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Posted at 11:24 AM ET, 12/10/2010

The White House's case for the tax-cut deal in one graph

By Ezra Klein

They're circulating this around the Hill:

wegottheygotgraph.jpg

It's also worth noting that those numbers could end up looking a lot better -- say, if the payroll-tax cut gets extended next year, which many think likely – or, if Democrats let their big tax cut expire in 2011 and then cave in to Republican demands in 2012, a lot worse.

By Ezra Klein  | December 10, 2010; 11:24 AM ET
Categories:  Charts and Graphs  
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Comments

Ezra, you love the payroll tax cut, but to be properly a Democratic "What We Got," it would have stayed as the Making Work Pay credit. It is a "neutral" or "What Republicans Got."

Too many tax cuts is not a good thing if not targeted at the right people, it means bigger deficits and thus bigger spending cuts down the line.

Posted by: jfung79 | December 10, 2010 11:32 AM | Report abuse

LOL. The payroll tax holiday was the Republican plan for purported stimulus. Put it on the Republican side, and the White House got $126B while the Republicans got $226B, thanks to the crack Administration negotiators.

Posted by: stonedone | December 10, 2010 11:34 AM | Report abuse

238 + 114 = 352. Not the 858 price tag for the cut deal. Who got the other 506?

Posted by: lucasblower | December 10, 2010 11:47 AM | Report abuse

Ez,

I'd love to believe--like you--that Republicans would have trouble letting the payroll tax cut expire in 2011. I'd love to believe that Democrats would be able to paint them as tax raisers. But I think you're being waaay too optimistic here, that it will put Republicans in an uncomfortable position. If they don't want to extend it, they won't and just say that they need to shore up the deficit. The real problem here is that there's one party which is INCAPABLE of holding the other party accountable for their unpopular views--(at least while said incapable party is in power).

Posted by: dhs08 | December 10, 2010 11:52 AM | Report abuse

The other 506 is probably the middle-class tax cut, it's not listed there. I'm shaking my head at all the love for extending the payroll tax cut, it needs to expire or be converted back to the flat dollar amount of the Making Work Pay credit. There is no doubt spending cuts to pay for a permanent payroll tax cut would hit the middle class and the poor or Social Security, and it doesn't help you if you have low income, thus low amount subject to payroll tax.

Posted by: jfung79 | December 10, 2010 11:57 AM | Report abuse

I echo the others' question: we keep hearing about a package worth inthe $900 billion range. What gives?

(I think they're might be an AMT fix in the proposal, too, so perhaps that accounts for it)?

Any chance you might weigh in, Ezra?

Posted by: Jasper999 | December 10, 2010 12:00 PM | Report abuse

sesame street

which of these things is not like the other

1)unemployment insurance extension

2)payroll tax holiday

you can't claim payroll tax holiday is something you got unless you and your advisors (ritlin, summers, rubin, et al) thought your reelection was not looking well without some additional stimulus monies

claiming something no one was looking for as something gained is chicanery -

Posted by: jamesoneill | December 10, 2010 12:20 PM | Report abuse

jfung79's point seems well taken:

It's hard to see how forgoing drawing sufficient revenue from the appropriate source (the uber wealthy) will not result in "bigger spending cuts down the line."

So, is the White House essentially deciding to risk this by betting on these measures to stimulate our economy enough to restore our budget situation to a place where cuts to the non-wealthy will no longer be necessary?

Posted by: Trogdorprof | December 10, 2010 12:21 PM | Report abuse

Ezra,

Thanks for illustrating in one graph that the Democrats are less serious about the deficit than the Republicans.

Posted by: ElGipper | December 10, 2010 12:24 PM | Report abuse

The payroll tax credit is a great thing that should have been implemented 2 years ago, rather than the stupid Making Work Pay Credit, or the giveaway to Obama's college volunteer base, or the giveaway to unions.

Posted by: krazen1211 | December 10, 2010 12:29 PM | Report abuse

I cannot believe all of those tax cuts had to be "extracted" from Republicans. As already mentioned, majority of those tax cuts were originally Republican ideas.

The only real "win" I see is UI and the tax credits.

Posted by: will12 | December 10, 2010 12:47 PM | Report abuse

BUT

What Democrats really wanted was stimulus spending: aid to states, spending on education, infrastructure, alternative energy, and so on, except Obama completely gave in to Republican pressure and the Republican narrative and ideology, like he all to often does, without a fight, and gave us a package that's almost all tax cuts.

And the package is $850 billion, where's the other more than half of it?

Posted by: RichardHSerlin | December 10, 2010 12:59 PM | Report abuse

This is a great chart. I have never understood that getting twice as much is rolling over. For all the shouting about the BAD payroll tax holiday, that was a great idea about two years ago according to all the people yelling now. What happened? Well, the progressive left got their feeling hurt and they are going to hold their breath and stamp their feet until he say's he is sorry. PS Social Security tax, revenue is less than expenditures for the first time since the 80's due to 9.8% unemployment we need the stimulus!

Posted by: keirandcee | December 10, 2010 1:19 PM | Report abuse

This is a great chart. I have never understood that getting twice as much is rolling over. For all the shouting about the BAD payroll tax holiday, that was a great idea about two years ago according to all the people yelling now. What happened? Well, the progressive left got their feeling hurt and they are going to hold their breath and stamp their feet until he say's he is sorry. PS Social Security tax, revenue is less than expenditures for the first time since the 80's due to 9.8% unemployment we need the stimulus!

Posted by: keirandcee | December 10, 2010 1:20 PM | Report abuse

Since when was cutting the Social Security tax a democratic policy?

I've been seeing it as a republican talking point for years.

It is something they have advocated as an important step in their attack on Social Security just as their starve the beast strategy is an attack on all transfer payemnts.

Posted by: seerrees | December 10, 2010 2:30 PM | Report abuse

Is this a score for a basketball game or what? "We" and "they"..where do those of us outside of DC fit into this? This isn't a game, it's hundreds of billions of our hard-earned dollars that we're talking about. This scorekeeping by the political "teams" nonsense is why we see voters swinging from one party to the next, looking for some adult leadership in Washington. Work together for what's best for "us", the folks who pay for all of this nonsense.

I'm hoping that this is all stimulative enough so that our kids aren't the long term losers in this game.

Posted by: Beagle1 | December 10, 2010 4:50 PM | Report abuse

Yeah, another thing we got is $114 Billion in additional national debt that does NOTHING to stimulate the econonmy. It just makes rich people richer. Now add to that the interest we'll owe to China on the $114 Billion unnecessarily borrowed. Every bit of the "blue" side benefits working class people and small businesses, not fat cats. Its a disgusting and weak give away.

Posted by: seve2yoo | December 10, 2010 11:59 PM | Report abuse

That's a Social Security Revenue cut!!
NOT a "Payroll Tax cut" - that's spin. Don't fall for it.
Cutting the Social Security revenue is another step toward Starve the Beast -- do we all agree that Social Security is a "Beast"?
Since BO gave in to the bully this year, it's reasonable to bet that he'll give in on extending the Social Security cut next year -- another axe-blow chop on our safety net.
Chalk the Social Security cut up on the Republican side of the ledger, not the people's.

Posted by: Old-Boh | December 11, 2010 11:05 AM | Report abuse

Here's how the $238B vs. $114B chart needs to be fixed:

1. The $112B under payroll tax "holiday" needs to go to the right. If it had been Make Work Pay, then it could be on the left. As it stands now, it is a "poison pill" and represents the right-wing's foot in the door and is their first step towards destroying SS. So, it HAS to go to the right side.

2. The $22B Expensing credits should be bipartisan. Yes, it is not a tax cut for the very rich but the Right will at least have to pretend that they support it.

3. Of the remaining,
a) EITC - $7B has to remain on the left (since the right doesn't give a damn what happens to the poor)

b) UI - $56B is on the left too (since the right doesn't give a damn what happens to the unemployed)

c) Child Tax Credit - $20B is on the left (since the right doesn't give a damn what happens to children - after they're born)

d) American Opp Tax Credit - $18B is on the left (since the right doesn't give a damn about education and re-training)

e) Renewable Energy grants - $3B is on the left (since the right doesn't give a damn about alternative energy).

So, the corrected chart should show : $104B on the left, $226B on the right and $22B as bipartisan.

Posted by: whirlaway | December 11, 2010 9:57 PM | Report abuse


The ONLY way that the payroll tax "holiday" could be spun as a Democratic gain was IF the upper limit had been extended from the current $106K to as high an amount as needed in order to generate the same revenues at the lower (4.2%) rate.

In that case, there was a chance that the "holiday" would end after one year. In the current deal, it will not end after 1 year, and therefore SS will go into "deficit". In reality, it should be able to draw on its own $2 TRILLION trust fund but everybody has conveniently forgotten that.

SS was considered the "third rail" but now the Obama administration has turned off the power to the third rail so that the metal thieves can move in. :-((


Posted by: whirlaway | December 11, 2010 10:08 PM | Report abuse

Look at "What We Got!" It's ironic that Bernie Madoff is back in the news this week -- or maybe it's prophetic. I imagine Bernie's investors said similar things until the day the music stopped.

Bernie built a huge Ponzi scheme -- so has our Government. Both are promising unrealistic returns and something for nothing.

In the case of our Government, we're running up ever-increasing credit card (National Debt) bills based upon an unwillingness to pay for Defense and Entitlements combined with the current tax cut fervor taking over the country.

When Bernie's Ponzi scheme came crashing down, thousands were harmed. When Uncle Sam's similar scheme finally falls apart, millions will suffer.

Meanwhile, all we hear are simplistic and ideological debates. "Cut Taxes!" "Raise Taxes!" "Stop Spending!" How about we try to find the courage to balance our books?

Posted by: SequimBob2 | December 12, 2010 11:41 AM | Report abuse

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