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A reasonable conversation we're not going to have

what_should_we_do_with_the_bush_tax_cuts_.png

Here's what I think is going to happen with the Bush tax cuts. The cuts for the rich are likely to be extended for at least two years. The cuts for the middle class are sure to be extended for even longer than that. Total cost to the deficit over the next 10 years? More than $3 trillion, and maybe more than $4 trillion.

But according to a Pew poll, the American public isn't as sure about this as the politicians are. A slight plurality -- 31 percent -- want all the tax cuts repealed. Thirty percent want the cuts for the rich extended. In other words, opinion is divided. Andrew Therriault comments:

This is pretty amazing. We could argue to no end about the reasonableness of (effectively) raising taxes during a recession, but that’s not the point. Nor are the exact numbers themselves gospel – I imagine more than a few respondents are reacting to the “Bush” part of “Bush tax cuts”, and the option of sticking it to the unspecified “wealthy” does summon the populist rage in a bipartisan fashion. What’s really important here is that, while Democratic lawmakers are clamoring to get on the tax cut bandwagon (or off of the tax increase bandwagon, if you’re thinking about attack ads), Americans appear willing to have a reasonable conversation about taxes -- that is, one in which raising taxes is at least on the table.

Anyone want to place a bet on whether they'll actually get that conversation?

By Ezra Klein  |  August 2, 2010; 10:54 AM ET
Categories:  Taxes  
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Comments

so once January comes will we be calling them the "Obama tax cuts"??

Or if some get their way and there is a two year reprieve will we end up with a similar situation as the SGR with medicare payments to doctors are?

Let them go. If they were as bad as liberals made them out to be when they were enacted then let them go.

Posted by: visionbrkr | August 2, 2010 11:27 AM | Report abuse

How much money would repealing the other unfunded Bush program, Medicare Part D (prescription drug benefit)save over the same time period?

Posted by: jnc4p | August 2, 2010 11:28 AM | Report abuse

jnc4p:

Much of Obamacare's costs are offset by fixing some of the costly aspects of Bush's part D scam.

Posted by: lol-lol | August 2, 2010 11:43 AM | Report abuse

He had me until:
"one in which raising taxes is at least on the table"

This is 'raising taxes' in the same way that a product coming off of sale pricing is a 'price increase'.

Until pundits start calling this what it is, how can the American public possibly have a reasonable conversation about it?

Perhaps the original 'tax cuts' should have been called a 'Temporary tax reduction'. Or like in VA with the car tax where it still technically in full effect but the gov't rebates 70% of it.

Posted by: rpixley220 | August 2, 2010 11:54 AM | Report abuse

Isn't "repeal" the wrong word here? I thought repeal was when you changed an existing law, not when you let it take effect. (Yeah, I know that makes it harder to explain, but using "repeal" is buying into exactly the dishonest frame that the GOP set up 10 years ago.)

Posted by: paul314 | August 2, 2010 12:08 PM | Report abuse

I think these Pew results show the public conversation is just about over Ezra. Look at these numbers this way:

Let the Bush tax cuts for the rich expire: 58%
Let the Bush tax cuts for the middle class expire: 31%
Extend the Bush tax cuts for middle class: 30%
Extend the Bush tax cuts for the rich: 30%

That seems pretty clear to me what the most popular course of action is.

Posted by: andrewlong | August 2, 2010 12:31 PM | Report abuse

This split among the electorate could be explained easily by basic self-interest. About a third of the population doesn't think that it will be affected much by restoration of Clinton-era tax rates. Another third thinks of itself as middle-class, and wants to preserve the middle-class tax cuts, but is happy to have the rich pay more. And the remaining third consists of people who are either wealthy, aspire to be wealthy, or identify with the wealthy, and don't want the wealthy to pay more. The people who responded based on what they think is in the best interests of the country would probably fit into a small D.C. hotel conference room, and would cancel each other out.

Posted by: ghall5 | August 2, 2010 12:32 PM | Report abuse

One possible interpretation of that poll result:

When a three-choice poll splits evenly three ways, it can mean that no one really has any firm opinion.

Posted by: bobsomerby | August 2, 2010 12:43 PM | Report abuse

To even have a decent conversation about the Bush tax cuts, you have to stipulate the reality that letting them expire as planned is not going to happen within the context of an election were fear by emcumbants in Congress is overwhelmingly the driving force. This isn't an economic argument, although maybe it could be somewhere down the road (perhaps after 2012 elections, if the Dems still control both houses and the POTUS, AND if the economy doesn't fall further down the rathole before then.

Whatever is the cost of the upper income (>$250,000/yr) tax cut (what IS that number???), it isn't so big to overwhelm fear and bring rationality. Let's say it is $200 B/yr. That amount of money would put 10 million unemployed people to work (in something like WPA-II - infrastructure and service jobs in health care and environment, for instance) at $10/hr x 40 hrs/wk x 50 weeks/yr.

But it isn't being framed that way. Most people would take the public jobs option than tax cuts for the rich, but currently they are offered only a reduction in the long term debt if the rich-tax is left to die. Such a deal! Why should 90-95% of the population care about that. The debt is abstract and the taxes are for someone else.

Posted by: JimPortlandOR | August 2, 2010 12:55 PM | Report abuse

@bobsomerby : Not really, each 1/3 of the population could have very strong intensity for their own views. You would need to design questions that ask about intensity of beliefs to find out if people have a slight or strong preference.

Posted by: srw3 | August 2, 2010 1:06 PM | Report abuse

Tax reduction thus sets off a process that can bring gains for everyone, gains won by marshalling resources that would otherwise stand idle—workers without jobs and farm and factory capacity without markets. Yet many taxpayers seemed prepared to deny the nation the fruits of tax reduction because they question the financial soundness of reducing taxes when the federal budget is already in deficit. Let me make clear why, in today's economy, fiscal prudence and responsibility call for tax reduction even if it temporarily enlarged the federal deficit—why reducing taxes is the best way open to us to increase revenues.


—President John F. Kennedy,
Economic Report of the President,

January 1963

Posted by: FastEddieO007 | August 2, 2010 1:59 PM | Report abuse

C'mon Ezra. Can't you read a chart. What the numbers show is 58 percent favor extending the tax cuts and 31 percent favor having them expire. Case closed. you still want to have the conversation?

Posted by: gramps2 | August 2, 2010 3:49 PM | Report abuse

I think the most likely scenario is that nothing will happen, particularly because I think that's what both sides want for two reasons: (1) It's good politics with each party's base. Dems will say the GOP held middle class tax cuts hostage for tax cuts for the wealthy. The GOP will say Dems allowed the largest tax increase ever. (2) Both parties know that there's a grave fiscal crisis pending, and these tax cuts can't be extended. I don't believe for the life of me that McConnell and Kyl and gang really believe that tax cuts pay for themselves. (Maybe that's wishful thinking on my part, because I'm truly terrified at the thought that they do believe it.)

So there will be an understood, implicit conspiracy that each side will play procedural tricks, which the other side won't fight that hard, to ensure nothing happens, thus allowing each side to have their preferred political argument while at the same time ensuring fiscal responsibility.

I actually think that's not only likely to happen, but almost certain to happen. But since it seems no one else is predicting it, maybe I just know nothing about politics (as might be evidenced by the fact that I actually think McConnell and Kyl don't really believe that tax cuts pay for themselves).

Posted by: JamesCody | August 2, 2010 4:43 PM | Report abuse

Repeal them all, Keynes will know his own.

Posted by: Jonnan | August 2, 2010 5:49 PM | Report abuse

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