Looks as though President O will extend President W's tax rates at a cost

By Dian Vujovich

I happened to like President Obama’s speech on Dec. 12th. In it he indicated that all of the Bush tax rates would be extended for another two years—if Congress buys it. And included were a number of other goodies such as a 2 percent cut in Social Security tax, the capital gains tax remaining at 15 percent, the top tax on dividends capped at 35 percent, and jobless benefits extended for 13 months for some. Many people, both rich and poor, have cheered his wishes. Others are pooh-poohing it.

But extending the current income tax rates and the other proposals in his plan, comes with a hefty price tag: It’s estimated to add about $800 billion to a deficient that’s already fat. The addition is about equal to the amount of the 2009 stimulus package. Lots of people hated that stimulus package. Thought it was too expensive–even unnecessary.

Funny though, 800 b to keep tax rates at the levels they have been in years at a time when the gov could really use some money is okay on the one hand. But, kind of goofy on the other.

Then again, maybe not.

Watch any news or entertainment program on TV or online and you’d think everyone in these United States of ours has boatloads of money. In reality, however, that’s just not the case.

More American’s are out of work now than have been in decades, homeless neighborhoods are springing up across the country and thousands of five- and six-figure wage earners are losing their jobs plus their homes. So a president can’t simply dismiss a nation into the streets. Or do so in a country where the greatest growth seen since the Bush tax rates were put into place in early 2000s have been in a) the wage gap between the haves and have-nots, and b) the numbers of unemployed and under-employed.

The appropriate action when individual circumstances are that severe is to take care of the people who are suffering. And do so even if it adds to an already big fat deficit.

Do the wealthy, of which there are 2.4 million with household incomes of over $250,000, and a mean annual income of $425,000, need W’s tax rate to stay in place? No. Do the lower income folks, like the 10 million households with annual incomes between $40-$50,000 a year–an amount roughly equal to the monthly take home of a $425,000 annual salary— need O to keep Ws rates in place. Absolutely.

And therein lies the rub.