The President's deficit reduction proposal is meant more to establish the platform for the 2012 election than to realistically pass new legislation. This is not completely his fault. They have seen the light. Republicans are betting all that by not permitting the President to pass any legislation that he favors, the Republicans can still win in Nov./2012. The race is on. Governing has been put on hold and campaigning the order of the day.
In his deficit reduction proposal the President said that "the Bush tax cuts could expire". He should have said they are expiring. Action is needed to continue them, not to do away with them. I don't believe all the tax cuts are that one sided. The lower rate for capital gains could be extended. This benefits a broader group of the population. The estate tax exemption and the lower dividend tax rate should be discontinued. They are not necessary and benefit far fewer individuals.
The Bush tax cuts were passed to benefit wealthier Americans and the decade that followed showed a tremendous increase in the inequality of wealth and well being between the middle and lower economic groups and the wealthiest members of our society.
These tax cuts were established with a Sunset Provision, which meant that they were not meant to be permanent. The Sunset Provision provided for a predetermined expiration date(end of 2010). This has already been extended for two years.
Republicans will tolerate a deteriorating economic condition and hold the public economic health hostage if the President pushes for the repeal of these tax benefits. They are betting this strategy will win the White House in 2012.
The argument that allowing these tax breaks to expire will not cure all our ills is a diversion from the point. They should be allowed to expire as one of many measures in an attempt to put our fiscal house in order.
The wealthy will stop investing if their tax benefits are taken away from them. This is the battle cry of the Republicans and if we are going to move forward, they will have to develop a newer less divisive battle cry. The wealthy are not going to stop investing just because they are paying a little more in taxes.