August 8, 2010

Bloody Bill-I'm-always-wrong-about-everything Kristol continues his track record on Fox News Sunday this week when he predicts that the Republicans will play a game of chicken with President Obama and decide its better for them politically to block extending the Bush tax cuts for the middle class if they can't keep them for the upper earners as well. As Jennifer Loven from the AP points out, that ain't gonna' happen. Even Chris Wallace seems stunned that Bill Kristol would think that's a good election strategy for the fall.

Kristol: Look, the President has a couple of interesting choices to make over the next two months. They're pushing, the FED to announce some quantative easing next week at its meeting to print more money. In fact they seemed to be toying with the idea, Treasury has a big meeting on Fannie and Freddie on August 17th, and they're toying with the idea of forgiving some mortgages for those who owe more than their house is worth, which would be an attempt at stimulus, very much like the mortgage proposal about a year and a half ago that was announced by Rick Santelli and actually launched the Tea Party. That was helping those that can't afford the houses they have.

And then... so we should see whether... that would be staying the course, government stimulus proposals. I don't think the markets will like it but they're toying with that and then in September they're going to have a big tax debate in Congress and the President I think will ulimately have to decide is he willing to accept the extension of all the current tax rates for a year or two, or is he going to go... or Republicans I think will not accept the part, the hike in taxes on the well-to-do and small businesses. I think the President if he did pivot, actually if he said enough of the stimulus for now and lets just at least not raise taxes, I think that's the one thing that could help him a little bit now politically over the next couple of months and I think the markets would welcome it.

Can you imagine if the President stood up in September and said look at this fresh data, it's too fragile of a recovery...

Wallace: Let me bring in Jennifer. Is there any possibility that this President would say ,you know what, we're going to keep all the tax cuts for the middle class and for the wealthy for a couple of years because this recession and this recovery is not going the way we thought it would?

Loven: Short answer, no. He's not going to accept that. They've been very clear about it and at this point to go back on that would cause him so much trouble with his own base and his own party, he has said he wants to extend them for the middle class, but extending them for the wealthy, no. It's not going to happen.

Kristol: Even if the choice is no extensions? Because I think Republicans will block the partial extensions.

Loven: I don't think so.

Kristol: You think he won't accept it?

Wallace: Why would Republicans block an extension for the middle class? You're going to be in a position of saying if we don't get it for the wealthy, we're not going to give a tax cut, or continue the tax cut to the middle class?

Kristol: We're in the position of saying elect Republicans and we'll give... we'll extend the current tax rates for everyone, so the middle class will get its lower tax rates and we won't put this huge burden on small business.

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