There was hope that the next Congress might finally buckle down and do something about the debt and the deficit. An 18-member bipartisan panel came up with an audacious series of proposals—enough to aggravate nearly every interest group—to trim $4 trillion from the deficit. It failed to gain the 14-vote supermajority needed to send the package to Capitol Hill. [Read more about the deficit and national debt.]
As the unemployment rate reached an un-festive 9.8 percent, congressional Republicans balked at extending unemployment benefits, putting at risk the fates of some 2 million people whose benefits will begin to expire this week. The GOP argues that the cost of extending the benefits should be offset by spending cuts elsewhere.
But that argument doesn’t apply when the Republicans talk about extending the Bush-era tax cuts. Keeping the tax cuts for everyone will cost $3.7 trillion over the next 10 years—nearly as much as the savings that would be accomplished by instituting all of the dramatic changes the deficit commission came up with, including raising the retirement age and eliminating the home mortgage interest tax deduction. [Check out a roundup of political cartoons on the economy.]
Democrats pushed through doomed legislation this week to keep the tax cuts for all but the wealthiest, a move that would bring $700 billion into the Treasury. Senate Democrats were set to make a similar attempt on Saturday.
House Speaker-to-be John Boehner immediately slammed the idea as purely symbolic and a waste of time—and he has a strong point:
"We’re 23 months from the next election, and the political games have already started, trying to set up the next election," Boehner fumed.
He was a sympathetic legislative character until he referred to the idea as "chicken crap."
True, the vote itself was clearly aimed at making a political point, since everyone knows Senate Republicans will stop the idea with the threat of a filibuster. But the idea itself—keeping tax cuts for the middle class while squeezing some cash out of the wealthiest Americans—is hardly unreasonable.
So this is how the week appears headed: serious, tough choices on deficit reduction have been shunted aside. The long-term unemployed are facing a cutoff of benefits just at the beginning of the holiday season. And lawmakers will likely have to choose between reverting to a higher tax rate for all Americans, or extending them for everyone, including the wealthy, and thereby accomplishing nothing towards deficit reduction. Great political posturing for both parties, but at the expense of the people whose votes they seek.