President Obama and congressional Republicans apparently have reached a deal. The word is that the Bush tax cuts will be extended for everyone for two years. This includes all income, dividends, and capital gains taxes. In exchange, unemployment benefits will be extended to those who qualify for them for up to 13 months. There will also be a reduction of the payroll tax in 2011.
This strikes me as a very good deal for Republicans. Extending unemployment benefits – a humanitarian move that isn’t entirely without merit – is a small price to pay for avoiding tax increases. Moreover, in a sense Obama has saved Republicans from themselves. Republican members would be vulnerable to a potentially powerful attack if they approved continued tax relief for millionaires, while refusing continued relief to folks who are looking for work but can’t find it because the economy isn’t producing many jobs.
The main benefit for President Obama and the Dems (to the extent they buy in) is that they avoid being held responsible (to a significant extent) for a large tax increase on the middle class. In addition, if the deal is approved quickly, Democrats may get the opportunity to attempt to enact legislation they like. All Senate Republicans were committted to blocking the Democratic agenda until the tax issue was resolved. But some Republican Senators have expressed their possible willingness to vote for liberal leglislation such as ending Don’t Ask, Don’t Tell, once taxes are sorted out.
In essence, then, the Republican leadership, through skillful maneuvering, laid the groundwork for what is something pretty close to capitulation by the president.
JOHN adds: I would go farther. It is a great deal, because of President Obama’s volunteering the 2 percent payroll tax holiday. We and many other conservatives have long argued that this measure would aid job creation more than just about anything the government can do. By abandoning any effort to raise taxes and adopting a favorite conservative tax cut, Obama has admitted that the Republicans were right all along.
No wonder many Democrats are gnashing their teeth in frustration! They have now been in power for four years, and have made no move to repeal the reviled Bush tax cuts. When the issue finally couldn’t be avoided any longer, they capitulated without a fight and added a further tax cut of their own. Members of the party’s base must be wondering: if the Democrats don’t stand for increasing taxes, what do they stand for?
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