CBO: Expiring Bush Tax Cuts For Wealthy Are Least Economically Harmful

[DonViejo]

Source: TPM

A new report by the non-partisan Congressional Budget Office reminds legislators that tax increases and spending cuts set to take effect automatically in January threaten job growth significantly in the coming year. But for the first time, CBO has analyzed (PDF) the economic consequences of specific provisions within the sequester. And it turns out the least harmful component of the coming fiscal consolidation is precisely what Democrats are demanding: the expiration of the Bush tax cuts for high earners.

CBO doesn’t examine the top bracket Bush tax cuts directly. But it does look at two competing scenarios: One where all of the expiring tax cuts except for the payroll tax cut are extended; another where all of the expiring tax cuts except for the payroll tax cut and the Bush tax cuts for top earners are extended.

The former, CBO says, would increase employment by 1.8 million full time equivalent employees in 2013 relative to allowing everything to lapse. The latter would increase employment by 1.6 million. The difference, 200,000 full time equivalent jobs, is attributable to the expiration of the top bracket Bush tax cuts alone.

By comparison, other layers of the fiscal cliff save less money and have far greater economic consequences. Failing to extend the expiring payroll tax cut and expiring emergency unemployment benefits through 2014 would cost the economy about 800,000 jobs, according to CBO. The two halves of the sequester — the defense cuts and the domestic cuts — would each cost the economy about 400,000 full time equivalent jobs.

Read more: http://tpmdc.talkingpointsmemo.com/2012/11/cbo-expiring-bush-tax-cuts-for-wealthy-are-least-economically-harmful.php?ref=fpnewsfeed

[McCamy Taylor]

1. Tax cuts for the rich are the worst form of stimulus spending.

Best spending is education, followed by health/infrastructure (tie) then military.

[daybranch]

2. Misleading views by CBO

You are saying that if we do not extend tax cuts for the rich we have 200,000 more jobs . What is the downside?

You are also saying that the cuts in defense programs which is only half what is projected for social programs will cost the economy about 400.000 jobs. This shows trhat money invested in defense only creates about half as many jobs per dollar spent. This has been attributed in economic theory tothe low multiplier effect of a dollar spent on defense. This really egs the question, that if you are concerned about jobs and the economy why would you have the cuts disproportionately(2 to 1) applied to social programs that produce twice as many jobs per dollar spent.

So concentrating on the tax cut extension for the wealthy as least harmful is just the type of baloney that republicans like to use to steer the reader from the real conclusions which are defense dollars do not benefit the economy nearly as much (only half) what dollars spent on social programs do. The real benefit of defense dollars to republicans is giving huge profits to giant companies like Lockheed who then contribute part of our tax dollars back as political investments in republican political campaigns.

You have to use some analysis to understand but none of this report in any way implies any benefit of extending tax cuts for the rich nor does it imply trhat cutting defense is any where near as harmful to the economy as cutting social programs.

The republicans must hate this report which merely demonstrates conventional wisdom known in the government for over 50 years.

[marble falls]

3. Let the cuts expire.

[robinlynne]

4. I do not understand how tax cuts increase employment. We know that is not true. We have seen

the theory tested. Am I understanding backwards? Are they saying with the income the govt can create jobs?

[sofa king]

5. Demanding, hell. We GOT IT.

It expires all on its own in January, and nothing can stop it. We've had that in the bag for nearly two years.

It would have been nice to extend the middle class cuts, but the Republicans held those hostage trying to get cuts for the rich extended, so now taxes are going up for everyone.

Because that's what Republicans really do: raise taxes on people.

[Volaris]

6. Yep. Let it go,

and then when Congress comes back in January, have the House Dems propose legislation that cuts taxes for the Middle Class, the working poor and LEGITIMATE Small Businesses (exxon and bp and kock industries and ge and boeing and haliburton DON'T fucking count, thanks for playing, though), and DARE the House GOP to say no. And when they do, keep bringing it up, keep trying to pass that bill.

The House GOP would get obliterated in the Mid-Terms, and Boehner knows it. And since he KNOWS he can't cut a deal without the Tea Party screaming for his head, all he can do is bluff. All that bullshit yesterday and today about it won't pass the House, so some other deal has to be done? It's just that--bullshit. All the Dem's have to do, is NOT FLINCH.

I almost feel bad for The Speaker, that he isn't ALLOWED to govern in a way he seems to KNOW is best for this country...
and then I remember that he helped ENABLE this mob of elected lunatics, by not slapping them down when they first showed up.

My empathy is at an end. Drop the Hammer, Mr. President, and be done with these fools. The Party (and the country) will back your play.

[JustABozoOnThisBus]

7. The AMT threshold expiration will hammer middle class

or at least the "upper middle". The Alternative Minimum Tax threshold is not pegged to inflation, so it's been increased by congress year-by-year. It's a pretty good hostage to be held by Boehner in his effort to get tax breaks for the rich.