We hear the White House is not wildly pleased with former budget chief Peter Orszag for abandoning the party line on tax policy this week. Now Democrats in Congress are beginning to distance themselves from President Barack Obama’s push to let taxes rise for the wealthiest Americans. We are unlikely to see this resolved before the mid-terms anyway, and there are still several different ways this could pan out. One possible compromise would be a short extension of the tax cuts for the rich and a longer extension for the middle classes, keeping any crucial decisions as far away from the 2012 campaign season as possible.
Tales from the Trail
A smart move by Republican leader John Boehner today, or a nicely laid trap if you prefer. Boehner echoed yesterday’s call from former White House budget director Peter Orszag, for a two-year extension to the Bush-era tax cuts for all Americans. Boehner appealed for both parties to “do this together” to “show the American people that we understand what is going on in this country.” There was, of course, one big difference between Boehner’s and Orszag’s suggestions – the Republican leader conveniently left out the all-important promise to let all the tax cuts expire at the end of that two-year period. Not surprisingly, President Barack Obama swiftly rejected the offer, insisting that the country could not afford to extend tax cuts for the rich. “This isn’t to punish folks who are better off — God bless them – it is because we can’t afford the $700 billion price tag,” he said in Ohio. You get the feeling this partisan battle isn’t going to be settled easily or early, and the lingering uncertainty this creates is probably not good news for the economy. Expect the blame game to continue.