Editorials
GUEST EDITORIAL
New York Times
The Tax Cut Endgame
Capitulating to….Not Compromising With
President Barack Obama’s deal with the Republicans to extend all the Bush-era income tax cuts is a win for the Republicans and their strategy of obstructionism and a disappointing retreat by the White House.
We suppose it could have been worse. The deal could help to stimulate the weak economy. And if the Republicans had blocked an extension of unemployment benefits, as they were threatening to, millions of Americans would have suffered greatly.
But the country can’t afford to continue tax cuts for the rich indefinitely. And by kicking the issue down the road to 2012--a presidential election year--it all but guarantees more craven politicking then.
Speaking on Monday evening, the president said that the deal would extend for two years all of the tax cuts, both those from the Bush years and those from last year’s stimulus law for low-income workers. Recently expired benefits for the long-term unemployed would be extended for another 13 months.
The agreement also includes a one-year cut in payroll taxes that will put a relatively modest, but much needed, $120 billion in workers’ pockets, and a year of bolstered write-offs for business investments. On a decidedly sour note, President Obama also said he had agreed to cut estate taxes even more than in the last year of the Bush administration. That is not compromise. It is capitulation.
The Republicans gave up very little except for their unconscionable stance of holding up all other congressional action until they ensured that the richest Americans keep their tax cuts.
The tax cuts were not affordable when they were passed and are even less affordable now--with unpaid-for wars, with a weak economy crying out for recovery efforts, with the nation’s infrastructure and education system increasingly decrepit, and with retiring baby boomers inexorably driving up health costs and the budget deficit in the decades to come.
A thoughtful approach--not broached by either side--would have been to extend most of the tax cuts for another year or so, letting the high-end tax breaks expire and using the money to help pay for policies that would do more than income taxes to generate growth. In the meantime, lawmakers and the administration could have undertaken tax reform to bring revenues in line with spending. President Obama and the country should not wait for two years to begin reforming taxes.
Until Monday night, both sides were silent on the fate of one of the biggest high-end tax cuts of all--the estate tax on multimillionaires and billionaires. Now, President Obama seems to have given in to largely Republican demands on those taxes. Perhaps he wanted to placate the main proponent of gutting the estate tax further, Sen. Jon Kyl (Rep., Ariz.), who is also the Senate’s point person on the new nuclear treaty awaiting ratification. That suggests less a compromise than a cave-in.
The deal validates the Republican strategy of obstruction--and invites more. U.S. Sen. Mitch McConnell, the Republican leader, has never wavered in his stance that all of the Bush tax cuts should be extended. Now that they have a temporary extension, Sen. McConnell and the Republicans will, undoubtedly, push to make it permanent. President Obama said on Monday night that he still believed extending the Bush tax cuts for the wealthy was a bad idea. He defended his retreat by predicting that they would be undone in two years, when it becomes apparent to everyone that it was a bad idea. But that assumes that President Obama and the Democrats are willing to confront the Republicans on high end tax cuts in 2012, demonstrating courage that was not on display this year.
Unfortunately, if history is any indication, extending them now will make it considerably more difficult to undo them later. And that will make the country’s budget problems far worse than they are now. President Obama said that he was not willing to fight anymore over the tax cuts for the wealthy because that would be “playing politics.”
He should have fought harder.
