The real fiscal cliff winner? Bush

By Michael M. Rosen
January 7, 2013

“Tax relief is an achievement for families struggling to enter the middle class,” the president trumpeted, shortly after Congress, by sweeping bipartisan margins and after a bruising battle, had lowered taxes for almost all Americans.  “For hard-working lower income families, we have cut the bottom rate of federal income tax from 15 percent to 10 percent. We doubled the per-child tax credit to $1,000 and made it refundable. Tax relief is compassionate, and it is now on the way.”

Despite a furious counterattack from the opposition, the president had scored a major victory by securing lower tax rates for everyone in the middle class on down.

President Barack Obama last week after narrowly averting the fiscal cliff?  Nope, President George W. Bush in June 2001, signing the first set of his much-sought-after tax cuts. Perhaps the “compassionate” was a giveaway.

Now that the vast majority of those cuts — to income taxes, and to much of the estate levy and capital gains and dividend rates —have been made permanent, with a bipartisan Washington consensus hardening around the benefits of tax relief, Bush must surely be smiling in Texas — and for good reason.

Republicans have now succumbed to navel-gazing, infighting and worse. But they should instead focus on how their larger principles have prevailed.

Start with income tax rates.  Bush and his GOP allies long dreamed of locking in the reduced 2001 rates across the board — particularly for the middle class.  In signing the temporary cuts into law, Bush highlighted the Ramos family, for whom “high taxes made saving difficult. Last year they paid nearly $8,000 in federal income taxes. Well, today we’re beginning to make life for the Ramos[es] a lot easier. ”

But while Democrats for more than a decade resisted preserving these cuts in perpetuity, years of conservative advocacy and rhetoric — combined with the real exigencies of a slumping economy and the artificial urgency of an impending deadline — shifted the conventional wisdom to the point that Democrats on the floor of the House of Representatives cheered passage of the fiscal cliff avoidance measure.

Senator Richard Durbin (D-Ill.), who voted against the original 2001 cuts, now praises “this historic vote” which “protects working families from an income tax increase and spares our economy from a devastating political disaster.”

Obama sounded a Bush-like note himself, when he stood on a stage in the White House with a group of voters  in the run-up to the vote “The last thing,” Obama said, “folks like the folks up here on this stage can afford right now is to pay an extra $2,000 in taxes next year. Middle-class families can’t afford it. Businesses can’t afford it. Our economy can’t afford it.”

Indeed, in the end, more than 98 percent of Americans will permanently enjoy the benefits of tax relief enacted by Bush, promoted by his Republican supporters and ultimately signed into law by a Democratic president.

The administration’s embrace of much of Bush’s tax relief goals also extended into the realm of the estate tax. Bush’s 2003 tax-cut package — also stubbornly resisted by many of the same House and Senate Democrats who so ebulliently backed the cliff deal — increased the estate-tax exclusion from $1 million to $5 million, while reducing rates on estates above that threshold from 55 percent to 35 percent.

Many progressives had called for a return to the $1 million limit and 55 percent rate. But the Obama-GOP deal locked in the $5 million threshold, and increased rates only slightly, to 40 percent.

Similarly, Obama largely adopted his predecessor’s changes to the investment tax regime.  In 2003, Bush persuaded Congress to treat dividends not as ordinary income but as investment earnings on a par with capital gains — taxed at a maximum of 15 percent. This legislation cleared the Senate only when Vice President Dick Cheney broke a 50-50 tie — with all but two Democrats opposing it.

This 2013 deal now modestly raises the rates for dividends and capital gains to a 20 percent cap for the highest earners, while enshrining the Republican principle that investment income should be considered different in kind from wages.

Once again, today’s Democrats have espoused this conservative taxation philosophy – notwithstanding stout opposition from the left.

So instead of a circular firing squad, today’s GOP should acknowledge and even trumpet  the triumph of its former standard-bearer’s ideals.

As Bush noted after passage of his first tax measure, “under this law, more than 98 percent of Americans and 97 percent of small businesses will not see their income taxes go up. Millions of families will continue to receive tax credits to help raise their kids and send them to college. Companies will continue to receive tax credits for the research that they do, the investments they make, and the clean energy jobs that they create.”

Oh, wait, no: That was Obama.

 PHOTO (Top): President Barack Obama walks between the Senate Minority Leader Mitch McConnell (L) ) and the House Minority Leader John Boehner at a Blair House meeting in Washington, February 25, 2010. REUTERS/Jason Reed

PHOTO (Insert): President George W. Bush beams as he looks up at members of Congress after signing a sweeping $1.35 trillion bill lowering U.S. income taxes across the board, at the White House, June 7, 2001. Surrounding Bush from left are House Speaker Dennis Hastert, Representative Bill Thomas (R-Calif.), Senator Zell Miller (D-Ga.), Senator Phil Graham (R-Texas), Senator Kay Bailey Hutchison (R-Texas), Representative Tom Delay (R-Texas), Senator Charles Grassley (R-Iowa), Senator Max Baucus (D-Mont.), Representative Jennifer Dunn (R-Wash.) and Representative Dick Armey (R-Texas). REUTERS/Kevin Lamarque

460 comments

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

Hello, just wanted to tell you, I liked this post. It was inspiring. Keep on posting!|

I’ve been surfing online more than 3 hours today, yet I never found any interesting article like yours. It’s pretty worth enough for me. Personally, if all webmasters and bloggers made good content as you did, the internet will be a lot more useful than ever before.|

Hello! I know this is kinda off topic however I’d figured I’d ask. Would you be interested in exchanging links or maybe guest writing a blog article or vice-versa? My blog addresses a lot of the same topics as yours and I believe we could greatly benefit from each other. If you happen to be interested feel free to send me an email. I look forward to hearing from you! Excellent blog by the way!

Howdy just wanted to give you a quick heads up. The text in your content seem to be running off the screen in Opera. I’m not sure if this is a format issue or something to do with browser compatibility but I figured I’d post to let you know. The design and style look great though! Hope you get the problem solved soon. Kudos

If some one wants to be updated with most recent technologies afterward he must be pay a visit this website and be up to date everyday.|

I am regular visitor, how are you everybody? This piece of writing posted at this website is actually good.|

Have you ever considered writing an ebook or guest authoring on other blogs? I have a blog based on the same ideas you discuss and would really like to have you share some stories/information. I know my readers would value your work. If you’re even remotely interested, feel free to send me an e-mail.

Hello to all, since I am in fact keen of reading this webpage’s post to be updated on a regular basis. It carries fastidious information.|

Greetings! This is my 1st comment here so I just wanted to give a quick shout out and say I really enjoy reading through your articles. Can you recommend any other blogs/websites/forums that deal with the same subjects? Thanks a lot!

Have you ever thought about adding a little bit more than just your articles? I mean, what you say is important and all. Nevertheless think about if you added some great graphics or videos to give your posts more, “pop”! Your content is excellent but with pics and video clips, this site could definitely be one of the very best in its field. Fantastic blog!

It is in reality a great and useful piece of information. I am satisfied that you just shared this helpful info with us. Please stay us informed like this. Thanks for sharing.|

We stumbled over here by a different page and thought I might check things out. I like what I see so now i’m following you. Look forward to checking out your web page yet again.|

Hey! Quick question that’s entirely off topic. Do you know how to make your site mobile friendly? My website looks weird when browsing from my iphone. I’m trying to find a theme or plugin that might be able to fix this issue. If you have any recommendations, please share. Cheers!

I just like the valuable info you supply to your articles. I’ll bookmark your weblog and take a look at again right here regularly. I am fairly certain I will learn plenty of new stuff proper right here! Good luck for the following!|

Hi! I’ve been following your site for a while now and finally got the courage to go ahead and give you a shout out from Austin Texas! Just wanted to say keep up the good job!

Hi there! Quick question that’s totally off topic. Do you know how to make your site mobile friendly? My site looks weird when viewing from my iphone4. I’m trying to find a template or plugin that might be able to fix this problem. If you have any recommendations, please share. Many thanks!|

Do you have a spam problem on this blog; I also am a blogger, and I was wondering your situation; many of us have created some nice practices and we are looking to trade strategies with other folks, be sure to shoot me an e-mail if interested.

I absolutely love your blog and find most of your post’s to be just what I’m looking for. Would you offer guest writers to write content for yourself? I wouldn’t mind producing a post or elaborating on a number of the subjects you write concerning here. Again, awesome web log!

Simply wish to say your article is as surprising. The clarity in your post is just nice and i could assume you’re an expert on this subject. Fine with your permission allow me to grab your feed to keep up to date with forthcoming post. Thanks a million and please keep up the gratifying work.|

I really like what you guys are up too. This type of clever work and reporting! Keep up the awesome works guys I’ve included you guys to our blogroll.|