Right Thinking From The Left Coast
Reality is merely an illusion, albeit a very persistent one. - Albert Einstein

Monday, November 08, 2010

Tax Movement

Well, that didn’t take long:

President Obama said a Republican proposal to preserve the full array of Bush administration tax cuts for two more years presents a “basis for conversation” that could lead to a compromise as lawmakers prepare to meet next week for a high-stakes showdown over taxes.

The compromise that Obama is proposing is permanent tax cuts for those under $250,000 and a two-year extension for the rest.  This seems imminently reasonable.  Two years gives the economy some more time to recover.  But at the same time, it leaves the door open in case taxes have to be raised to pay for the massive commitments we’ve made to Medicare, Social Security and defense.  It also gives some time to do what we really need to do—enact massive tax reform to eliminate the hundreds of billions of deadweight loss the current system imposes upon us.  Resident GOP Sane Person Paul Ryan has argued for precisely this scenario.  And cooperating with Obama on this could lay the groundwork for real cuts in spending.

(While we’re no that subject, Cato has a rundown of the various proposals to cut spending.  It’s pretty interesting including a joint proposal from USPIRG and NTU that would cut $600 billion over five years.  It’s not impossible.  But it will take a lot of willpower.  And, unfortunately, bi-partisan covering fire.)

Right now, the GOP is saying they won’t take this deal.  But the alternative is to pass a permanent cut that the President vetoes, which accomplishes nothing.  This doesn’t preclude a later tax cut extension.

This is the real test for the GOP—are they more interested in governing or in bashing Obama?

Posted by Hal_10000 on 11/08/10 at 12:30 PM in Politics   Law, & Economics  • (0) TrackbacksPermalink
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