Friday, December 10, 2010

An Awful Deal on Taxes and Spending

It's often been said that you know you have reached a good compromise when you find a deal that nobody likes but everybody is willing to accept. The negotiating process starts with two sides with opposing goals and leaves with both sides feeling that they got some things they didn't like in exchange for some things that they did. The sausage making itself is often pretty ugly, but the sausage itself doesn't taste all that bad at the end of it.

I wish I could say that this is the case with the deal that the President cut with Republicans on the Bush era tax cuts. Sad to say, I think this is a case where the compromise was actually worse than the starting point for either side. It isn't often that I oppose virtually every provision of a bi-partisan bill (I'm usually the one advocating for them), but just about everything about this deal is wrong.

Let's start with the tax cuts. $900 billion in reduced revenue over the course of the next two years and no permanent solve around our tax structure. In other words, we are pissing away $900 billion and are going to find ourselves in precisely the same place come 2012. Do any of you have ANY hope that cool heads will reach a reasonable compromise in a Presidential election year?

But don't tax rates need to be maintained to protect the fragile economy? This popular line is proven nonsense. President Clinton passed a large tax increase on the heels of the 90/91 recession and it didn't sink the fact, we had one of the strongest periods of economic growth in our history. Ronald Reagan signed a significant tax increase package in 1985. It would be hard to argue with the success of the second half of the 80s. Taxes don't spur recessions, unless they are very extreme. Asset bubbles and monetary crises do. If you give me the choice between lower taxes and a smaller deficit, I make the same choice every time, and it isn't for the tax cuts.

And look at the cuts for the rich...and not just the living rich either, huge breaks in the estate tax, basically a giveaway to the dead rich. Explain to me how encouraging people not to spend money while they are alive helps stimulate the economy again?

Now, on to the spending hikes. And make no mistake about it, extending unemployment benefits BEYOND 99 weeks is a spending increase. After nearly a full two years, if you are taking government money, it is no longer unemployment insurance, it is welfare. And we have no money to fund it.

But don't we need extended unemployment insurance because of the lack of jobs out there? Beyond the ordinary 26 weeks, absolutely. But beyond 99 weeks? It isn't like there are NO jobs out there...minimum wage jobs abound. Sure, there may not be a job in your town in your field at the income you want. But after two years, it's time to take a dose of reality and move, change fields or accept lower pay. A far better path would be an expanded Earned Income Tax Credit. Then we would be subsidizing the people who DO take the minimum wage jobs and helping them provide for their families, rather than paying people not to take said jobs.

This compromise is the height of irresponsibility. Lower taxes AND higher spending when we just saw a deficit reduction commission report on how much we need to CUT spending and RAISE taxes? Where are the deficit hawks? Heck, where are the people who can do basic math?

I voted Republican (for the first time in a long time) during the mid-terms to force the parties to the table to address the deficit. So far, I'm decidedly unimpressed with both the GOP and President Obama.

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