Good Timing

On Thursday, the House approved a controversial bill that would extend President Bush's tax cuts. The bill is now headed to President Obama's desk. It would be difficult for the timing to be any better. The bill extends the tax cuts for two years. That means the next debate over the cuts will be in 2012. 2012 is an election year. It is a big election year. Obama will be running for reelection in 2012. I have never been good at predicting the future but I will hazard a guess that taxes and the economy will still be issues of concern to voters in 2012. I will also guess that the prospect of ending or continuing Bush's tax cuts will be an issue as well. Short of a war or a catastrophe, the economy should be the major issue in 2012. If it improves significantly, President Obama will point that out every at every opportunity. If it does not improve, republicans will point that out at every opportunity.

If the economy is improving in 2012 many will credit the tax cuts. It will be said that lower taxes spurred the recovery and raising them will only harm it. If the economy is still foundering, it will be difficult to make an argument for letting the cuts expire. Whether or not the higher taxes that will result if the policy is allowed to expire will help or hinder the economy, they will not be popular: higher taxes never are. Election years are the years when politicians want most to be popular. The only circumstance under which letting the cuts expire will not cause a lot of controversy is if the economy is thriving. If the economy is thriving many would not complain, at least not complain loudly, if some taxes were raised. People could afford it. Not only that, people could afford principal and fairness as well. Election years are the best years to grant tax cuts. They are the worst years to raise taxes. 2012 is an election year.

Tax cuts and economic policy are complicated issues except at election time. At election time they are simple: do you want to pay higher taxes or not? Obama hailed the tax cuts. He pretty much had to.