A deal to extend all Bush tax cuts--not just those going to families making less than $250,000 a year--is being forged by the White House and Republican lawmakers in exchange for an extension of unemployment benefits to people who've been out of work for months. Congressional Democrats will accept the deal, but they're not happy about it, The New York Times' David M. Herszenhorn and Carl Hulse report. Others aren't entirely sure about even the acceptance.
House Speaker Nancy Pelosi thinks the White House is making a huge concession without getting much in return from Republicans. But the White House wants to move quickly past the tax debate in order to pass other legislation, including a repeal of Don't Ask Don't Tell and the ratification of a nuke treaty with Russia. Herszenhorn and Hulse write that the tax cut extension will be for just a year or two, even though a three-year deal would keep the issue out of the 2012 presidential campaign. Is this politically wise? Fiscally wise? Commentators analyzing the deal already have a wide variety of takes.
- A Potential Revolt Among House Democrats Joe Biden and the White House chief of staff met with House Democratic leaders, The Huffington Post's Howard Fineman reports, for two hours Saturday to figure out "how to cajole liberal Democrats" into accepting the tax deal. Last week the House voted 234-188 to extend the cuts only for those making less than $250,000, Fineman writes. "If all House 179 lame-duck-session Republicans support a two-year extension (by no means certain), Pelosi still would need to round up 39 Democratic votes. ... The assumption is that Democrats would not want to risk blowing up the deal. ... But some Democratic backbenchers, increasingly estranged from the White House and the president, seem willing to do so--or at least talk bravely about it."
- Idiots! Mother Jones' Kevin Drum fumes. "What in God's name are the morons who pass for leaders of the Democratic Party thinking? If they've finally backed themselves into a corner where they're forced to extend all the Bush tax cuts, then OK. I'm resigned to it. But they're seriously planning to extend the tax cuts for two years, even though that means restarting the fight during the 2012 campaign season, 'because they see it as politically helpful to them in painting Republicans as defenders of the rich'? And they think this why?" Drum asks. The plan didn't work so well in 2010, clearly. "The only non-moronic spin I can think of for this strategy is that 2012 is a presidential election year, not a midterm. And somehow, Barack Obama's silver tongue will carry the day in a way it couldn't when he himself wasn't campaigning."
- Letting All the Tax Cuts Expire Wouldn't Be So Bad, Paul Krugman argues at The New York Times. Republicans insist that all the tax cuts must be extended, or none at all. "What should Democrats do? The answer is that they should just say no. If G.O.P. intransigence means that taxes rise at the end of this month, so be it." Krugman says Democrats should call the GOP's bluff, because "while raising taxes when unemployment is high is a bad thing, there are worse things. And a cold, hard look at the consequences of giving in to the G.O.P. now suggests that saying no, and letting the Bush tax cuts expire on schedule, is the lesser of two evils."
- More Support for Hiking Taxes on Millionaires Than You'd Now From This Deal, Michael Tomasky observes at The Guardian. The Senate rejected a proposal, pushed by Sen. Chuck Schumer, that would extend everyone's tax cut for their first million dollars in income. Obama personally opposed it, Tomasky reports, because he thinks the legislation "would in effect establish the idea that anyone earning $400,000 or $800,000 or $999,999 is 'middle class,' and the Democrats shouldn't have any truck with that idea." Interestingly, "all the Democrats from red states who are up for reelection in '12 who'd voted with the GOP on the question of raising rates on households above $250K--Ben Nelson, Jim Webb, Joe Manchin--voted" for Schumer's plan.
- Republicans Have a Spine After All, Big Government's Dan Mitchell rejoices. "I fully expected that GOPers would fold on this issue several months ago because Democrats were using the class-warfare argument that Republicans were holding the middle class hostage in order to protect 'millionaires and billionaires.' Republicans usually have a hard time fighting back against such demagoguery," Mitchell writes. But Republicans stuck together. "At the risk of being a Pollyanna, I wonder if the politics of hate and envy is falling out of fashion."
- The Mechanics of This Deal Are Tricky, The conservative National Review's Daniel Foster cautions.
Will Republicans and Democrats alike let each piece of the compromise go through the regular order without a filibuster, or will each caucus have to cough up the handful of votes necessary to get to 60? Some Democrats are even talking about allowing all the cuts to expire and extending the debate into the next Congress. All of this suggests Republicans might have to carry the weight on the compromise votes. But on the Republican side, things could get interesting if one or several Senators decide to take a stand--a la Senator Bunning--on offsets for any UI extension.
- A Deficit Hawk's Worst Nightmare, Derek Thompson writes at The Atlantic. "Six months ago, it looked like the president might raise taxes on families making more than $250,000, thereby saving the Treasury about $700 billion in revenue. Today, we're talking about extending the entire behemoth and adding on with unemployment insurance and further tax cuts for business and families. Even if those additional measures are wise (I'm torn on extending MWP, but totally behind more UI), it will be difficult to defend this deal on the basis on medium-term budget sanity without more attention to future cuts and tax changes."