Lieberman Favors Extension of Bush-Era Tax Rates for the Wealthy

Joe Leiberman, team player:

Lieberman Favors Extension of Bush-Era Tax Rates, NY Times: …Senator Joseph I. Lieberman, the Connecticut independent who is aligned with the Democrats, said on Monday that he favored maintaining the lower rates for everyone, including the wealthiest Americans, for at least one more year.

“I don’t think it makes sense to raise any federal taxes during the uncertain economy we are struggling through,” Mr. Lieberman said… “The more money we leave in private hands, the quicker our economic recovery will be. And that means I will do everything I can to make sure Congress extends the so-called Bush tax cuts for another year, and takes action to prevent the estate tax from rising back to where it was.” …

Senate Republicans control enough votes to use the threat of a filibuster to block any legislation on the tax cuts that they do not support. Without the support of all 59 members of the Democratic caucus, it would be all but impossible for Democratic leaders to overcome such a block. …

Mr. Lieberman … did not say whether he would join Republicans in such a filibuster. But in similar situations in the past, on issues that he feels strongly about, he has been open to teaming up with them.

The other Senate Democrats who have expressed doubts about letting the tax breaks expire for the rich are Evan Bayh of Indiana, Kent Conrad of North Dakota, Ben Nelson of Nebraska and Jim Webb of Virginia. …

Many of the Democrats supporting an extension of the tax cuts for the wealthy have expressed concern about deficits in the past. Interesting that when push comes to shove, the wealthy are more important that the deficit. It’s framed in terms of worries about the effects on spending, but as noted below, if that is really the concern there are better ways to address it than tax cuts for high income taxpayers.

If Lieberman is really concerned about the effects on aggregate demand — which would likely be relatively small for wealthy taxpayers — he could have proposed transferring the tax cut from the wealthy to lower income groups where the money is more likely to be spent. The effects on aggregate demand would be much larger. The fact that he didn’t propose this, and instead chose to defend tax cuts for the wealthy on such a flimsy basis — and threw in the estate tax for good measure — is telling as to what his real concern is.

About Mark Thoma 243 Articles

Affiliation: University of Oregon

Mark Thoma is a member of the Economics Department at the University of Oregon. He joined the UO faculty in 1987 and served as head of the Economics Department for five years. His research examines the effects that changes in monetary policy have on inflation, output, unemployment, interest rates and other macroeconomic variables with a focus on asymmetries in the response of these variables to policy changes, and on changes in the relationship between policy and the economy over time. He has also conducted research in other areas such as the relationship between the political party in power, and macroeconomic outcomes and using macroeconomic tools to predict transportation flows. He received his doctorate from Washington State University.

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