President Obama gave Republicans their tax break
for the rich and very rich in exchange for another 13 months of benefits for the unemployed and a one-year Social Security tax holiday for workers (but not employers) and other tax breaks for business.
The compromise must pass Congress to become law. It will face strong opposition from Democrats but is likely to squeak through. The alternative would be to see all of the Bush tax cuts of 2001 and 2003 expire, a consequence economists warn might trigger a double-dip recession.
The two-year extension of the tax cuts means a two-year postponement of any serious effort to reduce the deficit. Because the tax cuts given to the upper 2 percent of taxpayers will cost the treasury about $70 billion in taxes not collected each year, the budget deficit will grow by that much more.
The compromise, if carried out as proposed this week, will also set the stage for the 2012 election. The Republicans apparently have decided the economy will improve enough by the end of next year so that they can successfully argue that keeping the tax cuts untouched did stimulate the economy and that renewed growth will produce enough additional tax revenue to bring the deficit down.
If, on the other hand, unemployment stays high, middle class incomes don’t recover and the gap between the nation’s rich and rest of society continues to grow, a jobless recovery may drive a stake through the heart of GOP trickle down economics.
The president offered the compromise because he had to in order to get an extension of unemployment benefits through the Senate in time to keep
millions from going hungry. Extending the benefits will also keep that much money flowing into the economy after Christmas spending stops.
While it is astounding and disheartening to learn that Senate Republicans were willing to hurt the desperately poor in order to prevent a 3 percent tax hike on the wealthiest families in the country, most will agree the bargain had to be struck.
— Emerson Lynn, jr.
