When Obama warned about the consequences of raising taxes, the economy was moving away from recession—growth in the fourth quarter of 2009 was nearly 6 percent. Today, however, economic growth has slowed to less than 2 percent. Even before the horrible June jobs report, economists were warning about the “substantial” possibility of a double-dip recession. Many others agreed after the news last week. “In addition to the shock value…we need to seriously question whether a double-dip is there,” David Ader, chief treasury strategist at CRT Capital, told CNBC. “I would say it’s back on the table.”
If raising taxes in a recession would be “the last thing you want to do,” wouldn’t raising taxes in a struggling economy teetering on a double-dip be the second last thing you’d want to do?
Obama made a similar argument in December, when he signed the bipartisan tax relief agreement – a deal that maintained Bush tax rates (even for the wealthy) and included additional tax breaks for businesses. “Millions of entrepreneurs who have been waiting to invest in their businesses will receive new tax incentives to help them expand, buy new equipment or make upgrades – freeing up other money to hire new workers.”