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Why the Bush tax cuts won't need 60 votes

When Democrats regained Congress in 2006, they tried to draw a contrast between their fiscal responsibility and the free-spending ways of the Republicans by forcing themselves to live under PAYGO rules. That meant, in the absence of 60 votes to waive the rule, non-emergency spending or tax cuts would have to be paid for. No increasing the deficit to get what you want.

Except when it comes to the Bush tax cuts for people making less than $250,000. As Ryan Donmoyer explains, those are exempt from PAYGO, though the high-income tax cuts aren't:

Budget rules adopted by Congress earlier this year allow lawmakers to extend them without offsetting revenue increases. That's a huge break: Keeping the cuts for the 130 million households earning less than $250,000 will cost about $255 billion a year.

There is no similar budgetary escape hatch that would let Republicans extend the tax cuts for the wealthy. They must find $55 billion in revenue to make up for the cost of keeping top marginal rates at 35 percent and dividends and capital gains taxes at 15 percent, among other reductions.

PAYGO, however, can be waived with 60 votes, so if Republicans can find 19 Democrats willing to vote to extend the tax cuts for the rich without any offsets, they can pass them.

By Ezra Klein  |  July 19, 2010; 10:25 AM ET
Categories:  Taxes  
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Comments

OK, so what am I missing here? If the tax cuts for the below $250,000 crowd are worth $255B a year, and those for the wealthy are worth only $55B, how were the Bush cuts primarily for the wealthy???

Posted by: jifster | July 19, 2010 10:48 AM | Report abuse

jifster,

many more in the middle class than in the "wealthy" category.

That being said how are they going to convince anyone (in this deficit mad climate) to pay a price of $255 BILLION to keep the cuts?

Posted by: visionbrkr | July 19, 2010 11:00 AM | Report abuse

@vb: Didn't you hear? Tax cuts don't need to be paid for. John Kyl said it and Mitch (the turtle) McConnell said that MOST OF THE REPUBLICAN CAUCUS DON'T THINK THAT TAX CUTS NEED TO BE OFFSET with well anything.

"You do need to offset the cost of increased spending. And that’s what republicans object to. But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans."

On the one hand, he attacks Obama for rising deficits but at the same time says that multibillion dollar tax cuts “never” have to be offset.

You just don't understand Republican economics.

Posted by: srw3 | July 19, 2010 11:15 AM | Report abuse

Will President Obama then veto any such bill passed by Congress where they are giving $55B tax cuts to rich (balanced or un-balanced)? Is he ready to make that stand?

Why is it not effective politics making a 'stand on such a veto' in post-Nov 2010 world? Americans will love it when all the talk will be about deficit commission and its recommendations.

If Congress does not dare to pass such 'tax cuts for rich', President should ensure that he gets the credit too.

Unless President Obama starts putting forward such clear and stark choices in front of Americans and unless he starts differentiating / contrasting against GOP; people will continue to punish President Obama and Dems poitically.

Posted by: umesh409 | July 19, 2010 11:20 AM | Report abuse

poor diction... rich is a stock, income is a flow.

Posted by: cdosquared5 | July 19, 2010 11:59 AM | Report abuse

Jesus, just let them all expire and then do some more temporary stimulus for people under $250k.

Letting a temporary bill expire is not the same as raising taxes.

Posted by: MosBen | July 19, 2010 1:25 PM | Report abuse

The comments to this entry are closed.

 
 
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