The guys at the Tax Policy Center name 2010's worst moments in fiscal policy in "the fourth annual Lump of Coal Award."
Bronze, silver and gold all go to last week's $850 billion tax cut deal:
3. The estate tax. First Congress allowed the tax to expire, granting a windfall to the heirs of billionaires who happened to die this year. Then, by failing to act until a week ago, it created massive uncertainty over what would happen to the levy in 2011 and beyond. Had Congress done nothing, the estate tax would have reverted to relatively tough 2001 rules. Instead, Congress restored the tax in a more generous form than ever before. The heirs of a handful of super-rich estates benefit, and the national debt rises by another $70 billion. Heckuva job all around.
2. Addressing all the expiring Bush-era tax cuts. Well, Congress did it, though it waited 'til the clock nearly ran out. But who could blame the pols: They've only known for a decade that the 2001 tax cuts would expire this year. The issue became a grotesque political football and, in the end, Congress and President Obama agreed to an extension of the law that combined the worst of the Democratic and Republican agendas. And because the deal is again temporary, we get to have the same argument again in two years.
1. The winner is: Senate GOP Leader Mitch McConnell (R-KY), who called the $858 billion tax cut and spending bill he helped engineer a "step in the right direction" toward deficit reduction. Only in Washington can you spin an $858 billion increase in the debt as a step in the direction of deficit reduction. For that bit of high rhetorical legerdemain, Mitch McConnell wins our 2010 Lump of Coal Award with George Orwell Newspeak ribbon.
In 2010, the question at the bargaining table was how much to lower taxes and expand the deficit. In the next two years, Democrats and Republicans will face the opposite question: How much to raise effective tax rates and close the deficit.
Read the full story at TaxVox.
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