Tax deal a good, not great, bargain for Republicans

posted at 9:30 am on December 7, 2010 by Ed Morrissey

It’s victory!  It’s defeat!  It’s the end of Obama!  It’s the end of the world!  The deal to keep the current tax rates in place has received soaring praise and bitter criticism on the Right, but the truth is that the deal winds up being good for Republicans while making their job in the 112th Session a little harder, especially on budgeting.  However, it works for them in other ways, especially on credibility, and sets up the next electoral cycle as a fight on tax increases — just as 2010 played out.

Jennifer Rubin diagnoses the impact of Barack Obama’s surrender on the tax question:

They won the philosophical point (tax hikes impede economic growth) and, candidly, are more than delighted to have a repeat of this debate for the presidential campaign in 2012. Ryan Ellis of Americans for Tax Reform, which strenuously pushed for extension of the Bush tax cuts, tells me,”If 2012 is a referendum on Obamacare and tax hikes, we win.”

The Left has demonized the Bush tax cuts as the Source of All Deficits for years, even though tax revenues increased after the cuts as the economy began booming again [see update III].  Obama, the most Left-leaning President ever elected, just endorsed the Bush tax rates for another two years — and, as John Hinderaker notes, added in a payroll tax holiday that will do more to encourage growth than anything Obama has done in the past two years.  John Podhoretz calls this a “what the hell” deal for Obama, who coughed up more for less than imagined, and exposed his grasp of economics as superficial at best:

Here’s a theory: Obama said, “What the hell.” Once he knew he had to give in, and would get criticized for giving in, he figured he might as well go whole hog. The whole deal seems designed to test conservative arguments about how best to help the economy right now, with the understanding that if the economy improves markedly as a result, he will get more credit for his role from the independents he lost so decisively in the 2010 election. And if it doesn’t, then the GOP will be in the position he was in this year in relation to the stimulus—their desired policy won’t have worked either, and he won’t get blamed for acceding to political reality in going along with it.

Paul Krugman and the Nation and moveon.org were going to be enraged no matter what compromise he struck. So…what the hell. Go long. Try the Hail Mary. Nothing Barack Obama could have done indicates just how empty his own economic policy quiver is.

My friend and mentor Hugh Hewitt was outraged at the deal, telling me last night in a hastily-arranged but tremendously fun on-air argument that the GOP had all of the political momentum and should have held out for total victory.  He was most angry about the concession on unemployment benefits, arguing that an extension of 13 months was a ridiculous idea.  After all, these started at 26 weeks, and now we’re putting employers and taxpayers on the hook for 161 weeks [see update IV: still 99 weeks].  That will slow growth all on its own, and Hugh is right to be opposed to such an extension. The deal will end up costing around $270 billion over the next two years if one counts tax cuts as part of the cost (which is illegitimate, as those dollars belong to the taxpayer in the first place), which will mean the GOP will have to cut deeper in its first year than perhaps thought.

However, the nature of politics in a time of split power is compromise.  Republicans made the tax rates their priority after the election, and to some extent before it as well.  They needed to get a victory on this point before the tax hikes took effect, all while knowing that the situation in January would be more or less the same as it is now: Democrats still control the Senate and the White House.  Demanding an all-or-nothing position would mean sticking all taxpayers with a higher bill, which (not surprisingly) was the same strategy demanded by the Left to get the GOP to surrender on the higher tax bracket rate.  That position helped turn the midterm into a big loser for the Left, and it wouldn’t have helped anyone after January, either — not Republicans or Democrats. The parameters of the deal wouldn’t have changed much at all by waiting.

What do Republicans gain?  They get to set up the 2012 elections in large part as a debate on pending across-the-board tax hikes for one.  The extension of unemployment benefits will expire in the 2012 primaries, which will create another debate on the wisdom of continued government interventions — but also will keep unemployment higher for longer, which won’t help Obama in 2012.  The estate tax only goes up to 35% after the first $5 million, rather than 55% after the first $3.5 million, as Democrats demanded (and would have gotten had they bothered to deal with it in 2009 rather than wait until now).  The payroll tax holiday and the tax rate extensions may help a little in economic growth, but tax rate consistency only gets us a little further down the road and won’t be a game changer. (Increases, though, would have been disastrous.)

Mostly, though, the deal and the Democratic furor over it shows that the Republicans came to lead and get things accomplished, not just act as obstructionists for the next two years.  That will add considerable credibility to the GOP from the independents who flocked to Republicans in this past midterm cycle.  That’s a good, not great, deal for the Republicans in an environment where they have limited bargaining power.  If Democrats end up sabotaging this deal in Congress, well, so much the better.  They will become the obstructionists instead, and will have made the argument for their own oblivion in the next election.

Update: Just to clarify, the Death Tax was going to 55% on January 1, with an exemption to the first $3 million.  Had we done nothing, that was the new status quo.  Keep that in mind.

Update II: A few e-mailers inform me that the 2011 Death Tax would have started at $1 million, with 41%, escalating to 55% above $3 million, which makes it even worse.

Update III: Yes, tax revenues increased after 2003, and according to the CBO, in excess of overall economic growth.  In fact, from 2003 to 2006, tax revenues jumped 35%:

Total federal revenues grew by about $625 billion, or 35 percent, between fiscal year 2003 and fiscal year 2006. CBO’s analysis of that increase in revenues since 2003 is necessarily preliminary because relevant data are not yet fully available.  CBO examined the available data using the commonly employed method of analyzing the sources of revenue growth as a percentage of GDP. Had revenues grown at the same rate as the overall economy between 2003 and 2006, federal receipts would have increased by only $373 billion.

The reason?  Corporate tax revenues soared, thanks to the economic boom:

This analysis shows that the overall increase in revenues as a share of gross domestic product (GDP) since 2003 is disproportionately accounted for by increases in corporate income tax revenues.

Update IV: Actually, the unemployment extension is less than meets the eye, too:

The filing deadline for federal unemployment insurance that provides benefits for people who run out of their 26 weeks of state-provided benefits without finding a job would be extended until January 2012. Essentially, this will make it possible for people who became unemployed in the past 99 weeks and still haven’t found a job to collect benefits for the same length of time as people who lost their job more than 99 weeks ago. This would not add additional weeks of benefits — 99 weeks would still be the maximum amount of time that anybody could receive benefits.

So in exchange for tax rates staying the same across the board, the GOP agreed to open the window for eligibility for an additional 13 months but not to pay more than 99 weeks to any individual.  That adds cost, but not nearly what the White House’s description suggested.  Big thanks to Gabriel Malor for clarifying this point for me.


Related Posts:

Breaking on Hot Air

Blowback

Note from Hot Air management: This section is for comments from Hot Air's community of registered readers. Please don't assume that Hot Air management agrees with or otherwise endorses any particular comment just because we let it stand. A reminder: Anyone who fails to comply with our terms of use may lose their posting privilege.

Trackbacks/Pings

Trackback URL

Comments

Comment pages: 1 2

The Death Tax goes from 0% to 35% !!

Yeh – great deal. – Idiots.

jake-the-goose on December 7, 2010 at 9:32 AM

The death tax is redistribution of wealth; period end of story. Idiots!

Keemo on December 7, 2010 at 9:35 AM

I loved the petulance on display during his little speech, huffing off the podium without taking questions. So endearing. So manly.

Akzed on December 7, 2010 at 9:37 AM

Yeah we were definitely going to have to conceed some ground on the unemployment extension. I wish we could have conceeded a shorter extension but overall I think the compromise was a much better deal than not getting the extension done.

What was it RR used to say? Something about how when you walk away from the negotiating table having gotten 85% of what you wanted, that’s a win. You can go back later for the other 15%. I think this is one of those kinds of deals.

dczombie on December 7, 2010 at 9:39 AM

If Democrats end up sabotaging this deal in Congress, well, so much the better. They will become the obstructionists instead, and will have made the argument for their own oblivion in the next election.

God help the Dems if they block this deal and let all the tax cuts expire. Even with all the help in the world from the drive-bys, they won’t be able to pin that on the GOP.

As for the complaints about the death tax, that’s the nature of compromise. You scratch their back and they’ll scratch ours. The GOP got a lot in this deal, but they weren’t going to get everything.

Doughboy on December 7, 2010 at 9:40 AM

The estate tax is a way to stick it to middle class suckers. The truly wealthy almost never pay it, at least not with their own money.

flyfisher on December 7, 2010 at 9:40 AM

The death tax is theft redistribution of wealth; period end of story. Idiots!

Keemo on December 7, 2010 at 9:35 AM

darwin-t on December 7, 2010 at 9:42 AM

The death tax is redistribution of wealth; period end of story. Idiots!

Keemo on December 7, 2010 at 9:35 AM

Worse, it is a re-distribution from the middle class to the “bookends”.
The “lower class” and the “upper” class reap the benefits.

right2bright on December 7, 2010 at 9:43 AM

The Death Tax goes from 0% to 35% !!

Yeh – great deal. – Idiots.

jake-the-goose on December 7, 2010 at 9:32 AM

And without this deal, it would have gone to 55% on estates over $1 million, in exactly 25 days.

Jesus Christ, people… we won. We didn’t win as big as we would have liked, but it’s a win, both politically and economically.

And we should accept it with at least a modicum of grace.

JohnGalt23 on December 7, 2010 at 9:43 AM

The Death Tax goes from 0% to 35% !!

Yeh – great deal. – Idiots.

jake-the-goose on December 7, 2010 at 9:32 AM

The death tax is redistribution of wealth; period end of story. Idiots!

Keemo on December 7, 2010 at 9:35 AM

Agreed that the death tax is bad. Super bad. But it didn’t go from zero to 35%. It was slated to go way up at the end of this year and we at least mitigated that somewhat. We have to remember who still controlls Congress and the Veto stamp. We weren’t going to get the tax cuts extended without giving up something. We weren’t going to just get everything on our wishlist. They weren’t going to just meet all our demands without us yielding on some of theirs.

Yeah, there are some things in this deal that taste bad. But considering who holds the gavel and the veto stamp, we did pretty well. We’ll have to go back later and try to fix the other stuff. In the meantime, if that death tax applies to you try not to die in the next couple years if at all possible.

dczombie on December 7, 2010 at 9:44 AM

I loved the petulance on display during his little speech, huffing off the podium without taking questions. So endearing. So manly.

Akzed on December 7, 2010 at 9:37 AM

He never takes questions because he is afraidn of looking bad with his uninformed answers. The guy is a dolt.

darwin-t on December 7, 2010 at 9:44 AM

While this may strengthen the Republican position for 2012, I worry that this also strengthens Obama for 2012 as this tax deal is one of pure triangulation, and I worry about how many “drive by” voters might get duped into thinking this man is actually a centrist. Even Krauthammer agreed last night that this deal can only help candidate Obama in 2012 by showing how bipartisan he is (al though, thanks to his track record, bipartisan is the LAST thing he really is).

Thoughts?

Indy82 on December 7, 2010 at 9:44 AM

The Left has demonized the Bush tax cuts as the Source of All Deficits for years, even though tax revenues increased after the cuts as the economy began booming again.

facts are stubborn things..

ted c on December 7, 2010 at 9:46 AM

(Increases, though, would have been disastrous.)….

If Democrats end up sabotaging this deal in Congress, well, so much the better. They will become the obstructionists instead, and will have made the argument for their own oblivion in the next election.

This is what I am afraid of. The #1 goal of all politicians is getting re-elected. Democrats are suddenly going to go all conservative-ish 2 years before a major election, and leave themselves a ticking time-bomb in the process? If this passes, the 2012 elections will be about avoiding tax increases and repealing Obamacare. Democrats have to know it, they couldn’t possibly give Republicans a better campaign platform if they tried.

I’m afraid that they will be willing to take the hit now, and depend on the average voter’s notoriously short memory when it comes to 2012. I very much doubt that they are worried about how it will make Obama look anymore, they are thinking about Primarying him over this tax “cut” as it is! These weasles are cornered, and cornered vermin are dangerous.

Mord on December 7, 2010 at 9:47 AM

Probably a better deal than we would have gotten with a competent evil president.

Independents have already realized they were burned by Dear Liar, they won’t vote for Him again (provided the GOP nominates a good candidate) and this just means that a lot of Leftists will sit out 2012. Those on the right will be motivated to vote for an end to scheduled tax hikes in 2013.

rbj on December 7, 2010 at 9:47 AM

I worry that this also strengthens Obama for 2012 as this tax deal is one of pure triangulation, and I worry about how many “drive by” voters might get duped into thinking this man is actually a centrist. Even Krauthammer agreed last night that this deal can only help candidate Obama in 2012 by showing how bipartisan he is (al though, thanks to his track record, bipartisan is the LAST thing he really is).

Thoughts?

Indy82 on December 7, 2010 at 9:44 AM

sure it strengthens Obama in 2012. It should. When a politician does what is right for the country, his stock should go up. The converse is also true, his stock should dwindle when he does what is wrong for the country. He needs his base, this won’t help. He needs Independents, this will help. He may have already pi$$ed off too many people to help his cause no matter what he does. Heck, he could act like Reagan for the next two years, and many of us will vote against him anyway. The same goes for the left, who’ll never vote against him. It’s the wild card independents that are in question.

ted c on December 7, 2010 at 9:50 AM

the Democratic furor over it shows that the Republicans came to lead and get things accomplished, not just act as obstructionists for the next two years.

Uh… No.

What this really shows is that our Republican leadership in Congress does not think clearly and cannot be trusted to negotiate. They gave up billions of dollars in unemployment expenditures to get 2 years of the same tax rates we have now!
Republicans should have begun negotiations by putting a 3 month limit on any unemployment extension and making the “extension of tax cuts” – a misnomer the right should have replaced with “proposal to hike taxes”- permanent.

They should have “compromised” by reducing each unemployment check every month until they zeroed.

To think that the Left is upset at this at all is just plain naive. They know that Clinton increased his popularity by moving toward the middle. This outrageously outrageous outrage we’re hearing from the Left is calculated to give the average under-informed American the impression he has moved to the right. The realization that our representatives and those in the conservative media are falling for this simple ploy is disquieting.

ROCnPhilly on December 7, 2010 at 9:50 AM

Well, I’m at least enjoying watching the commies go berserk on Obama for not being commie enough.

forest on December 7, 2010 at 9:50 AM

If the deal wasn’t scheduled to run out in 2012 — if Obama had been smart enough to let the tax cuts remain until 2013 — then it would have strategically been a worse deal for the Republicans, even while providing a little more stability for taxpayers in general and small business owners in particular.

A three-year deal would have freed Obama from having this return as an issue during the 2012 campaign, allowing him to win back the moderates via it’s passage while at the same time doing a wink-and-nod to the left that once the pesky 2012 election was over, those cuts would be history come December 2013. He can’t do that now — he’s forced himself into either triangulating against his base on the tax rates during the ’12 campaign, or trying to gin up the turnout of that base by trashing the rates and seeking to raise taxes in an election cycle two years from now.

It’s a better position for Obama, but a sure-fire liberal head-exploding issue 20-22 months from now (when they left will simply have to satisfy themselves with their hatred of all things conservative/Republican as the motivating factor to re-elect Obama, who isn’t clueless enough to be seen as the Mondale-like tax-hike candidate going into November of 2012.)

jon1979 on December 7, 2010 at 9:50 AM

The Death Tax goes from 0% to 35% !!

Yeh – great deal. – Idiots.

jake-the-goose on December 7, 2010 at 9:32 AM

The spectacle of Obama going along with extending the Bush tax cuts after demonizing the GWB economy for years represents a complete and total victory for Republicans. The 35% estate tax (after the first 5 mil for individuals, 10 mil for couples) is, as Ed pointed out, better than the 55% the Dims could have had if they even tried to deal with this in 2009. Now, ‘the party of the rich’ charge against Republicans just lost some of it’s teeth. I know there’s a tendency here to snatch defeat from the jaws of victory, but let’s enjoy this one for a while. Obama got rolled, the progressives are having chest pains, and the Bush cuts for all income levels are safe for another two years. Yes!!!

joejm65 on December 7, 2010 at 9:51 AM

Indy82 on December 7, 2010 at 9:44 AM

It certainly helps Obama for 2012. at least with the middle. But that’s okay, because I think it helps the GOP more, by moving the ball down the field in our direction. Our base (the malcontents here and elsewhere in the blogosphere notwithstanding) is going to be thrilled with this deal, while Obama’s base will be p!ssing fire over it.

And we get to use it as a club again in 2012.

JohnGalt23 on December 7, 2010 at 9:51 AM

even though tax revenues increased after the cuts as the economy began booming again

nonsense. as a percentage of the GDP, tax revenues are still below the FY2000 level.

you’re just making up stuff to justify increasing the deficit.

sesquipedalian on December 7, 2010 at 9:51 AM

Doughboy, they will continue to pin it to the gop until their last dying breath….tingle will be leading the msm pack

cmsinaz on December 7, 2010 at 9:52 AM

When is this going to a Vote? It’s not already a done deal is it?

Mord on December 7, 2010 at 9:54 AM

As long as a 13 month extension of sit-on-your-ass benefits are attached to this it is a raw f-ing deal. I am a small business owner; where is my flipping gov handout…where is my bailout?

melachiro on December 7, 2010 at 9:55 AM

My friend and mentor Hugh Hewitt was outraged at the deal, telling me last night in a hastily-arranged but tremendously fun on-air argument that the GOP had all of the political momentum and should have held out for total victory

You know who this helps? Mitt Romney.

/just sarc’n on ya, Hugh.

Though I love Hugh, he knows better than to make the momentum argument. After all, Hugh once worked in Reagan’s executive branch, and thus instinctively understands that the Executive Branch will always have a leg up on controlling the narrative, regardless of who has “momentum.”

BradSchwartze on December 7, 2010 at 9:55 AM

The GOP folds again!!!!!!!!!! AH!

All that money, time, effort, sweat and hope to win the house…ARGGG!

Leave it to the GOP to take an historic win, the wind at their back and momentum of a herd of elephants running from a forest fire and….then make a freakin’ COMPROMISE with the commies!!!!!!!!!!!!!!!!!!!!!!!!!

BTW Ed, Hugh Hewitt gave you a nice spanking yesterday on his show and I don’t agree with him very often but he’s spot on with this one.

katy on December 7, 2010 at 9:56 AM

On balance I think this was a reasonable win for Conservative governance. It will help a lot of struggling Americans while also providing reassurance for those who are more fortunate.
*
Yes, it may spark a rebound which could help Obama in 2012. Would you rather that millions of Americans suffer even more in order to make a point?
*
Obama will still have plenty of time to screw the pooch. One word, Iran.

Metanis on December 7, 2010 at 9:58 AM

you’re just making up stuff to justify increasing the deficit.

sesquipedalian on December 7, 2010 at 9:51 AM

When the cuts begin in January the budget deficit won’t be in the headlines anymore.

Wave farewell to all of your favorite alphabet institutions.

Mord on December 7, 2010 at 9:58 AM

It’s what lawyers call a good divorce: when both parties walk away unhappy with the settlement. The GOP got the best of it tho’ not great by a long shot. At least they are handing the “Party of NO” label to the Dems if they’re dumb enough to take it.

The estate tax is one of the most outrageously unfair taxes there is. That the government, after taxing someone’s assets all their life, thinks it’s entitled to a cut of those assets when that life ends, is repulsive.

cartooner on December 7, 2010 at 9:58 AM

The whole deal seems designed to test conservative arguments about how best to help the economy right now, with the understanding that if the economy improves markedly as a result, he will get more credit for his role from the independents he lost so decisively in the 2010 election.

Obama’s Independent Problem, I am an Independent.

I voted for Bill Clinton the first time, but not the second. Why? Fool me once shame on you, Fool me twice shame on me. Bill Clinton ran as a liberal in moderate clothing.

Obama has shown his colors they are at best “opportunistic” at worst “Marxist”. Class warfare is a signature of the Marxist. It appears that’s all that survived the November election, but now they are marginalized. There is a prevailing mood in the American public to finish the job they started in November of 2010. To that end We will see a Republican majority in both the House and Senate, if not the Presidency. Divided government works. If the Republicans want the Presidency back, they are going to have to show in the next 2 years, they are going to push back on all the Progressive/Marxist over reaching that took place since 2009.

Maintaining the status quo isn’t not going to be enough.

As an Independent that leans Libertarian, no way, no how am I interested in voting for Romney. The Era of the RINO has come and passed.

Dr Evil on December 7, 2010 at 9:58 AM

Defending this “compromise” is a classic example of what’s wrong with the GOP.

We must DEFEAT the left – not compromise with them.

jake-the-goose on December 7, 2010 at 9:59 AM

Hey, 3.1 years is a short period in which to find another job while collecting gubmint checks!!!! The pressure isn’t fair!

search4truth on December 7, 2010 at 9:59 AM

Reasonable win, I guess. I think, to expand on the hapless football metaphor used yesterday, it’s the fourth quarter and we scored too quickly, leaving too much clock on the field for the opposing team to pursue their DREAMS.

But apparently, I am the only Republican that thinks that ending this lame duck session with as little socialist legislation getting passed as possible is the best thing.

I don’t know why I am so wrong, but it just seems that way to me. You know, the left has been refudiated so we should not let them pass anymore sweeping, unread 2000 page bills.

joeindc44 on December 7, 2010 at 10:02 AM

Yeah we were definitely going to have to conceed some ground on the unemployment extension. I wish we could have conceeded a shorter extension but overall I think the compromise was a much better deal than not getting the extension done.

IDK. It seemed as though we had at least 4 debates on extending the unemployment benefits JUST THIS YEAR. Just taking this off the front burner for nearly all of 2011 will help get the eventual weaning off passed a lot easier than it had been this year.

BradSchwartze on December 7, 2010 at 10:02 AM

Even Krauthammer agreed last night that this deal can only help candidate Obama in 2012 by showing how bipartisan he is (al though, thanks to his track record, bipartisan is the LAST thing he really is).

Thoughts?

Indy82 on December 7, 2010 at 9:44 AM

Gee, isn’t it curious how Krauthammer always takes the anti-conservative view?
He doesn’t think about how much the American people need for their taxes not to go up, but how it will make 0bama look.
Actually, CK or no CK, any idiot can see that President Urkel seriously doesn’t want to pass this bill to keep the Bush tax cuts…
He’d go out of town again to avoid more embarrassment if he didn’t have to host all those White House Christmas parties!

Jenfidel on December 7, 2010 at 10:02 AM

Regarding the estate tax, it’s not a bad deal. Without action, we’d have returned to 2001 law: a $1 million exemption, graduated rates of 37% to 55% applying to taxable estates from $1 million to $3 million, and a rate of 55% applying to the value of taxable estates exceeding $3 million.

Consider that in 2009, the last year before the abberational one-year disappearance (which included a byzantine carryover-basis regime), the exemption was $3.5 million and the top marginal rate was 45%.

For now, take it. Work on repeal later.

BuckeyeSam on December 7, 2010 at 10:04 AM

Yeah we were definitely going to have to conceed some ground on the unemployment extension. I wish we could have conceeded a shorter extension but overall I think the compromise was a much better deal than not getting the extension done.

What was it RR used to say? Something about how when you walk away from the negotiating table having gotten 85% of what you wanted, that’s a win. You can go back later for the other 15%. I think this is one of those kinds of deals.

dczombie on December 7, 2010 at 9:39 AM

This IS a good deal for Republicans, if it passes Congress. If the lame-duck Congress sabotages it, Republicans can put it back on the table in January, with the advantage that withholding will increase in January.

The extension of unemployment benefits costs money ONLY IF unemployment remains high. But how many businesses were prevented from hiring because they were afraid their taxes would go up in January? If the compromise passes Congress, and businesses start hiring, there will be fewer unemployed people needing benefits. If they don’t start hiring, Republicans can blame the increased costs of ObamaCare, and use that as an argument for full or partial repeal.

The extension of the tax cuts for TWO years means that tax HIKES will again be an issue in 2012, with Obama trying to defend them when he’s on the ballot. “Read My Lips”, 20 years later.

The extension of the Bush tax cuts also means that Government revenues will be down, at least in the short term, giving Republicans an excellent argument for cutting spending to reduce the deficits, once they gain the majority in the House.

If the economy rebounds, it will be hard for Obama to take credit in 2012. Republicans can always argue that Democrats had complete control in 2009-10, and unemployment skyrocketed, while the economy only improved when the Republicans controlled the House.

Steve Z on December 7, 2010 at 10:04 AM

Death Tax, that should have been killed (no pun) as a deal breaker from the start.

And now another UC extension while good jobs go unfilled, at least in my area. I could get you hired right now for $20/hour, hell if you can weld and are willing to work outside all day in Minnesota winters I would hire you.

Bishop on December 7, 2010 at 10:05 AM

I’m ready to see a compromise where, instead of each side giving away goodies, each side gets their preferred does of the painful stuff. Dems want more spending and higher taxes, GOPers want less spending and lower taxes. How about a bill which calls for higher taxes and less spending? It won’t happen until there’s an actual disaster on our hands because nobody wants to be the “bad guy.”

ggoofer on December 7, 2010 at 10:07 AM

nonsense. as a percentage of the GDP, tax revenues are still below the FY2000 level.
you’re just making up stuff to justify increasing the deficit.
sesquipedalian on December 7, 2010 at 9:51 AM

And that is a meaningless statistic which totally misses the point. The lower tax rates stimulate a greater GDP and and a lower percentage of a larger GDP results in REAL increases of returns – which is the whole objective. It’s not a zero sum game we have here.

tommyboy on December 7, 2010 at 10:08 AM

The Death Tax goes from 0% to 35% !!

Yeh – great deal. – Idiots.

jake-the-goose on December 7, 2010 at 9:32 AM
The death tax is redistribution of wealth; period end of story. Idiots!

Keemo on December 7, 2010 at 9:35 AM
Agreed that the death tax is bad. Super bad. But it didn’t go from zero to 35%.

And, how many states still impose this tax? I dislike it as well. But this battle continues until the tax is abolished on the states and the federal level. 35% is not a total win, but it still moves the ball down field from where Bush started from.

EliTheBean on December 7, 2010 at 10:08 AM

When the cuts begin in January the budget deficit won’t be in the headlines anymore.

Mord on December 7, 2010 at 9:58 AM

you’re both incoherent and ignorant. the cuts began nearly 8 years ago.

sesquipedalian on December 7, 2010 at 10:10 AM

Remember this is the congress we voted against. The new one wont be there until January and this deal is not bad all things considered.

Bringing back the Death Tax is immoral and bad economics, but there was no way in hell Obama would or politically could agree to keep it buried.

The fact that everyone hates this deal means it’s probably the best that could be expected, for now.

RadClown on December 7, 2010 at 10:11 AM

The death tax is redistribution of wealth; period end of story. Idiots!

Keemo on December 7, 2010 at 9:35 AM

Took the words right off my keyboard Keemo. I was thinking of a headline like: “Obama, Redistribution of Wealth–Takes a Holiday”.

Funniest thing on Morning Joe this morning:

Mark Halperin: “The President is serious about deficit reduction.”

Joe S : “How has Obama shown that?”

Halperin: “He passed the health care bill to reduce deficits.”

REALLY???????

Rovin on December 7, 2010 at 10:12 AM

nonsense. as a percentage of the GDP, tax revenues are still below the FY2000 level.

you’re just making up stuff to justify increasing the deficit.

sesquipedalian on December 7, 2010 at 9:51 AM

Really?

Revenues by Major Source, 1968 to 2007, in Billions of Dollars

2000 2,025.5

2001 1,991.4

2002 1,853.4

2003 1,782.5

2004 1,880.3

2005 2,153.9

2006 2,407.3

2007 2,568.2

darwin on December 7, 2010 at 10:12 AM

It’s a sickening failure. The goal isn’t to compromise and push forth a deal. The goal is to completely revise the tax code and set a flat sales tax.

Set the goal and adhere to principle!

The GOP just set the goal for more of the same. They need to fight right now.

No more comprise. No more half measures, fight or leave. The media no longer controls the narrative. No more “compromise” BS.

joshlbetts on December 7, 2010 at 10:13 AM

you’re both incoherent and ignorant. the cuts began nearly 8 years ago.

sesquipedalian on December 7, 2010 at 10:10 AM

I think liberals should voluntarily accept higher tax rates since they don’t mind higher rates. Also, one can easily give more to the IRS … there’s a form availbale to do so.

It’s a win-win for everyone!

darwin on December 7, 2010 at 10:14 AM

It is an awful deal for Republicans. They caved 2 minutes after a huge win. We get 2 years of taxes, they get a lifetime of 2 million permanent welfare recipients disguised as unemployment benefits. It’s as if someone said you get $10 this and next year but you have to pay me back $2 a year for the next 50 years. That is exactly what this great win for Republicans sets up.

This is the difference between Reps and Dems. Obama says I won, do as you’re told. Republicans apologize for winning and do as they’re told.

So much for the great conservative comeback.

angryed on December 7, 2010 at 10:15 AM

you’re both incoherent and ignorant. the cuts began nearly 8 years ago.

sesquipedalian on December 7, 2010 at 10:10 AM

The tax cuts began in summer of 2001. Which is more than “nearly 8 years ago”. Now someone was saying something about ignorant…..

Epic fail again from our resident trolls.

angryed on December 7, 2010 at 10:16 AM

If you’re not happy with the deal, send an email or call your elected rep. The dems are saying wait just a gosh darned minute and are putting on a show of being against the compromise. Zero is putting spin on to make it look like HE WON and is looking good to independents. The R’s should have held out a little longer, he would have caved anyway and they could have come away with more.

Kissmygrits on December 7, 2010 at 10:17 AM

… The deal will end up costing around $270 billion over the next two years if one counts tax cuts as part of the cost …

So far, I have heard everything from 56 to 800+ billion as the cost for this deal. Clearly, an itemized list will be required to evaluate this better.

Freddy on December 7, 2010 at 10:18 AM

And sesquip would rather we all forgot that until Copperheads took the Congress (which spends the money) in FY2007, the budget deficit was decreasing steadily, in spite of the 2000 recession, the Iraq War, etc.

Copperheads crawl under rocks and hide when their destruction of the country becomes obvious.

SDN on December 7, 2010 at 10:19 AM

So far, I have heard everything from 56 to 800+ billion as the cost for this deal. Clearly, an itemized list will be required to evaluate this better.

Freddy on December 7, 2010 at 10:18 AM

It will “cost” zero and is simply a lie. Democrat are touting a number they think they would have received in additional revenue if the Obama tax increase were to go ahead.

darwin on December 7, 2010 at 10:22 AM

Funniest thing on Morning Joe this morning:

Mark Halperin: “The President is serious about deficit reduction.”

Joe S : “How has Obama shown that?”

Halperin: “He passed the health care bill to reduce deficits.”
REALLY???????

Rovin on December 7, 2010 at 10:12 AM

heard that too…was going huh?

cmsinaz on December 7, 2010 at 10:22 AM

This is a win-win situation for the Republicans. The 2012 election will become one of taxes and government-run health care.

Should the Democrats in the lame-duck session scuttle this, and that is a very real possibility, this explodes in their faces just like one of the classic Acme cigars Bugs Bunny used to give Yosemite Sam.

pdigaudio on December 7, 2010 at 10:22 AM

<strongKissmygrits on December 7, 2010 at 10:17 AM

Again, you must be one of those folks who thinks there mere act of someone like the President going to the negotiating table in response to someone else driving the conversation on a particular issue is caving.

Which means you must get rolled fairly often when it comes to negotiating anything.

BradSchwartze on December 7, 2010 at 10:23 AM

nonsense. as a percentage of the GDP, tax revenues are still below the FY2000 level.

you’re just making up stuff to justify increasing the deficit.

sesquipedalian on December 7, 2010 at 9:51 AM

Speaking of nonsense, please explain why government spending should be pegged as some fixed percentage of GDP.

strictnein on December 7, 2010 at 10:23 AM

Thoughts?

Indy82 on December 7, 2010 at 9:44 AM

Oh yeah, that’s exactly why it was done. Pure “triangulation”.

The Mega Independent on December 7, 2010 at 10:23 AM

The estate tax is one of the most outrageously unfair taxes there is. That the government, after taxing someone’s assets all their life, thinks it’s entitled to a cut of those assets when that life ends, is repulsive.

cartooner on December 7, 2010 at 9:58 AM

Ten years ago I played in a charity golf tournament and a Blue Dog Democrat Congressman on Ways and Means was a member of the foursome. At the time there was a lot of debate in Washington on the future of the estate tax. There was some talk that President Bush supported repeal of the tax altogether. That day the Congressman admitted that some liberals on the Committee supported an estate tax rate of 100%.

flyfisher on December 7, 2010 at 10:24 AM

I don’t know how much of an impact unemployment bennies are going to have, actually. The way they work, they are based on how long you were employed before being fired (thus, people who quit don’t get them). So people on unemployment don’t automatically get 99 weeks of paychecks unless they were employed for 99 weeks plus one calendar quarter. I.E. this only affects people who worked for over two years and a quarter at the same job, and since then have not had any work.

To take advantage of an additional 13 months means you would have had to been employed at the same job for 3 and a half years or more before you were fired.

I have to think that most of those on unemployment don’t qualify for that. Because people who have 3 and a half years at the same job weren’t the first let go, most likely. Sure, there’s lots, but most people probably were switching jobs, etc. So it’s not automatic that people are going to get another 13 months worth of checks. Only if they qualify. And a whoooole lot of people won’t.

Vanceone on December 7, 2010 at 10:24 AM

Considering that right now Republicans have absolutely no power in congress this is a good deal. We got something with nothing.
Now we have to start chipping away at all this other crap until 2013 when we can really roll it back and unleash the economy. Do stuff like kill the minimum wage (which artificially raises costs and gives the unions a big pay increase) end ethanol subsidies, and start privatizing social security and medicare.

Iblis on December 7, 2010 at 10:24 AM

The GOP caved like the spineless coward milksops they are.

Either someone makes the difficult choices to correct the system now or the system will correct itself and drag us down with it.

The GOP is thinking about winning elections, big deal, we’re screwed and tattooed by the economy so they can win a few extra seats and continue to bury us, just at a slower pace than the ‘rats would utilize.

Bishop on December 7, 2010 at 10:26 AM

As a conservative I hate this deal. For only a two year extension of the tax cuts Democrats should have gotten nothing. For a permanent extension Democrats could have gotten a little but still not nearly everything they got in this deal. Republicans have shown once again that they have absolutely no backbone.

Lizzy on December 7, 2010 at 10:26 AM

you’re both incoherent and ignorant. the cuts began nearly 8 years ago.

sesquipedalian on December 7, 2010 at 10:10 AM

Full steam ahead then! LOL.

Seriously though. What cuts? The government has been spending more than it takes in, with a few brief periods of sanity, since at least WW2. That is why we are over 14 trillion in debt. And since obama got elected, we are adding to that debt by over a trillion a year. Simply cutting spending to what occured in the last fiscal year that was pre-Obama would constitute the largest reduction of federal spending in US history.

Mord on December 7, 2010 at 10:27 AM

Republicans Won. They should have thrown that in Bambi’s face non-stop and said they will wait till 2011. I won should have been there only statement to throw back at OBAMA

PrezHussein on December 7, 2010 at 10:28 AM

Doesn’t an extension of unemployment benefits further deplete state unemployment funds?

hawksruleva on December 7, 2010 at 10:30 AM

Again, this still have to be approved by the lame-duck Congress. Between Bela Pelosi’s and Dingy Harry’s groups of lame quackers, they may not have the votes to do anything. Then it’s all around the Democrats’ necks.

pdigaudio on December 7, 2010 at 10:30 AM

Doesn’t an extension of unemployment benefits further deplete state unemployment funds?

hawksruleva on December 7, 2010 at 10:30 AM

Don’t worry, Obama will bail them out.

flyfisher on December 7, 2010 at 10:30 AM

AAAAHHHHH hahahah! I’m even dumber than the troll! I was talking about spending cuts and he was talking about tax cuts! woops.

Mord on December 7, 2010 at 10:30 AM

The tax cuts began in summer of 2001. Which is more than “nearly 8 years ago”. Now someone was saying something about ignorant……

angryed on December 7, 2010 at 10:16 AM

i’m glad you managed to hone in on the substantive part of my argument again.

sesquipedalian on December 7, 2010 at 10:31 AM

The GOP caved like the spineless coward milksops they are.

Bishop on December 7, 2010 at 10:26 AM

Tossing around insults like that doesn’t get anyone anywhere. Now apologize to all the spineless coward milksops you just offended by comparing them to the GOP.

The Mega Independent on December 7, 2010 at 10:32 AM

i’m glad you managed to hone in on the substantive part of my argument again.

sesquipedalian on December 7, 2010 at 10:31 AM

Your substantive argument is tax everyone at 180%. I was pointing out that you have no clue what you’re talking about, even when it comes down to basic dates.

angryed on December 7, 2010 at 10:34 AM

I don’t like the estate tax, despite doing a fair amount of trusts and estates work. I would have been far happier with extending the 2010 status quo with no estate tax, and no Generation Skipping Transfer tax, but that was not going to happen.

If nothing had been done, the estate tax exemption would have been only $1 million and the rate on estates in excess of $1 million would have been 55%. That would be crippling and would have basically been a lawyers’ full employment act as everyone would be scrambling to find new ways to avoid estate taxes.

So, I’m reasonably happy with the deal on the estate tax for my clients: it’s not as good as we’d have liked, not as bad as it could easily have been. We live to fight another day on this.

I’m more concerned about the extension of tax credits and unemployment compensation – the disincentive effects are real, but people in the street and lining up in breadlines would not be pretty or helpful either. A new approach to unemployment compensation/medium term welfare (which is what it is) needs to be found.

The payroll tax cut is all to the good, but to have real incentive effects, it would need to be made longer than 1 year.

CatoRenasci on December 7, 2010 at 10:34 AM

I agree with Hewitt, but the GOP probably did the right thing for the economy here, at least in the short run. They could have gotten the tax cuts done in January, but the disruption would have really caused problems in the markets.

hawksruleva on December 7, 2010 at 10:35 AM

The death tax is redistribution of wealth; period end of story. Idiots!

Keemo on December 7, 2010 at 9:35 AM

Not if you’re Ted Kennedy…

Khun Joe on December 7, 2010 at 10:35 AM

“And we get to use it as a club again in 2012.”

That is one of the upsides I see of the deal… two years from now it will be class warfare vs. The Republicans, and 9 out of 10 times an Independent voter will sympathize with the Republican viewpoint.

In addition, as Charles Hurt mentioned in the NY Post this morning (along with Jonah Goldberg on NRO), Obama may have done such harm to his own base that his liberal support turns on him in 2012 by staying home.

However, as I mentioned earlier, al though I am happy about the deal and do not wish for the American people to suffer through tax increases just because I dont want Obama to have any momentum going into 2012, I still worry that Obama, last night, won over a lot of easily impressionable Independent voters whose moods swing at the blink of an eye.

Indy82 on December 7, 2010 at 10:36 AM

By the troll libs,

Can you tell me the number of people you know who work for people receiving unemployment benefits? How about the number of times you’ve worked for someone on welfare? Or the number of people on welfare you know running start ups and employing people?

The answer of course is 0. Yet for some reason you are all convinced that the way to increase employment is to tax the crap out of the people producing jobs and give all the money to the people producing nothing.

angryed on December 7, 2010 at 10:36 AM

The GOP caved like the spineless coward milksops they are.

Either someone makes the difficult choices to correct the system now or the system will correct itself and drag us down with it.

The GOP is thinking about winning elections, big deal, we’re screwed and tattooed by the economy so they can win a few extra seats and continue to bury us, just at a slower pace than the ‘rats would utilize.

Bishop on December 7, 2010 at 10:26 AM

I agree. I’ve owned and operated my own businesses for 30 years now; I can tell you that this was a bad business deal. Death by a thousand swords. This is a time in our history when we need decisive leaders in the GOP as the other party are nothing but marxists. Again, watch this video and ponder what this man is telling us.

http://www.morningstartv.com/oak-initiative/marxism-america

Keemo on December 7, 2010 at 10:36 AM

I agree with Hewitt, but the GOP probably did the right thing for the economy here, at least in the short run. They could have gotten the tax cuts done in January, but the disruption would have really caused problems in the markets.

hawksruleva on December 7, 2010 at 10:35 AM

So what? Democrats have caused 4 years of disruption and they got what they want. A few weeks of disruption would be worth making the tax cuts permanent don’t you think?

angryed on December 7, 2010 at 10:38 AM

Considering that right now Republicans have absolutely no power in congress this is a good deal. We got something with nothing.
Now we have to start chipping away at all this other crap until 2013 when we can really roll it back and unleash the economy. Do stuff like kill the minimum wage (which artificially raises costs and gives the unions a big pay increase) end ethanol subsidies, and start privatizing social security and medicare.

Iblis on December 7, 2010 at 10:24 AM

Only the hard-line conservatives disagree with you, but the reality is, we did not really have the power to demand the whole pie. I still love this comment made over at Huffpo last night:

Wowww!!!! Think you guys are mad now???? Wait till redistrict­ing sets up GOP Majorities forrrrrrre­eeeeeevvvv­vvvvaaaaaa­ahhhhhhhhh­!!!!!!!!!!­!!!!!!!!

I doubt this conservative will last long at Huffpo, but the reality is this could all come to fruition.

Rovin on December 7, 2010 at 10:38 AM

“Oh yeah, that’s exactly why it was done. Pure triangulation.”

The question is… will it work? And if so, to what degree?

Indy82 on December 7, 2010 at 10:39 AM

Unless the tax cuts are made permanent then it is just more of the same….in two yrs we have a looming tax hike…so how is the economy going to recover? Where is the incentive for any kind of job growth, I wouldn’t want to work hard/expand for two yrs just to have the gov come along and tax me for it. This is no solution…we’re right back where we were two yrs ago and the left will be able to say the extensions didn’t work.

tinkerthinker on December 7, 2010 at 10:41 AM

Obama may have done such harm to his own base that his liberal support turns on him in 2012 by staying home.

Indy82 on December 7, 2010 at 10:36 AM

No chance, unless they can find someone more reliably communist.

The Mega Independent on December 7, 2010 at 10:41 AM

Update: Just to clarify, the Death Tax was going to 55% on January 1, with an exemption to the first $3 million. Had we done nothing, that was the new status quo. Keep that in mind.

If I were negotiating for the Republicans I would have given this one away. Make the threshold $10M and anything above that tax at 60%. This would satisfy people who want to stick it to the rich and it would also protect the family farm types. Only people really hurt are the Paris Hiltons of the world and that’s cool by me.

angryed on December 7, 2010 at 10:44 AM

Doesn’t an extension of unemployment benefits further deplete state unemployment funds?

hawksruleva on December 7, 2010 at 10:30 AM

YES

The Republicans can’t just maintain the status quo. The Left is upset it had to compromise. Imagine what happens when all the crap they passed for the last 2 years, starts getting defunded and repealed. If the Republicans don’t push back the States are going to be affected adversely.

The Republicans didn’t just pick up record seats Nationally they picked up seats in the State legislatures.

For some reason the new coastal party, thinks their legislative record is popular – all evidence to the contrary.

Dr Evil on December 7, 2010 at 10:44 AM

The question is… will it work? And if so, to what degree?

Indy82 on December 7, 2010 at 10:39 AM

I want to keep my tax cuts, but I hope that the Republicans in Congress will fight as hard as they can not to accept Urkel’s deal.
(Even with tax rates staying at Bush levels, we’re going to have to pay for all those unemployment benefits sometime soon. When? and how much will it cost us later?)
And if keeping the Bush tax cuts stimulates the economy–which it will–maybe all those folks won’t even need unemployment bennies because people will start hiring again.
Thirdly, I think Obama’s deal sends a weird message: on the one hand, you get benefits if you don’t work
(unemployment), but smaller benefits if you do work (payroll tax rebate)???
We’re paying people to do both and that’s crazy.

Jenfidel on December 7, 2010 at 10:44 AM

The question is… will it work? And if so, to what degree?

Indy82 on December 7, 2010 at 10:39 AM

How much it works depends on way too many other factors.

For now, it just gives him a talking point in the debates. “I kept tax cuts for everyone of all income levels as a compromise with the eeeeeeevil capitalist Rethugs. I’ve known socialists. I’ve worked with socialists. And I am no socialist.”

The Mega Independent on December 7, 2010 at 10:45 AM

sesquipedalian on December 7, 2010 at 9:51 AM

Raise taxes high enough and I’m sure you can reverse that. Yay!

lorien1973 on December 7, 2010 at 10:46 AM

angryed on December 7, 2010 at 10:44 AM

So, as long as the bar is set to your specs, wealth redistribution is ok with you?

Rovin on December 7, 2010 at 10:47 AM

Only people really hurt are the Paris Hiltons of the world and that’s cool by me.

angryed on December 7, 2010 at 10:44 AM

Once Marxist/Socialist class warfare is codified like that, but “punishing” “the rich” by targeting them for the size of their fortunes,individual wealth accumulation and creation in this country are doomed in more ways than one.

Jenfidel on December 7, 2010 at 10:47 AM

i’m glad you managed to hone in on the substantive part of my argument again.

sesquipedalian on December 7, 2010 at 10:31 AM (emphasis added)

Let’s home in on (zero in on, as a homing pigeon) rather than hone (sharpen), shall we?

http://www.wsu.edu/~brians/errors/hone.html

BuckeyeSam on December 7, 2010 at 10:48 AM

angryed on December 7, 2010 at 10:44 AM

Why?

lorien1973 on December 7, 2010 at 10:49 AM

Yet for some reason you are all convinced that the way to increase employment is to tax the crap out of the people producing jobs and give all the money to the people producing nothing.

angryed on December 7, 2010 at 10:36 AM

because giving people money to spend stimulates growth. increasing demand creates jobs, not making the rich even richer.

sesquipedalian on December 7, 2010 at 10:52 AM

So the death tax is the stickler ?
News flash as a couple if you have assets of 10 million then hire a lawyer and create a trust or some other instrument.
Really how many folks are worth 5 million ? Of that subset how many arent smart enough to use an instrument to pass the $ along and evade the tax man ?
They still have to vote on it ?
What would be funnier, DEMS dont vote for it or Republicans shy away
Either way it makes OBAMA look weak and puts another lofty campaign promise he failed miserably on

ELMO Q on December 7, 2010 at 10:55 AM

(Even with tax rates staying at Bush levels, we’re going to have to pay for all those unemployment benefits sometime soon. When? and how much will it cost us later?)
Jenfidel on December 7, 2010 at 10:44 AM

As I said in another thread today:

I really believe this latest extender should be written so that the last six months be a graduated reduction in the benefits, (each month the full amount would be reduced by “X%” until the last month the check is almost at zero). This gives each recipient (who’s been on the 99 + 13 more months), the incentive and reality that the “government dole” is going to end.

Rovin on December 7, 2010 at 9:33 AM

At some point we do have to ween the unemployed off the permanent dole or this will become another Dem welfare class.

Rovin on December 7, 2010 at 10:56 AM

Look this is just the first step in undoing a CENTURY OF PROGESSIVISM. People seem to be forgetting that Pelosi and reid are still in charge right now. The fact that we’re getting ANYTHING right now is GOOD. Not great, but good. the ball is moving the right way.
I was expecting the libtards in congress to go scorched earth and really screw us over, and they still might.
When we get the gavel we can go on offense, right now its a holding action. And the big things won’t come until 2013. Its just the nature of our politics.
Until Obama and Reid are gone (from power) we’re gonna have to fight hard just to keep things in check.

Iblis on December 7, 2010 at 10:57 AM

BuckeyeSam on December 7, 2010 at 10:48 AM

fail.

sesquipedalian on December 7, 2010 at 10:57 AM

They needed to get a victory on this point before the tax hikes took effect,

Why?

Why wouldn’t we have been in a stronger position in January?

In any ordinary political environment this might have made sense. But it ignores the perilous truth of our times, of Obama, and the path of destructiveness he has led us. It’s as if we’ve learned nothing. Quick, let’s cut a deal! We can’t be seen as obstructionists! We have to work with the White House! That’s what really matters!

We needed to step back, take stock of our victory, and come up with a larger plan that further exposed Obama and forced him into scathing ideological confessions and concessions. On that, we should have worked and waited until January. The lame duck session should have been focused on exposing and defeating the Left’s 11th hour legislative Turkish bazaar. Now, what about that Dream Act? Are we going to bend on that because Obama bent on tax cuts? Does anybody even care anymore?

Idiocy and weakness.

rrpjr on December 7, 2010 at 10:58 AM

This is making me think Obama got the short end of this deal:

Sen. Bernie Sanders, an independent from Vermont who votes with Democrats, told MSNBC last night that he’ll filibuster the deal…Liberal Rep. John Conyers, D-Mich., is quoted in AOL’s Daily Politics that he will also try to do whatever he can to stop the compromise.

These are Obama’s fellow travelers in the Marxist wing of the party and I’m now convinced that Obama will get primaried, if he runs at all.

RadClown on December 7, 2010 at 10:59 AM

Comment pages: 1 2