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Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: jlallen who wrote (25844)	4/17/2008 12:45:56 PM
From: TideGlider	Read Replies (1) \| Respond to of 224718

SFGate: Politics Blog « Pennsylvania Debate:... \| Main Taxing Matters For viewers upset that the first half of last night's Philly debate was all about flag pins and cookie baking, take a second look at all that second-half red meat on taxes. Obama supporters should be squirming. Sen. Hillary Clinton is no fool. It was no accident that she tagged the end of her answer that she would not raise capital gains taxes above 20 percent with the line, "if I raise them at all." The question about raising taxes in a weak economy is the little-noticed economic equivalent of the question about pulling troops out of Iraq. The country is headed for a major reckoning over the Bush tax cuts that expire in 2010. They will have to be dealt with in 2009, as soon as the new president takes office. The recession will probably be over by then, but its memories will be quite fresh. The tax cuts were large, ergo, the tax increases that will occur when they expire will also be large. Democrats have had an easy time talking about the Bush tax cuts for the rich in the abstract; they will get a lot less confident when they face the reality of imposing a huge hit on everything from inheritances to capital gains to the top income rates paid by many small businesses. Sen. Barack Obama was less than clear last night about where income threshold is where people should take that hit. He was honest in saying new spending programs should be paid for, not borrowed; it takes some courage for a politician to have a truthful discussion about tradeoffs, something President Bush has studiously avoided. Obama's proposal to eliminate the income cap on payroll taxes, now at $97,000, whatever its merits, is huge because payroll taxes are huge, as any working person knows. So is his suggestion that capital gains taxes should rise to 28 percent from 15 percent, as anyone who owns stocks knows. If anything will gather Republicans behind John McCain, that's it. Taxes are the one thing that unites a fractured GOP. Few things are more certain to paint Obama as a classic Dukakis liberal; nothing is more likely to snap back the necks of Republicans tempted by Obama's moderate mien. It should be noted that McCain's gas-tax holiday is pure populist foolery, and his tax-cut plans don't add up. Yet his adviser Douglas Holz Eakin may be right when he says it is preposterous to think the Bush tax cuts will just disappear in 2010, bringing a happy flood of revenue to the federal government for Democrats to spend, whether they call it investing or not. Bush will leave to his successor the blame for "losing" Iraq. So too will he leave the choice to raise taxes, while his own spending will have been forgotten. It's a perfect trap. Posted By: Carolyn Lochhead (Email) \| April 17 2008 at 08:17 AM sfgate.com