The Republicans' plan to extend the Bush tax cuts will increase the deficit in 2011 by $36 billion over the Democrats' plan to let the cuts expire for families earning more than a quarter-million dollars.
Thirty-six billion is about 1 percent of our budget and 2.5 percent of our projected deficit in 2011. That's right. The difference between Obama and the Republicans' tax policy for 2011 is 2.5 percent of the deficit. It is, as Peter Coy noted, evidence of the narrowness of Washington debates.
One should prefer an extra $36 billion to go somewhere closer to the crisis than the pockets of the richest two percent. As the graph* above shows, the folks receiving the largest tax cuts under the Republicans' preferred plan are millionaires. The average millionaire tax cut under the Republicans' plan is 17 -- seventeen! -- times greater than the Obama tax cut.
So the Bush tax cut debate is lopsided. When you put the Obama and GOP plans side-by-side, the effect on low-income Americans is negligible. The effect on middle-income Americans, negligible. The effect on the lower-upper class up to $500,000, negligible. The one-year impact on our debt, negligible. But the impact on millionaires is a factor of seventeen.
In short, two sorts of people should be getting excited about the tax cut debate. The first is millionaires who can save a hundred thousand dollars every year under the GOP tax plan. The second is deficit hawks (many of whom are, in fact, millionaires) who recognize that over a ten year horizon, the Bush tax cuts add between a quarter and a third of our total debt accumulation.
*The Washington Post really has a really fantastic economic graph and chart department that always seems to produce the clearest, most intuitive pictures about public policy. Nice job, guys.