The House Democrats voted yesterday to extend the "middle class" Bush tax cuts. The Senate Democrats appear likely to do the same, although they risk being filibustered by Republicans, who want an extension of all tax cuts for all income levels. Economist Mom puts the debate in context:
What a juxtaposition to have President Obama’s deficit-reduction commission release its final report while the Administration “negotiates” with Congress on whether all of the Bush tax cuts, or just most of them, should be permanently extended (and deficit financed). The media has been reporting that whether the bulk of the Bush tax cuts will be extended or not is not the issueit is whether the upper-bracket ones benefitting only the rich will be included as well, and what constitutes “rich.” (That floor may be moving up all the way to $1 million.)
Let’s remember that the permanent extension of “just” the “middle-class” Bush tax cuts, as President Obama has proposed, would add about $2.2 trillion to the debt over the next ten yearswithout interest costs and without the associated extension of Alternative Minimum Tax relief. Such extension would preserve the full value of Bush tax cuts for 97-98 percent of households while continuing to give the largest dollar value of tax cuts to those above the $250,000 threshold. (That’s because those in the upper tax brackets have income that passes entirely through the lower brackets.) Extending the upper bracket cuts along with the rest would raise the ten-year cost to close to $3 trillion (again, without interest). So the Administration and Congress are debating over whether we should commit to over $2 trillion, versus closer to $3 trillion, in deficit-financed Bush tax cuts.
I have rarely been more depressed by the political leadership in this country. At a time when everyone knows we need to be dealing with the debt, we are adding massively to it, because the Democrats and the president seem incapable of making the case for anything, and because the GOP is as ideological as it is politically autistic.