Conrad: Extending Bush Tax Cuts Permanently “Would Be a Disaster”
Last week I noted that Kent Conrad, the chair of the Senate Budget Committee and a member of the cat food commission, appeared to support extending all of the Bush tax cuts, including those on the top 1% of earners. This would cost hundreds of billions of dollars and not stimulate the economy in any way.
In an interview with Mike Stark, Conrad backtracked on that claim somewhat, saying that he was misinterpreted in his comments, and that he would prefer an extension of the lower-end tax cuts before those on the wealthiest. The full audio interview is at right.
Conrad says that he was asked about cutting spending or raising taxes in the midst of this economy, where the recovery is fragile, and he responded that the general rule of thumb is to defer those measures until later. “It was in the context, actually, of unemployment extension,” Conrad said. “But if you were to prioritize it, the first priority is to extend unemployment, because people are most likely to spend that money. The next highest priority would be to extend the middle-class tax cuts, because they’re the next most likely. The least likely to spend it are the highest income people. But I think, given the weakness of this economy, you could make an argument that you don’t raise taxes on anybody at the moment.”
Conrad added that raising taxes on the wealthy would be the first priority after the recovery fully blooms. This seems to be a way to extend those high-end tax cuts for two or three years; Conrad put it at 18 months.
The idea of not doing policy that takes money out of people’s hands in a downturn is generally standard economic theory, but of course extending the high-end tax cuts for a while could beget more extensions, and so on.
Conrad did say he would not join Republicans in filibustering any bill that would not extend all of the Bush tax cuts. In other words, if a bill came up with President Obama’s guidelines of extending the middle-class tax cuts only, he wouldn’t stand in its way. Extending all of the Bush tax cuts permanently, as the Republicans want to do, “would be a disaster for the deficit, it would be a disaster for the debt, it would be a disaster for the economy,” Conrad said. Furthermore, if it meant stopping the high-end tax cuts now in order to get the tax cuts for the middle class extended, Conrad said he would do that, and join his party.
As the debate over the Bush tax cuts continues, it will be crucial to pin members of Congress down on these issues, as Mike Stark has done here.