Charles Krauthammer argues that the Republicans got snookered by President Obama on the tax deal. He believes that the deal constitutes a stimulus that exceeds the $814 billion package Republican so deplored in 2009.
This claim depends on characterizing the continuation of the Bush tax cuts as “stimulus.” It strikes me as counterintuitive to view the maintenance of existing tax rates as stimulus. But even if one does so, on the theory that the baseline is what the world would look like next year when the Bush rates would have expired, Krauthammer’s core argument is badly flawed.
In determining whether Republicans were snookered, the test isn’t how much “stimulus” they agreed to. The issue is how much they agreed to that they don’t like (or shouldn’t like). Republicans like the Bush tax cuts, so they clearly weren’t snookered into agreeing to that component of the package.
Most Republicans also like the payroll tax reduction. Indeed, many (including me) argued in 2009 that the stimulus should have consisted of payroll tax relief. So again, no snookering here.
The next component of the deal is the extension of unemployment insurance. Most Republicans probably oppose this, but not very vehemently. Like the payroll tax, and unlike the 2009 stimulus, it puts money directly into people’s hands. In this case, the people are, by and large, victims of the poor job market, and thus sympathetic figures. To have compromised on this component of the tax deal hardly amounts to being snookered.
Finally, the tax deal contains some 2009 stimulus-style pork. For example, as Scott notes below, it includes almost $5 billion in subsidies for corn-based ethanol. This kind of spending is legitimate cause for concern, of course. But the inclusion of a few such boondoggles does not amount to a victory for President Obama, who caved on tax rates, and a defeat for the Republicans.
The key question is, how much of this bad stuff is in legislation and, above all, what is its collective price tag. At some point very far short of $814 billion, the deal does become a second stimulus package in a highly objectionable sense. At that point, it would no longer be a good deal for Republicans and it would no longer worthy of conservative support.
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