Liberals are livid over the tax deal President Obama has cut with congressional Republicans. Obama only added more grist to their mill with his denunciation yesterday of those who prefer “the satisfaction of having a purist position” to “victories for the American people.” Obama is having a Harriet Miers moment, angering the crowd that would rather see minimum wage earners pay higher taxes than lose the opportunity to soak a single rich person. It’s as if he’s begging for Dennis Kucinich to challenge him.
On the Right, RedState’s Erick Erickson hates the deal, which he says constitutes “subsidizing unemployment.” Club for Growth President Chris Chocola gave it a stern condemnation: “This is bad policy, bad politics, and a bad deal for the American people.”
But forgive me if I imagine them laughing — just a bit — on the inside.
What have Republicans given up in this deal? First, the deal extends for 13 months the 99-week unemployment benefits regime, instead of the 39 weeks that employers actually pay for.
If you’re a conservative, this slightly irks you — I mean, really, 99 weeks? But you also have bigger fish to fry than newly jobless people who have probably been contributing to the system for years.
Besides, put yourself in presumptive Speaker John Boehner’s, R-Ohio, shoes. You’ve just won an election because 56 percent of Americans, according to exit polls, believe that “government is doing too many things better left to businesses and individuals.” Your caucus has 83 freshmen, most of whom want to abolish the Departments of Education, Commerce, and Energy before lunch on their first day.
Do you really want your first vote on the House floor to be an extension of unemployment benefits? President Obama has just relieved Boehner of that headache. Hopefully, he will use his majority’s political capital to cut spending on higher-priority items.
The more serious GOP concession is the resurrection of the inheritance tax. Its absence this year has not harmed anyone except perhaps the life insurance industry. Over the years, this tax has hastened media and business consolidation, and it raises very little revenue for the government. It has no redeeming qualities.
But it’s also a very small part of the picture. And its temporary revival comes with a lower rate (same as regular income) and a higher exemption than existed in 2009. What’s more, it has to be dealt with again in two years — perhaps with a different president — at which point it can still be abolished.
Not ideal, but now consider what you’re getting in exchange.
First, the top marginal income tax rates — the ones that matter most for job creators — are being kept where they are.
Second, they have to be dealt with again in two years, which means they will be an issue in the 2012 presidential race.
Third, you prevent the top marginal rate from being decoupled from everyone else’s tax rates, which could have created a situation in which the supply-side tax policy has narrower support.
Fourth, the civil war on the other side.
Finally, some extra gravy: You keep Obama’s tax break for low earners. And instead of doing it with the strange, hard-to-calculate credit he created, you do it by cutting two points from everyone’s payroll taxes.
In the future, I think this will be called the “Obama tax cut.” As in, “Mr. Speaker, this bill would make the Obama tax cut permanent by letting workers save the money in their personal Social Security account.”
For a minority party in Congress, the Republicans probably could have done a lot worse.
David Freddoso is The Examiner’s online opinion editor. He can be reached at [email protected].
