President Obama's weekly address was on taxes: " I don't see how we can afford to borrow an additional $700 billion from other countries to make all the Bush tax cuts permanent, even for the wealthiest 2 percent of Americans. ...I want to make my priorities clear from the start. One: middle class families need permanent tax relief. And two: I believe we can't afford to borrow and spend another $700 billion on permanent tax cuts for millionaires and billionaires."
Supply sider Larry Kudlow interprets this as Obama backing at least a temporary extension of all the tax cuts, and writes that that is okay with him until a broader flat-tax type tax reform two or three years down the road.
There are a few other ways to interpret the president's remarks. The first is the "millionaires and billionaires" language, making it sound like the president might be okay with permanently extending the Bush tax cuts for those with income of say, $900,000 a year, or at least something above the $250,000 threshold that he had been insisting upon.
Second, if one accepts for a moment the president's debatable assumption that tax cuts are something the government has essentially to pay for, $700 billion may be an understatement; I believe $700 billion is the ten-year cost under CBO budgeting rules. The "permanent" cost could, under this logic, be significantly more, because America could last a long, long, time, and over that number of years the money earned by the "rich" that they could have had to pay the government could be a lot. As a practical matter, these rates aren't "permanent" in the sense that they are written in stone, just in the sense that they would not expire at some fixed time in the future. If some future Congress and president wanted to change the rates, they could do so even if they were "permanent."
Third, Mr. Obama buys into the idea that it somehow qualifies as a government "spend" to let people keep money that is theirs to begin with.
Fourth, Mr. Obama leaves open the idea that it is okay to "borrow and spend" some smaller sum to temporarily extend tax cuts to millionaires and billionaires.
Fifth, Mr. Obama leaves open the idea that it is okay to permanently extend the tax cuts so long as the "cost" of them is not borrowed but is offset some other way.