Everyone Gets a Tax Cut

A few thoughts on the announced tax-cut deal between Obama and the Republicans:


Generally, I like the deal. Everyone gets what they want (even if we can’t pay for it). Taxes don’t go up for everyone next year. We even get a little tax cut. Unemployment benefits get extended for another year. And the earned income tax credit get extended. So, tax cuts for everyone and the most needy get a little extra.

It’s absurd that there had be to any negotiations at all. The Republicans get a say because they have 42 senators and Democrats only have 58. Since it takes 60 votes to do anything, 42 is as good as 58. If the senate doesn’t kill that rule at the start of it’s next session then the Democrats are insane. I’m looking at you Jeanne Shaheen. What the heck, I’m looking at you too Kelly Ayotte. Just because you’re a Republican doesn’t relieve you of the responsibility to end this foolishness.

Liberals who are apoplectic about this deal need to rethink their priorities. Would the world really be a better place if taxes for everyone went up next year? And unemployment benefits ended? This is a stealth-stimulus. It’s not a very efficient stimulus. But it’s better than nothing -- and will be much more popular.

I support progressive taxation. I opposed the Bush tax cuts. I never liked the Democratic plan to extend 75% of the Bush cuts. I don’t think it’s a moral imperative that rich people pay higher taxes. We need a lot more revenue to balance the budget. When we get serious about the nation’s fiscal health I would like to see a little extra come from where it’ll cause the least hardship - people richer than me. But everyone will have to share the burden. We shouldn’t fool ourselves into thinking otherwise.

But we aren’t serious about balancing the budget. Nobody cares. Not this year. This deal piles on another $600-$900 billion on the deficit. It also settles taxes and economic stimulus issues for the next few years. Maybe this is our last big bender. Hopefully, this opens the door to serious negotiations around a big picture deficit reduction plan (like Simpson-Bowles) where everything is on the table and we look at the kinds of real, structural changes that are required in tax policy, defense, medical, and entitlement spending.

Speaking of negotiations- Obama is clearly at home with them. He’s much more interested in being the presidential centrist than leading the charge as the front-man of the Democratic party. I admire this quality. But it drives “the base” berserk. Obama will get plenty of opportunity for negotiation over the next two years. The man himself is such a stark contrast from the communist-socialist rhetoric that comes from the right. I hope that’ll become increasingly apparent, that the fever will break, and that American center will realized Obama is one of them.

In this highly polarized era there may not be much support for a President-as-centrist-negotiator. But that’s his job. And I’m glad Obama is the one doing it.