So it’s hard to criticize the deal the president struck with Republicans on extending the Bush tax cuts for another two years as not being a bipartisan effort. However, it’s pretty easy to call the plan not very good policy, and I expect that’s exactly what a lot of congressional Democrats will be saying in the coming days.
Obama may have the Republicans on board, but at the expense of his own party.
In announcing the deal, Obama said, “Economists from all across the political spectrum agree that giving tax cuts to millionaires and billionaires does very little to actually grow our economy.” But then Obama proceeded to announce such tax cuts were included in the package.
Obama said because the Republicans refused to go along with any deal that didn’t include the billionaire tax cuts, he had no choice.
After all of the talk about the deficit in this past election, this package would add more than $700 million to the debt. Of course the Republicans and the Obama Administration will argue this will be stimulative to the economy, and perhaps parts of it will. But at what expense?
The deal would continue tax relief for the middle class but also for billionaires. It includes a payroll tax reduction and an extension of unemployment benefits along with a deal on the estate tax and a huge investment tax credit for American businesses, a tuition tax credit, and an expansion of the Earned Income Tax Credit.
Tax cuts for all. That’s bound to be popular, but not necessarily right.
Obama said that he believes in two years he will be able to convince the American people that extending the tax cuts permanently isn’t responsible. But that brings us to 2012—an election year. Promising to raise taxes in an election year? That will happen.
Appearing on Fox News this morning, Virginia Democratic Sen. Mark Warner expressed concern that the tax cuts were not linked in any way with deficit reduction and would only increase the national debt—which is growing at a rate of $5 billion a day.
“I think this could be a recipe for disaster,” predicted Warner.
“If Washington can kick the can down the road and avoid making the hard choices— they’ll do it every time,” said Warner.
Democratic Sen. Ron Wyden, who I spoke with on Monday before details of the plan had been released, was of much the same mind. He told me while he could support a one-year extension of the tax cuts, he was uncomfortable with a two-year extension.
Wyden supports serious tax reform and has been working on a tax reform plan that he hopes to introduce in the next session of Congress. A one-year extension of the tax cuts would allow that debate to happen, but a two-year extension probably means it won’t take place. Wyden argues lawmakers need to take the long view to fix the nation’s fiscal situation.
“In this town, people aren’t willing to look beyond the next 15 hours,” Wyden told me.
Truer words were never spoken.
- Follow the money in Congress.
- Read more about the deficit and national debt.
- Read 10 things you didn't know about the Bush Tax Cuts.
Corrected 12/08/10: An earlier version of this column incorrectly reported the cost of extending the Bush tax cuts. The tax deal is expected to cost around $900 billion.