Tags: paul | Krugman | Tax | Deal | Threatens | Obama | Re-election

Krugman: Tax Deal Threatens Obama’s Re-election Chances

Tuesday, 07 Dec 2010 09:45 AM

President Barack Obama struck a deal with congressional Republicans that extends tax breaks for all Americans — including the wealthy — as well as keeps unemployment benefits in play.

But the deal, says Nobel economist Paul Krugman, will ultimately hurt the president's chances for re-election in 2012.

Why? It won't create jobs, and any improvements to the economy the tax breaks bring will be short-lived.

"We’re awash in excess capacity, and likely to stay that way for years, so I don’t expect business investment to be noticeably affected by tax breaks that give an incentive to move spending up in time," Krugman writes in his New York Times column.

"So, was this worth it? I’d still say no, although it’s better than what I expected over the weekend," Krugman says.

"It still greatly increases the chances of the Bush tax cuts being made permanent — especially because the front-loading of the stimulative stuff actually worsens Obama’s 2012 electoral prospects."

The deal is seen as a big win for Republicans, who control neither the House nor the Senate at the time of the vote.

Now lawmakers must vote on the arrangement, with some in the president's own party already expressing their disgruntlement.

"Senate Republicans have successfully used the fragile economic security of our middle class and the hardship of millions of jobless Americans as bargaining chips to secure tax breaks for the very wealthiest among us," says Senator Tom Harkin, a Democrat from Iowa, according to the Associated Press.

Republicans are praising the measure.

Republican Senate Minority Leader Mitch McConnell thanked Obama for "working with Republicans on a bipartisan plan to prevent a tax hike on any American and in creating incentives for economic growth."

© 2017 Newsmax Finance. All rights reserved.

1Like our page
2Share
StreetTalk
President Barack Obama struck a deal with congressional Republicans that extends tax breaks for all Americans including the wealthy as well as keeps unemployment benefits in play. But the deal, says Nobel economist Paul Krugman, will ultimately hurt the president's...
paul,Krugman,Tax,Deal,Threatens,Obama,Re-election,Chances
281
2010-45-07
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved