Expiring, temporary Bush tax cuts to be all the news.

For the rest of the year, the cold war in Congress about what to do with the Bush tax cuts will be a battle that gets hotter and hotter as the November elections roll around.

In short, in the late Spring of 2001, Congress passed a 10-year package of tax cuts, commonly known as the “Bush tax cuts”. As expats know, President Bush and his Republican-controlled Congress raised taxes on us in 2006–retroactive to the beginning of that year. But the 2001 cuts, coupled with another package focused on dividend earners in 2003, are what today’s Republicans are focused on.

Since the Democrats let the Republicans set the agenda with their constant harping, the talk is now about how to extend the Bush program–rather than let it expire and simply pass the tax cuts that the Democrats want to keep.

Democrats, as usual, are also playing by the Marquis de Queensbury rules. They are talking high-minded policy to the general public, rather than figuring out how to explain the issues in an easy way that busy Joe Sixpack can understand. As a result, they are going to lose the support of the very people that the Democratic program should help.

If the economy stays bad, I would pass a bill to extend the Bush rates for the middle class, but let them expire for the wealthier income earners. To beat the Republicans at their own game, I would increase the benefit to the middle class, maybe by extending Obama’s Making Work Pay Credit, which expires this year. Hike taxes on big corporations who (generally) aren’t hiring to pay for it.

Few people believe the lies that tax cut packages for the wealthy create any jobs. They don’t. Jobs are created when the money is put into the middle class, who spend it.

Democrats have to get a lot more aggressive on these tax issues.