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Boehner: Don't throw Republicans into the briar patch!

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"House GOP Leader John Boehner offered a concession on tax cuts," reports John McKinnon, "suggesting Republicans would accept a two-year extension of all the Bush-era tax breaks rather than the permanent extension they have been seeking."

That's some concession. Think of the timing: A two-year extension now means the tax cuts would expire ... at the end of 2012. Coincidentally, there's a presidential election right around then. So the tax cuts would again be an election-year issue, with Republicans and their presidential candidate again warning that Obama and the Democrats are planning an immense tax hike (that Republicans built into law), and Democrats again trapped between letting taxes rise and letting deficits soar.

It's worth reminding people of what the two policy options are here. Obama has proposed extending the vast majority of the tax cuts indefinitely. That would create the "certainty" about tax policy that Republicans say businesses desire so dearly. Everyone would know what the tax code was going to look like for the foreseeable future. But Republicans would prefer a two-year extension -- with all the attendant uncertainty of the suddenly unknown 2013 tax rates -- if it means they get to keep the cuts for the rich, and run on the policy in 2012. More evidence, I guess, that certainty isn't the overriding concern that some suggest.

By Ezra Klein  |  September 9, 2010; 11:41 AM ET
Categories:  2012 Presidential , Taxes  
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Comments

Dems are insane to punt this issue to the 2012 election.

Current polls suggest most people want the tax cuts for the wealthy to expire as they stand.

Hey, speaking of polls, new GALLUP polls also suggest Dems and Repubs are tied among registered voters for the 2010 election. Where is the media? A week or so ago when the Repubs built a big lead the media was all over it.

Posted by: lauren2010 | September 9, 2010 12:08 PM | Report abuse

Man, I feel like I'm taking crazy pills here. I know I've been bringing it up in a lot of posts, but why are the Dems even talking about extending the Bush tax cuts? It leaves this as a Republican issue and victory and, as Ezra points out, lets them run on it again in the next presidential election.

Is there really nobody high up the Democratic party that thinks it would be a much better idea, both in politics and policy, to let the Bush tax cuts expire in their entirety but pass a new set of tax cuts which are more targeted towards getting hiring going again? Firgure it out so that people making less than $250,000 don't pay more in taxes (probably through a payroll tax holiday, I'm thinking), but designed in a way that gives employers an incentive to hire.

There has to be a more stimulative way to do this other than a blanket reduction in margainal tax rates. Even if they decided to do the exact same thing as the Bush tax cuts, but to do it for two years, pass it as its own, separate bill rather than an extension of the Bush tax cuts and rebrand them as President Obama's.

Posted by: MosBen | September 9, 2010 12:09 PM | Report abuse

John Boehner must be making Newt Gingrich so proud. With every idea he has, Boehner tries to pack more and more deception, politics, and lies into each one.

Keep protecting those millionaires and billionaires, Johnny. One day, they'll give you your very own golf course as a reward.

Posted by: oxfdblue | September 9, 2010 12:10 PM | Report abuse

Remember that the current law has a whole bunch of tax code changes expiring and reverting to prior law. Affirmative legislation is required to extend every one of them--it won't happen otherwise. So the alternatives are (1) a stalemate so nothing happens and the taxes revert; (2) some sort of deal in which some revert and some do not; (3) a series of separate bills extending some but not others; or (4) a simple bill extending everything.

And the bill has to originate in and be passed by the House first, but anything the House passes is likely to be changed in the Senate. The GOP won't want separate bills but House rules would permit them. The Senate could combine them and add what it wants, probably tax cuts for the rich. Then it's up to the House.

It would seem that the odds favor nothing getting done. But next year, if they punt, they will again face the AMT patch and whatever SS and other recommendations the Commission comes up with.

If the consequences of doing nothing weren't the loss of tax breaks for everyone, I'd put it as the most likely outcome. In games of chicken the GOP has generally shown itself to be the superior player.

This is probably Orszag's calculation.

Posted by: Mimikatz | September 9, 2010 12:26 PM | Report abuse

Just wondering how all the fiscally conservative deficit hawks on the right reconcile/explain borrowing another $700 billion to pay for the tax cuts for the wealthiest? It's added directly onto the deficit.

How many jobs will the extension create - because we've all heard that boehners REALLY concerned about job creation. C'mon, fess up, how many jobs would be created? If the past performance of the tax breaks given to those "job creators" is any means of justification, the tax breaks should be scrapped. Bushs job growth record was the lowest in recorded history. What's the benefit of the tax breaks? I just haven't seen any redeeming justification for their continuation.

Posted by: JilliB | September 9, 2010 12:26 PM | Report abuse

I can't personally think of another Party that deserves to be thrown into the briar patch more than the Republican Party is....they started their war about two years ago and have continued as the Party of No which espouses hatred, bigotry, ignorance and greed. If a Party in this country deserves to go down, this is the one. Democrats are not perfect and have a way to go in becoming less "weak kneed and lily livered" but the Republicans are a disgrace to our nation.

Posted by: gilbertpb40 | September 9, 2010 12:30 PM | Report abuse

The GOP deficit hawks don't have to justify extending the tax cuts because they don't think tax cuts have to be paid for. Either they pay for themselves or they are just what is due the rich.

None of them really care about the deficit; it is just a cudgel with which to beat down any programs that favor the bottom 95%.

This is why growing inequality matters, because the rich have taken over running the system, and they are doing it for their sole benefit in the here and now, the rest of us and the future be damned.

Posted by: Mimikatz | September 9, 2010 12:31 PM | Report abuse

When I look at Boehner I see Bush/Cheney. No way do I want him or his associates back in charge of anything.

Posted by: clintt5 | September 9, 2010 12:34 PM | Report abuse

Please explain how tax cuts create jobs. I'm no expert, but I am highly educated and I know that I learned that supply and demand control what's produced, what's not produced, who is hired, and who isn't hired. Tax cuts don't lead to increased supply and demand.

Posted by: nsu1203 | September 9, 2010 12:38 PM | Report abuse

The real surprise is not that republicons are playing games -- and hoping that they can stall long enough to make their massive welfare for the wealthy policies live on -- no ther real surprise is that boner managed to get to work and actually stay there long enough to at least put his name on a proposal. How much tanning time did he have to give up to show up at work for a half hour?????

Posted by: John1263 | September 9, 2010 12:38 PM | Report abuse

I'm glad you pointed out the tactical issue involved in extending the tax cuts for a two year period and why Republicans would be willing to accept that "compromise". As you said they'd have the best of both worlds, the tax cuts now and an issue to run on in 2012, what amazes me is that no Democrat, especially the progressives, has pointed out such an obvious stratergy. Are they really that politically and tactically inept?

Posted by: dnf42580 | September 9, 2010 12:40 PM | Report abuse

MosBen,

Actually Democrats have been trying to do just what you're asking for. They know that some small businesses will get wrapped up in the top 2% group, so they proposed a paid-for bill that would extend tax cuts to small businesses, to help move the economy.

That bill is anonymously being filibustered in the Senate right now by a Republican, for no apparent reason other than it getting passed would help Dems and hurt Republicans. No care for the actual country.

Posted by: pathfinder12 | September 9, 2010 12:43 PM | Report abuse

"Just wondering how all the fiscally conservative deficit hawks on the right reconcile/explain borrowing another $700 billion to pay for the tax cuts for the wealthiest? It's added directly onto the deficit." posted by JilliB

This fiscally conservative deficit hawk wonders how Obama can whine about borrowing $700 billion in the same speech in which he asks for billions more to throw after bad, AND thumps his chest over extending the Bush Tax Cuts For The Non-Wealthy to the tune of $3 trillion in future debt.

Posted by: bgmma50 | September 9, 2010 1:12 PM | Report abuse

Not a word from you this morning about the news, on AP, that obamacare will actually increase the deficit. You spoke with such assurance about how it would bend the cost curve down.

Posted by: truck1 | September 9, 2010 1:13 PM | Report abuse

Klein opined, "a two-year extension of the Bush tax cuts doesn't make sense."

Umm, how do I put this delicately? Ezra, after you have observed politicians AND politics for at least 10 years, it will make total strategic sense. Do yourself a favor, go work in the real world for a decade THEN, work in DC for a few years, THEN start writing about politics...

Posted by: illogicbuster | September 9, 2010 1:14 PM | Report abuse

Sure, this is good politics for the GOP.

But isn't the scoffing a little unfair, considering that the two-year time frame was strongly endorsed by Peter Orszag?


See here:

http://www.nytimes.com/2010/09/07/opinion/07orszag.html

Posted by: trooperim | September 9, 2010 1:34 PM | Report abuse

@MosBen: "There has to be a more stimulative way to do this other than a blanket reduction in margainal tax rates. Even if they decided to do the exact same thing as the Bush tax cuts, but to do it for two years, pass it as its own, separate bill rather than an extension of the Bush tax cuts and rebrand them as President Obama's."

What about preserving the Bush tax cuts for those making less than 250k, then changing the tax rates to be more progressive above 250k. That is, instead of going up a global 3% on everybody over 250k, go up 1% for 250k to 500k, 2% on 500k to 750k, and then the full 3% on folks making 750k and above. I think shifting the tax burden further upward, and making it more progressive, makes extending tax cuts for the rich harder to belittle as "the rich being your next door neighbor or your boss or your parents" sort of thing. I don't know anyone making 250k a year, but if I did, I'd probably be more sympathetic towards their objection to a tax hike than someone making 1 million a year, especially when talking about 1% or 2% or 3% increases.

And it forces Republicans to fight for tax cuts for increasingly richer and richer individuals.

Also, they ought push a business-filing-individual deduction so small businesses don't get the tax cut, but CEOs, etc., do, given a common objection is that the tax hike will actually be effective small businesses that are s-corps or sole proprietorships.

Posted by: Kevin_Willis | September 9, 2010 1:35 PM | Report abuse

It is either the red pill or the blue pill, this country can't handle both tax cuts and spending. Republicans should move away from being defined by conservative social values and define the party as a party of reduced taxes. Tax cuts are a far better option than the recently announced "Write off plan." For example, Why would a business invest in new machinery if it wouldn't be used in the near future? Businesses know exactly how much the tax cuts save them whether it is 10% or 17%. The cuts allow them to remain competitive in the global market and retain employees during these difficult times.

Posted by: RisingTideLiftsAllBoats | September 9, 2010 1:44 PM | Report abuse

saw young dems going door to door this morning for the first time.

Posted by: donaldtucker | September 9, 2010 1:55 PM | Report abuse

Kevin_Willis: "I don't know anyone making 250k a year"

Really? 1st, that's 250k for both husband and wife combined. 2nd, no big city lawyers or doctors among your friends or neighbors? And 3rd, where I live there are LOTS AND LOTS AND LOTS of families who pull down that kind of money. People can't afford those Lexus SUVs and big houses in the 'burbs on pennies a day.

Posted by: ostap666 | September 9, 2010 2:00 PM | Report abuse

Let the tax cuts die. Don't we have debt and deficit to pay for? The cuts are still in affect and they aren't helping, as promised.

Posted by: jckdoors | September 9, 2010 2:15 PM | Report abuse

I think Kevin's last post has a good idea with the graduated level taxes. My guess is that Osta666 lives in a large metro area on the East or West Coast. Doesn't Kevin live in Tennessee?

Posted by: Mimikatz | September 9, 2010 2:18 PM | Report abuse

This:

*Ezra, after you have observed politicians AND politics for at least 10 years,*

Contradicts this

* Do yourself a favor, go work in the real world for a decade *

If you go work in (what this guy thinks is) the real world for a decade, he would be doing something other than observing politicians and politics.

*, they ought push a business-filing-individual deduction so small businesses don't get the tax cut, but CEOs, etc., do, given a common objection is that the tax hike will actually be effective small businesses that are s-corps or sole proprietorships.*

While tactically this has a lot of rhetorical power, if I'm filing a schedule C and taking home more than $250,000 *after deductions,* I'm making lots and lots of money. Yes, I'm probably working harder than a CEO paid an equivalent salary, but a tax cut for people like that just seems like a political goodie to be handed out instead of a sound policy decision.

Posted by: constans | September 9, 2010 2:59 PM | Report abuse

@nsu1203"Please explain how tax cuts create jobs. I'm no expert, but I am highly educated and I know that I learned that supply and demand control what's produced, what's not produced, who is hired, and who isn't hired. Tax cuts don't lead to increased supply and demand. "

http://en.wikipedia.org/wiki/Supply-side_economics

The short version is that reducing tax rates on the members of society who control production (usually owners of businesses, etc) & removing other barriers to production such as excessive regulation will incentivize them to produce more. This resulting production will require more "stuff" (capital, inputs, labor) which will increase demand.

Posted by: jnc4p | September 9, 2010 3:19 PM | Report abuse

Kevin_Willis has a good idea IMHO too. While he may not know anyone making $250K, there are tons of folks as ostap666 observed. I'm surprised no politician has moved the bar up. At some point we miss the job creating small business owners and only hit those evil wall street types we all love to hate.
I would also keep low rates on capital and raise the estate tax limits for the same reasons as making the "rich" tax steeply progressive above.

Posted by: Underwriterguy | September 9, 2010 3:22 PM | Report abuse

@gilbertpb40"I can't personally think of another Party that deserves to be thrown into the briar patch more than the Republican Party is"

I think you misunderstand the use of the term briar patch. The briar patch is exactly where the Republicans want to be.

http://en.wikipedia.org/wiki/Br%27er_Rabbit

Posted by: jnc4p | September 9, 2010 3:25 PM | Report abuse

Uh oh, "briar patch" = "tar baby" = "OMG, racist remark!" Call out the PC squad!

Posted by: 82ndairborne | September 9, 2010 3:49 PM | Report abuse

Kevin, as always, it's nice to have an interesting proposal suggested. I'm sort of ambivalent on the specifics on the plan because I'm not an expert in what the best way to address our current economy through tax policy. From what I've read a payroll tax holiday seems like a good idea, but I'm not sure how you'd set that up so that President Obama could be keeping his promise that people making less than $250k wouldn't have their taxes go up.

I'm thinking about this more as a political issue, and it just seems crazy to me that Democrats are even uttering the phrase "extend the Bush tax cuts" in public at all. They should hammering on what a bad idea those tax cuts were in the first place every chance they get while simultaneously saying that though it's a good thing to have that bad piece of legislation expire, we're not in an economic position to have everything go back to normal just yet. Until the economy recovers a bit more, here's a patch that will shift incentives around a bit to encourage employers to hire without taking more money out of your paycheck. It would also show some, you know, leadership.

Posted by: MosBen | September 9, 2010 4:01 PM | Report abuse

"Bushs job growth record was the lowest in recorded history. What's the benefit of the tax breaks? I just haven't seen any redeeming justification for their continuation."


You mean, other than Barack Obama's.

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