Obama Will Extend Tax Cuts – Here’s Why

President Obama will eventually agree to extend all the tax cuts if the Republicans stand firm and hold out for the full extension for all income levels. Extending the tax cuts helps Obama for his 2012 re-election regardless of how the economy performs.  Allowing the tax hikes to go into effect could hurt him badly...

President Obama will eventually agree to extend all the tax cuts if the Republicans stand firm and hold out for the full extension for all income levels.

Extending the tax cuts helps Obama for his 2012 re-election regardless of how the economy performs.  Allowing the tax hikes to go into effect could hurt him badly in 2012 if growth and job creation remain slow.

Here’s the logic: If the tax cuts are extended and the economy continues its poor performance, Obama will say “I tried it your way, we cut taxes and it didn’t work.  Now we’ll have to do it my way.”

On the other hand, if growth is good, he’ll say, “My policies are working, the economy is growing and we must continue with my agenda.”  He’ll take credit for success and champion his own agenda.

Win-win.

But if he refuses to go along with the tax cuts and the slow growth continues, he will be blamed and on the defense for having raised taxes in the middle of an economic crisis.  That’s a losing strategy–hence he’ll pick the win-win strategy and extend the tax cuts.

With a permanent extension unlikely, one step the GOP can take to combat this is extend them till either October 15, 2012 or October 15, 2014 when the issue will be on voters minds yet again–but this time before the election rather than after.  That’s a winner for the taxpayers most of all.