Shadow White House: Middle Class Tax Cuts

When I ran for president, I promised to make tax rates fair for Americans earning less that $250,000 per year. Today, I re-affirm my commitment to that goal.

If we fail to extend the current middle class tax rates, then the typical family will take home about 50 fewer dollars each month--starting in just 30 days. For most American families, this is real money. This is money we spend on our winter gas bills, on our kids' sports leagues or on a dinner out Friday night. This is money we need; money we put right back into our local economies.

So I urge members of Congress--both Democratic and Republican--to support the tax legislation currently working its way through the House. Now is not the time to raise taxes on working families.

But Republicans in Congress are doing everything they can to attach a payout for billionaires to the middle class tax cut currently being considered. To support this indefensible stance, they are using outdated economics and raw emotional appeals, so let's take a look at the facts.

They're going to make fun of me for saying this, but there's no evidence to suggest that raising taxes on the rich will cost America a single job. In fact, most independent analysts suggest that extending unemployment benefits will create far more jobs than passing more tax cuts for the richest Americans--and for a fraction of the cost.

When I ran for president, I promised to deliver difficult news, when necessary.

If we really want to encourage growth, we will need to be much smarter. In particular, we need to surrender the appealing falsehood that says lower taxes always lead to better economic growth. The Republican Party's dominance for 40 years has afforded countless opportunities to test this hypothesis and the results are definitive: cutting taxes does not create jobs.  We've repeatedly tried to cut taxes as a road to growth--and that experiment has repeatedly failed. We cannot continue to deny the benefits of good government to the American people simply to protect the skyrocketing wealth of the super rich. It is simply wrong.

Most Americans would agree that tax policy under President Clinton was thoughtful, measured and fair. Clinton tax policy turned deficits into surpluses and created 22 times more jobs than President Bush. Let me repeat that: President Clinton created 22 million new jobs, but President Bush only created 1 million. The tax bill we are considering is a compromise between the two--although I think we can agree that the evidence suggests one policy over the other.

In fact, the 3 best 5-year periods of economic growth in the past 50 years were all overseen by Democratic administrations--with higher rates of taxation. And despite the caricatures of the past 30 years, President Carter presided over a more robust period of GDP growth than even President Reagan. The simple fact is that economic growth is almost always much better when taxes are higher than they are now--and taxes on the super rich are currently at historic lows.

Republicans would have you ignore these facts simply because their ideology of continual tax cuts is so appealing. I have to admit I still want to believe it every time I hear it--nobody likes to pay more in taxes. But it simply is not true. Working people are far more likely to spend their money than the super rich. And it is this spending, known as demand, that spurs investment--not tax cuts for investors.

Republicans would also have you believe that the biggest obstacle to growth is widespread uncertainty about tax policy. This claim is as laughable as it is transparent: making current middle class tax rates permanent and returning rates to Clinton-era levels for those making more than $250 will provide all the certainty required. If Republicans in Congress truly believe that uncertainty has put the American economy on the precipice, then their efforts to block this legislation reflect a cynicism that runs terrifyingly deep. The American people expect more from their leaders.

Over the past 30 years, Republicans have presided over a complete reversal of the American Dream. Their broken moral compass has directed more and more of our wealth into the hands of fewer and fewer connected elites. Democrats don't want to start a class war, we want to stop one. We cannot afford $1T in additional deficits so the richest 1% of Americans can add more to their worth, but little to the economy.

So I reaffirm my commitment to protect the middle class from an additional tax burden.  That is why I will veto any legislation that does not protect the current middle class tax rates and return rates to Clinton-era levels for top earners. The bill brought before the House today will accomplish this goal and I encourage its passage.

In the coming debate, we should be careful to discuss the issue with honesty and integrity: taxes are not tyranny, but the dues required in a free state; taxes are not theft, but the money we pay for the things we decide to do together; taxes are not socialism, but lay the bedrock upon which modern markets are built.

Thank you. And God bless America.