The Opposition In The U.S. And Greece Want Tax Cuts

Greek opposition leader Antonis Samaras wants the parliament there to approve tax cuts. He believes it will shock the economy back into a period of growth, he told the WSJ. The IMF and EU are against that. The two organizations, which will probably throw Greece a financial lifeline, want higher taxes combined with budget cuts to slow, and eventually reverse, the increase in the southern European nation’s debt. No one other than Samaras knows whether he truly believes his position to be economically sound or rather a powerful tool to get votes.

Speaker of the House John Boehner recently made his position on taxes as a part of debt ceiling negotiations clear on Fox News. “Zero. I’ve made it clear to the president, we are not going to raise taxes. You can’t raise taxes on the very people that we expect to invest in our economy and to create jobs.” House Majority Leader Eric Cantor left negotiations with Vice President Joe Biden over the same issue.

Austerity has begun to lose whatever reputation it gained as a way to salvage the finances of sovereign nations. This is not so much based on cuts in government programs as it is on the issue of whether taxes are regressive. The parties that do not control the administration in Greece and the U.S. mean to make the tax argument the most dominant one in the austerity debate.

The tax cut argument puts austerity in a light that was not intended to be the brightest one. Austerity was supposed to be about deep cuts in a range of programs, resulting in lower numbers of government jobs, social services limits, and even curtailment of the social safety plans for the aged. These have taken a lesser role in battles over budgets in the last week. Antonis Samaras wants to be the Greek prime minister. He has decided to use his stance on taxes to get him that job. Similarly, Boehner and his party seem to believe a “no tax” pledge is their best means to the White House.

The press has made a great deal of the fact that Republicans want tax cuts as a way to salvage the economy. Samaras believes the same about Greece. The issue that these tax cut positions raise is whether their proponents really have a strong conviction that they are true, or rather as a way to first placate and then attract voters? If that is the game, then the debate is an artificial one and is about political advantage, not the future of the economies of either Greece or the U.S.

Douglas A. McIntyre