5:30 PM UPDATE: A deal has reportedly been reached on tax cuts. President Obama will address the deal at 6:10 ET. Stay tuned for more…
At issue, the Bush-era tax cuts, which are due to expire at the stroke of midnight entering 2011. The White House, Democratic and Republican leadership all agree there should be an extension of these tax cuts for almost all Americans. Where the parties diverge is on the issue of tax cuts for couples making more than $250,000 per year and individuals making more than $200,000. Democrats say let ‘em expire; Republicans don’t want to let that happen.
Republicans have said publicly that nothing in Washington will get done until these tax cuts are passed for the wealthiest few. So today, it’s another day, and still no extension of jobless benefits for the unemployed, still no extension of the Bush-era tax cuts for the working and middle classes, still no repeal of Don’t Ask Don’t Tell, still no DREAM Act to send children of immigrants to college, still no nuclear arms treaty with Russia, still no clean energy and food safety measures. Why? Republicans are holding the entire legislative calendar hostage, waiting for the White House to cave, and the Obama administration has shown itself to have no political instincts and zero fight.
On Saturday Senate Republicans, as expected, defeated two bills that would have preserved the Bush-era tax cuts for most Americans (the first bill for individuals making under $200,000; the other for anyone making under $1 million). They were helped by four Democrats and a Lieberman. So if you’re scoring at home on your post-partisan card, the House voted to extend tax cuts for nearly all Americans. The Senate tried to do so. The Republicans + four Dems and Lieberman said no tax cuts for you until the wealthiest get theirs too. How can anyone — left, right, center, up, down — support that?
So will the Democrats, who have the winning hand, fold before the flop? Senate Minority Leader Mitch McConnell seems to think so, saying over the weekend “I think it’s pretty clear now taxes are not going up on anybody in the middle of this recession…It isn’t going to happen.”
Keep in mind that Plain Ol’ Republicans and Tea Party Republicans campaigned on reducing the deficit, yet their plan will add nearly $4 trillion to the deficit over the next 10 years alone — that’s more than any program Obama or the Democrats have implemented since 2008.
Now it looks likely that President Obama inexplicably may be looking to deal on these tax cuts. Washington Post blogger Greg Sargent posted this email from a White House official: “The President will also renew his opposition to even a temporary extension of the Bush tax cuts if it does not include an extension of benefits for the unemployed and extensions of the other tax cuts that benefit middle class families. Without them, taxes would still rise for 95 percent of Americans.”
So there you have it. In exchange for something the White House should be able to get for nothing, President Obama may cave. The saving grace is that the deal may also include the repeal of Don’t Ask Don’t Tell in the lame-duck session, but again, that’s something a strong White House should’ve been able to wrangle for nothing.
You’re looking at a very weak, very inexperienced West Wing if this deal goes through as is.
UPDATE: For anyone who thinks your taxes are too high, consult today’s Felix Salmon piece in Reuters, where Salmon points out via chart called “Federal taxes as a percentage of GDP” that “Federal taxes are the lowest in 60 years” and “There aren’t any wealth taxes, but the closest thing we’ve got—estate and gift taxes—have shrunk to zero.” Summarizing he says “If you were structuring a tax code from scratch, it would look nothing like this.” It’s a must-read. Seriously, get on it.