September 23rd, 2010
11:53 AM ET
4 years ago

$700 billion too much? Why is $3 trillion OK?

New York (CNNMoney.com) - President Obama says the country can't afford the $700 billion it would cost to permanently extend the Bush tax cuts for high-income households.

He said it would be "irresponsible" to borrow that much money just to hand out $100,000 tax cuts to millionaires.

Fair enough. The United States is staring at a serious medium- and long-term debt situation, so the less it's aggravated the better.

But why then is it OK to borrow $3 trillion to permanently extend the tax cuts for the majority of Americans - something the president and both parties support doing?

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Filed under: issues • President Obama • Taxes
soundoff (37 Responses)
  1. Eric

    Yep, the "tax cuts for the rich" cost too much, Barry says... but the stimulus, that has not stimulated anything other than union coffers, at nearly a billion, that's just OK.

    September 23, 2010 11:56 am at 11:56 am |
  2. kakaraka

    Why this stupid question? The middle class americans need increase in purchase power throught tax cut while wealhies, millionaires don't need one. They have enough cash in the bank already and have strong purchase power. So they don't need tax cut. Borrow $700 billion to give riches through tax cut is unnecessary and totally irresponsible.

    September 23, 2010 12:15 pm at 12:15 pm |
  3. stufit

    Because he needs votes and this will appeal to the NEA educated minds and those whose pay their union bosses to tell them how to think. The fuzzy headed, incompetent, inept thinking is why we are in trouble now. It is like the blaming the Repbulicans for all of our problems when the recession actually started in Decmeber, 2007 after the ill advised minimum wage increase took effect. That was by the Democrat liberal controlled congress. The same folks bought us the stimulus which was a pay off to union bosses and left wing nut organizations and Obamacare which is now and will continue to be an absolute robbery and disaster for people who actually pay taxes and are capable of taking responsibility for their lives.

    September 23, 2010 12:15 pm at 12:15 pm |
  4. Ancient Texan

    The President, as well as most of congress, cannot see the obvious on this matter. And even more obvious is the fact most small businesses are in this tax group of $250,000 and up. This is the very segment that can help the unemployment situation by beginning hiring, once the threat of a tax increase is removed.

    September 23, 2010 12:16 pm at 12:16 pm |
  5. jim

    Anytime you cut people's taxes it stimulates growth as people have more money to spend.Therfore,.more revenue actually comes into the government than is lost through the cost of the tax cuts.It's basic economics. The government doesn't like it because it takes them out of the decision making of how the money is spent. That's is why they like the idea of raising taxes.The idea of who's taxes to raise or lower is based solely on politics.

    September 23, 2010 12:25 pm at 12:25 pm |
  6. anthony

    The price tag of extending the Bush tax cuts for everyone is 3.8 trillion. The price tag of extending Bush tax cuts for people making over $250,000 is 700 billion. The truth is that we can't afford either. But we are in a deep recession, and taking money out of the pockets of people who are make less than $250,000 (this is just an arbitrary number, but the argument is the same) will hurt them far more than taking money out of the pockets of people who are making more. People who are making less money are more likely to spend the money they have, so tax cuts for them will help the economy more. It is true that people who make more money are in a better position to create jobs, but the fact is that the Bush tax cuts have been in effect in the last two years and they have not created any jobs.

    September 23, 2010 12:30 pm at 12:30 pm |
  7. barend

    Why not extend the tax cuts to the middle class only for a period of two years and at the end of that period evaluate whether or not that accomplished their goal so that they can determine whether or not to continue?

    September 23, 2010 12:34 pm at 12:34 pm |
  8. rs

    Not being a millionaire, Bush's tax cuts were pretty worthless to me all along. It seems if we as a nation are to be serious about paying down the debt, we need to let Bush's "temporary" tax cuts expire. Period.
    The argument however is very illustrative. Who do the Republicans want to help most and hurt most?

    They want to help the rich who get the most from the tax cuts, and are promising to end: Social Security; Medicre; Medicaid; the estate tax and now the recently passed Health care Reforms. Apparently Republicans like an impoverished, unhealthy working class. Very compassionate, very Christian.

    September 23, 2010 12:37 pm at 12:37 pm |
  9. Randolph Carter (the real one), I'm no expert, but...

    Because our economy runs on consumer spending and wages have stagnated for 30 years while corporate profits have soared. Trickledown doesn't work, folks. Never has, never will. Have a nice day!

    September 23, 2010 12:40 pm at 12:40 pm |
  10. Four and The Door

    But why then is it OK to borrow $3 trillion to permanently extend the tax cuts for the majority of Americans - something the president and both parties support doing?
    ___________________________________________________________________________________________________
    Obama and the Democrats need the votes in November. ( I wish all questions were this easy )
    Any other explanation is rediculous. They need to go for numbers. Quickly. This does it. They hope.

    September 23, 2010 12:42 pm at 12:42 pm |
  11. Tim

    The small businesses making $250,000+, is the personal income of the business owner, not the business revenues. Do you think if a business owner is taxed more on their personal salary that'll keep them from expanding if the opportunity to make more money came about? We've created some illusion that these small business owners who make 5-6 times the MEDIUM household income in the US, are struggling to survive. Perhaps they could sell one of their Mercedes... Most of these people pay a lower marginal rate anyways becuase Social Security payroll tax doesn't apply to any income over $106,000, and capitcal gains (a mucher larger portion of someone making $250k or more's income) is only taxed at 15%. The progress tax code only makes up for the regressive taxes built into the system.

    September 23, 2010 12:44 pm at 12:44 pm |
  12. Ken

    because of a campaign promise that the complainer will bring up even if he does the right thing.

    September 23, 2010 12:44 pm at 12:44 pm |
  13. BeanerECMO

    The dems are delaying the vote until after Nov 2. They can say all sorts of things before then about how they support extending some of the tax cuts to try to save some seats. After Nov 2, there will be no vote to extend the cuts and they will be allowed to expire. Come on, people, yoy knew this was going to happen – bait and switch.

    September 23, 2010 12:50 pm at 12:50 pm |
  14. Fair is Fair

    Why not just go to a flat tax?

    September 23, 2010 12:52 pm at 12:52 pm |
  15. Sniffit

    "Anytime you cut people's taxes it stimulates growth as people have more money to spend."

    This is a blatant fallacy from one end and a hampered reality from the other.

    Fallacy becuse, when you give the already wealthy more money, they cimply horde it. They do this by investing in derivatives and hedge funds and, in general, gambling on Wall Street through instruments that actually add very little, and more likely nothing, to the economy other than to give those with enough disposable income a safe place to put it in hopes it will make them more money. It does not magically turn into jobs and growth...as one can quite clearly see by looking at the DOW's recovery into the 10K range and the continued dirth of job growth.

    Hampered reality because middle-class consumers are now pretty much riddled with debt...consumer debt, education debt, home-owner's debt, etc. When you give them tax cuts, the money doesn't go directly into the economy as if it is disposable income. It goes to pay off the debt they accrued in order to shove imaginary money into the market, often at obscene rates of interest, which really only further absorbs that money into the ether. Credit card comapnies making 29% interest on consumer debt doesn't do anyone any good, but you see, they want us living off debt. It makes it harder for you to tell your boss to go play in traffic when he tells you that you're not getting a raise for 3 decades and that he's cutting benefits and getting rid of the pension/401K.

    September 23, 2010 12:59 pm at 12:59 pm |
  16. vic, Nashville TN

    Bill Clinton raise tax and create 23 millions jobs

    September 23, 2010 12:59 pm at 12:59 pm |
  17. Sniffit

    BTW, my overarching point is that the only thing we should really be focusing on is restoring TRICKLE-UP economics as our model.

    It should work this way: If you build the better mouse trap, I will give you my money and you will get rich while I get a nice mouse trap.

    Not this way: You build lots and lots of pretty mediocre or even crappy mouse traps, overprice them to pay for your lobbying and political influence peddling to deregulate mouse traps and obtain tax cuts, and then I go out and take out a loan at 29% interest because, well, d-mnit, I need a mouse trap because my salary hasn't changed in 30 years and inflation and consumer and education debt have me living in a studio apartment on Slum Street. Meanwhile, you obtain your tax cuts and ship all your manufacturing jobs to southeast asia because they'll work for $0.85/hour. Then, in between trips in your private jet to visit the southeast asia plants and take your mistress to Boca Raton, you complain that you need more tax cuts to create more jobs.

    September 23, 2010 01:05 pm at 1:05 pm |
  18. REG in AZ

    It isn’t conservatism v liberalism as is trying to be sold as the cause; socialism isn’t even close to being a scare (in fact, with long running neglect, irresponsibility and a conservative concentration the pendulum has literally swung far to the right). No, what is really happening is a concerted effort to, both overtly and covertly, effect domination by an ultra-conservative mentality which favors only the few. There is a real effort to capture people’s thinking, to deceive and manipulate public opinion, by using emotional appeals to biases, prejudices and fears, disinformation, scare tactics and more, all cutely, boldly, aggressively and obnoxiously presented, to keep people from being rational and instead to have them be fearfully excited and to support positions and candidates that favor only the few. Special Interests and the influential, powerful and extremely wealthy few, all who stand to greatly gain, are ‘pulling the strings’, are spending the effort and the money and are perpetrating the con and the Republicans, both Tea Party and regular, have become their ‘puppets’.

    The proof is seen in that what they want is to return to ‘more of the same’, more of what they had under Bush-Cheney, more of what cost the majority so much and what caused the problems – when what we saw was the majority, including the total middle-class, constantly loosing and only the very wealthy consistently gaining. Who can actually believe that if given the power and the control that after they set things back, repealed the changes and returned to ‘more of the same’, that then they who have clearly demonstrated they are against all change, they would then implement the real needed changes? Who of the majority can survive more given to the few as it significantly costs everyone else? Bush-Cheney completely focused on benefit for only Special Interests and the select few while giving the majority only apathy, the costs and an abundance of subterfuge to rationalize their actions and manipulate public opinion; this country really can’t afford to return to ‘more of the same’.

    September 23, 2010 01:17 pm at 1:17 pm |
  19. Dominican mama 4 Obama

    Maybe because if the tax-cuts are extended to 95% of the population who's been suffering based on greedy deals by the top 5%, then that money could be circulated into the economy via spending. Maybe because 95% of the population has been getting jerked-off, while the top 5%ers have been taken care of by their 'friends' in Washington. Maybe to balance the scales a bit. Finally.

    Let me pose this to you: do you think that those that lived through WWII, Korean War, and Vietnam War paid for them? Or is it more likely that the money that was BORROWED to get us through those times was/is being paid for by FUTURE GENERATIONS? How about the Great Depression? You think we borrowed money to get out of that one? Do you think that we were able to pay back that money the following year? Do you?

    September 23, 2010 01:25 pm at 1:25 pm |
  20. Lynn

    Jim's comment is 100% correct, it is simple economics the less tax people pay the more money they have to spend, but as Jim said the control on where to spend it is the consumer and not the government and so they hate it and want control. As a small business owner that is not limited or incorporated, my husband and I file as one and if our taxes are increased by the 30% they are talking about then we have less money to spend on employees or on new equiptment etc. PLUS we have to sit Idle until all the new Healthcare laws are through as they too will cost us alot of money so we are getting a double wammy here and NOT eager to spend on anything that is not completely neccessary, Now if all small business owners are in the same boat(which I am sure they are ) I ask you how can these measure stimulate the economy????

    September 23, 2010 01:30 pm at 1:30 pm |
  21. Marc

    I agree with you Tim 100% – People we are talking about raising "Income Taxes" not the "Business Taxes". I also agree with the fact that the U.S. Progressive Tax Code, although confusing, only makes up for PART OF the regressive taxes built into the system

    September 23, 2010 01:34 pm at 1:34 pm |
  22. Scott

    @kakaraka: Youd said: " middle class americans need increase in purchase power throught tax cut while wealhies, millionaires don't need one. They have enough cash in the bank already and have strong purchase power."

    Ah... so your idea is "from each according to his ability, to each according to his needs". Sound familiar?

    September 23, 2010 01:43 pm at 1:43 pm |
  23. sara

    Because the 700 billion got us to THIS!!!!

    September 23, 2010 01:43 pm at 1:43 pm |
  24. Dutch/Bad Newz, VA

    $3 trillion dollars will actually go back into the economy rather than $700 billion dollars sitting in fat cat bank accounts.

    September 23, 2010 01:43 pm at 1:43 pm |
  25. sara

    because the majority of Americans SPENDS their TAX CUTS! 700 billion goes into the savings of the RICH....they can AFFORD to save theirs for generations!!!! What so hard to understand?

    September 23, 2010 01:45 pm at 1:45 pm |
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