The first big test coming for the White house and the democratic party is the Bush Tax Cut debate. The Bush Tax Cuts are set to expire this year. The big battle in this debate is whether upper income earners (those who make over $250,000 annually) should receive tax cuts during a "depression like" economy.If we look at history, in the worst economic times in the US (The Great Depression) marginal tax rates were raised on the top income earners so that basic services throughout the country could continue to be paid for. In fact tax rates on top income earners from 1932-1980 ranged fluctuated from 63% - 91%. When Reagan took office in 1980, US tax rates on the top earners was 80%. When Reagan left office after serving two terms, these rates had been reduced to 28%.
This tax debate is one of the most clear populist issues in recent history. The democrats had the chance to clearly side with the average American worker before the midterm elections. This was not only a major chance for the democrats in congress to show they side with American workers and do what is only fair in a time of major economic upheaval, they could have also given themselves a major campaign issue to hammer the corporate republicans with. Tax cuts for he middle class (democrats) versus tax cuts for the wealthy (republicans). But once again the democrats got derailed, like on so many other issues the last few years, by the handful of corporate democrats in both houses.
Since the midterm elections, once again the democrats have the opportunity to utilize common sense and do what is fair, help stabilize the economy like FDR did by raising tax rates on the wealthy, crystallize to the American people who is for the average American worker, and expose the republicans as only being interested in protecting the interest of the wealthy and multi-nationals, all in one issue. But will President Obama and the congressional democrats seize the issue? Will they pass this test?
This will be the most important test for President Obama and congressional democrats that will determine which party wins the White house in 2012. Will the democrats stand firm?
Already today in a briefing with White house Press Secretary Robert Gibbs, he signaled that the President was open to compromise on the Bush Tax Cuts. What in the heck are they thinking? It is this simple folks. If the President and or congressional democrats compromise and decide to extend tax cuts for the wealthy in a "depression like" economy furthering adding on to the deficit, it is curtains for them in 2012.
If cutting taxes for the wealthy was the correct strategy to create a robust economic recovery and for major job creation, why were there not tens of millions of jobs created after the Bush Tax Cuts originally passed in 2001 and 2003? In fact during President Bush's entire eight years in office only 1.08 million jobs were created. Prior to Obama, Bush's job creation numbers were the lowest of any US President post WWII.