We’re eight days away from midterm elections and it looks like the democrats are willing to make a deal. Vice President Joe Biden has a message for Republicans; “I think it’s important we get the middle-class tax cut made permanent,” said Biden. “We’re open to speak with Republicans, if they really mean it, if they’re talking about deficit reduction, if they’re willing to move.” The country is two months from experiencing what could be the largest tax hike in history. Is there hope for a compromise between the Democrats and Republicans? Democratic Strategist Doug Schoen joined Varney & Co. this morning to share his opinion.
Continue Reading Below
“[A tax cut compromise] is essential for the economy and I think the Democrats,” said Schoen. “We’re going to have an election next week, that whatever the final result, is a repudiation of President Obama and his policies. If that’s the case, we’re going to need a compromise on the extension of the Bush tax cuts.”
Democratic Senator Chuck Schumer suggested that in order to reduce deficits, reach a compromise and help the middle class, tax cuts should be extended to everyone with the exception of millionaires, only allowing tax cuts to expire for those making over $1 million per year. Vice President Biden is open to compromise as well, shifting away from the original threshold of $250,000.
Doug Schoen thinks that making a compromise is practical “A $1 million dollar threshold is an equitable and reasonable basis for compromise,” said Schoen. “I’d like to see them all extended for a year or two, but if that doesn’t happen, I think $1 million dollars is something that the Republicans can compromise.”
It’s practical, but many question if it’s obtainable. Are the democrats willing to extend tax cuts to people making more than $250,000 per year? “When the Vice President says something that means it’s coming from the President’s mouth, because Vice Presidents don’t do this unless they have preclearance,” said Schoen. “I doubt he would have done it without explicit authorization.
As the United States economy continues to struggle, Republicans argue that tax cuts and increase in spending stimulates demand and raises output and employment; tax increases and spending cuts have the opposite effect, and Schoen agrees. “The one thing you don’t want to do in a crippling recession like this one is tax those who consume the most and create the jobs.”