President Obama is laying out this week seem sensible. They may benefit the economy. But politically, they are not half as clever as the White House thinks.
Obama’s plans for an immediate capital investment incentive and permanent extension of the research and development tax break are being described in the press as part of a desperate attempt to boost the economy before Election Day. This is not something the proposals can conceivably do so quickly. But they are designed to confuse the issue in voters’ minds before Election Day, to the benefit of Democrats.
Obama is seeking to muddy the waters that were clarified by his support of a mega-spending 2009 stimulus bill and the federal takeover of health care.
With both measures unpopular and voters saying they prefer the GOP this November over the alternative, it’s not surprising that Obama is setting Democrats up to campaign as . . . Republicans.
Have you noticed? Obama drums away every chance he gets in support of a relatively minor small business bill, castigating Republicans for blocking it. Now, he’ll be demanding that they get out of the way while he tries to help large corporations – also known in his lexicon as Fat Cats – by reducing their tax burden.
Well, not their overall tax burden. Much of this – including new infrastructure spending also being thrown in – is going to be paid for by eliminating “loopholes” in the tax code that Fat Cats, despite their ponderous weight, love to jump through.
ELIMINATING THESE LOOPHOLES IS A TAX INCREASE
So we’re really not talking about an excessive amount in the way of stimulus here. But Republicans are going to have a lot of splainin’ to do if they line up against proposals they’ve backed for years.
I can tell you, from my relationships as a journalist with corporate lobbyists, a permanent research and development tax credit is as close to the holy grail for U.S. Biz, Inc. as it gets.
Obama will spend the fall saying, “I love you, small business. I love you, big business. And I love you, tax cut. What, Boehner, you don’t love too?”
Boehner will be forced to say, “I love, I love too, but I love not right now while I’m trying to take over the House.”
And Obama will say, “Boehner, you must always love, every minute of the day! Love is eternal.”
And the White House is hoping that some voters will say, “Who dost love the tax cut? And who dost love the business?”
And they will be confused and won’t know what to do when they get in the polling booth.
Which is arrogance, because it assumes voters are stupid.
To the contrary, they know Obama and the Democrats have governed way over to the left, something Obama himself proclaims. They know the recovery is not taking hold. And many of them know that what’s spooking business now is not the lack of a research and development tax cut, but the expiration of the Bush’s upper income tax cuts and the mass of Obama regulations waiting to be written for them on health care and other topics.
This ploy won’t work, but it is a clever strategy. And it may represent some new thinking in the White House. Unlike the 2009 stimulus itself, the capital investment incentive is designed to get money into the economy quickly, and it might be of some use.