Wonkbook: $858 billion price tag on tax deal; Obama weighs tax reform; AFL-CIO opposes South Korea trade deal
Washington, we've got a price tag: $858 billion. About $450 billion of it is the tax cuts for income under $250,000. The tax cuts for for income over $250,000 and the estate tax cut add in another $125 billion or so. Then there's another few hundred billion in stimulus -- stimulus that could, like the Bush tax cuts before it, get extended (notably the payroll tax). As Charles Krauthammer argues in his column today, the price tag here is larger than the original stimulus.
But though Krauthammer believes Democrats should be happy, they're don't agree. Sen. Chuck Schumer -- who was previously pushing a tax deal that would've extended the cuts for all income beneath a million dollars -- is leading opposition in the Senate. House Democrats broke into a chant of "just say no" during their caucus meeting yesterday. And the Republicans' successful effort to filibuster repeal of Don't Ask Don't Tell is not going to convince the liberal base of the value of compromise.
A month ago, few liberals would've believed they'd have the opportunity to spend $850 billion -- and possibly more -- on a weak economy, and even fewer would believe they'd let $850 billion not be spent if there was anything they could do to help it. Republicans, meanwhile, were running on reducing the debt, and claiming that success would come when Washington ceased being so fiscally irresponsible. Now it's Democrats who're skeptical of a stimulus bill -- in part because of its expansion of the deficit -- and Republicans who've stopped using the word "deficit" and are celebrating, in these temporary tax cuts, a typically Keynesian stimulus package.
Obama is considering pressing for tax reform next year, reports Jackie Calmes: "While administration officials cautioned on Thursday that no decisions have been made and that any debate in Congress could take years, Mr. Obama has directed his economic team and Treasury Department analysts to review options for closing loopholes and simplifying income taxes for corporations and individuals, though the study of the corporate tax system is farther along, officials said. The objective is to rid the code of its complex buildup of deductions, credits and exemptions, thereby broadening the base of taxes collected and allowing for lower rates -- much like a bipartisan majority on Mr. Obama’s fiscal commission recommended last week in its final blueprint for reducing the debt through 2020."
The tax deal will cost $858 billion over ten years, report Janet Hook and John McKinnon: "The Senate unveiled final details of a broad tax bill--and its 10-year price tag of $858 billion--and began debate Thursday night on the package, a significant step after two years of gridlock over how to treat expiring tax cuts enacted under former President George W. Bush. Without action, income taxes on nearly every American are due to rise on Jan. 1...But in the House, Democrats were in open revolt. In a closed-door gripe session, they chanted 'Just Say No,' capping a remarkable day of political theater before passing a nonbinding resolution that said the tax agreement shouldn't be considered in the House unless changes were made."
Obama won the tax standoff and humiliated the Republicans, writes Charles Krauthammer: "Barack Obama won the great tax-cut showdown of 2010 - and House Democrats don't have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package...Some Republicans are crowing that Stimulus II is the Republican way - mostly tax cuts - rather than the Democrats' spending orgy of Stimulus I. That's consolation? This just means that Republicans are two years too late. Stimulus II will still blow another near-$1 trillion hole in the budget."
"At great cost that will have to be paid after this newest free lunch, the package will add as much as 1 percent to GDP and lower the unemployment rate by about 1.5 percentage points. That could easily be the difference between victory and defeat in 2012. Obama is no fool. While getting Republicans to boost his own reelection chances, he gets them to make a mockery of their newfound, second-chance, post-Bush, Tea-Party, this-time-we're-serious persona of debt-averse fiscal responsibility."
Peter Orszag is headed to Citigroup: http://nyti.ms/hjJ9VQ
Organized labor plans to fight the South Korea trade pact, reports Howard Schneider: "The AFL-CIO, the United Steelworkers, the International Association of Machinists and the Communications Workers of America all said they would oppose the deal when it comes before Congress next year, arguing that it will drain U.S. manufacturing jobs and does not include worker and other protections unions had hoped President Obama would demand. Labor opposition is not uniform: the United Auto Workers, which along with automakers such as Ford Motor Co. was closely involved in the final negotiations over the agreement, has endorsed it. And officials with the United Food and Commercial Workers union have supported it for lowering agricultural tariffs and probably boosting sales of U.S. meat and other foods."
Got tips, additions, or comments? E-mail me.
Want Wonkbook delivered to your inbox or mobile device? Subscribe!
Swedish pop interlude: Robyn's "Call Your Girlfriend".
Still to come: Chuck Schumer is leading Senate opposition to the tax cuts; Ron Paul will chair the Fed Subcommittee in the House; the House has passed the doc fix; Wisconsin and Ohio are losing high speed rail funding; businesses are negotiating ad hoc deals in Cancun; and baby parrots in bowls.
Chuck Schumer is leading the Senate fight against the tax deal, reports Shailagh Murray: "To Schumer (N.Y.), Obama's decision to accept a two-year extension of all the tax cuts enacted by President George W. Bush - even at the highest income levels - is a needless capitulation to resurgent Republicans. Schumer wanted the president to push harder to extend the tax cuts, set to expire at year's end, only for middle-class families. But to the White House, it is Schumer who is acting recklessly by seeking to wage class warfare with just days left on the legislative calendar, risking the health of the economy and the pocketbook of every middle-class household with his threat to carry the fight into next year."
At least 54 House Democrats will oppose the deal: http://politi.co/gTjdCk
Ron Paul will chair the Fed subcommittee in the House, reports Felicia Sonmez: "Texas Republican Rep. Ron Paul is poised to chair the House Domestic Monetary Policy Subcommittee, putting the gavel of the panel overseeing the Federal Reserve into the hands of one of the central bank's most outspoken critics. Rep. Spencer Bachus (R-Ala.), the incoming chairman of the House Financial Services Committee, announced Thursday that Paul will head the subcommittee when Republicans assume the majority in the 112th Congress. 'This is the leadership team that crafted the first comprehensive financial reform bill to put an end to the bailouts, wind down the taxpayer funding of Fannie Mae and Freddie Mac, and enforce a strong audit of the Federal Reserve,' Bachus said in a statement."
The IRS is considering amnesty for offshore tax evasion: http://on.wsj.com/gZkFmx
Max Baucus is an impediment to progress on the deficit, writes Steven Pearlstein: "While Max's vote against the [Bowles-Simpson] plan surprised nobody, even commission members were surprised by his ludicrous explanation that it was bad for rural America...While voters and politicians from rural states talk a good game about cutting the government down to size, it turns out they are the biggest beneficiaries of the federal tax-and-spend machine. The conservative Tax Foundation calculates that the most rural states receive somewhere between $1.50 and $2 in federal spending for every dollar of federal taxes they pay; urban states receive 60 cents to 90 cents."
Obama had "a very good week," writes David Brooks: "The big story of the week is that Obama is returning to first principles, re-establishing himself as a network liberal. This isn’t a move to the center or triangulation. It’s not the Clinton model or the Truman model or any of the other stale categories people are trying to impose on him. It’s standing at one spot in the political universe and trying to build temporarily alliances with people at other spots in the political universe. You don’t have to abandon your principles to cut a deal. You just have to acknowledge that there are other people in the world and even a president doesn’t get to stamp his foot and have his way."
Adorable animals in ceramics interlude: Baby parrots in bowls.
The doc fix has passed the House, reports Robert Pear: "The House gave final approval on Thursday to a bill that would avert a 25 percent cut in Medicare payments to doctors by freezing reimbursement rates at current levels until the end of next year. The bill goes now to President Obama, who hailed the action by Congress and promised to sign the legislation...The cost will be offset by changing a provision of the new health care law that offers subsidies to lower-income people to help them buy health insurance, starting in 2014. The bill allows the government to recoup more of any overpayments that people might receive if they misstate their income or earn more than they expect in a given year."
The Senate GOP blocked health care for 9/11 first responders: http://on.wsj.com/hNspuP
Ohio and Wisconsin are losing high speed rail funds, reports Amy Merrick: "Gov.-elect Scott Walker in Wisconsin and Gov.-elect John Kasich in Ohio campaigned on pledges to stop passenger-rail projects in their states. On Thursday, they got their wish. U.S. Transportation Secretary Ray LaHood rescinded nearly $1.2 billion that had been allocated to Wisconsin and Ohio for new train lines. Wisconsin, which received $810 million for a passenger train between Madison and Milwaukee, will have to forfeit the entire amount. Ohio must give up $385 million of the $400 million allocated for a train connecting Cincinnati, Columbus and Cleveland. The funds will be redirected to train projects in 14 states. California and Florida will receive the largest portions, up to $624 million and $342.3 million, respectively."
Senate Democrats are delaying a vote on the DREAM Act, report Shankar Vendantam and David Fahrenthold: "Senate Democrats shifted strategy Thursday on legislation that would provide a path to citizenship for some people who were brought to the country illegally as children, calling off a vote that was nearly certain to fail and announcing that they are determined to pass a different version later this month. The House passed its version of the DREAM Act on Wednesday...Senate Democrats voted to pull their bill, allowing them to take up a version identical to the House bill. If the Senate were to pass that version, the legislation would go directly to President Obama for his signature, skipping the process of reconciling the two chambers' measures."
Newt Gingrich is the most pro-immigrant 2012 contender, writes Eduardo Schumacher-Matos: http://wapo.st/ifdYCZ
The tax deal will include extensions of renewable energy incentives, report Patrick Reis and Darren Goode: "Senators and the White House have apparently agreed on a one-year extension of a key renewable energy grant program, according to key Democratic senators. Sens. Tom Harkin (D-Iowa) and Kent Conrad (D-N.D.) said the program that gives cash grants to renewable developers will make it. The actual draft language should be made available Thursday evening. The lack of paper has caused some nervousness on the Hill among renewable energy backers. Wednesday, 81 House Democrats sent a letter asked their leaders to include a two-year extension of the grant program, which was originally part of the 2009 stimulus bill and is set to expire at year’s end."
The Obama tax deal could hurt the green economy, writes Brad Plumer: "The renewable industry will have a tough time gaining a firm footing in the market if, every year or two, there's glaring uncertainty about whether Congress will continue to offer support. Wind and solar companies are having a difficult time making investment decisions, which may help explain why wind generation dropped this year, after a boom in 2009. (Oddly enough, this is one "economic uncertainty" argument you rarely hear Republicans make.) An alternative approach would be to extend the tax program for a longer period of time--or go further and pass a bill that requires utilities to get a certain percentage of their power from sources like wind, solar, or biomass. But the latter idea died in the Senate this year, so clean-energy producers are back to fighting for scraps."
Businesses are using the Cancun conference to make ad hoc agreements, report Juliet Eilperin and William Booth: "In response to growing frustration that the U.N. climate negotiations are not producing real-world results, individual nations, states and business are cobbling together patchwork solutions to preserve forests, produce clean energy and scrub pollution from the air. Under this new approach, businesses in California will offset their greenhouse gas emissions by funding tropical forest preservation in Mexico and Brazil; Japan will help pay for nuclear power plants in developing nations; and South Korea will invest in promoting renewable energy at home. But the central question remains: Will a bottom-up network of ad hoc arrangements and bilateral deals be enough to avert dangerous climate change?"
CHART - Countries by total and per capita emissions: http://wapo.st/hCsYFG
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams. Photo credit: Brendan Smialowski Photo
Posted by: stonedone | December 10, 2010 8:14 AM | Report abuse
Posted by: lauren2010 | December 10, 2010 8:25 AM | Report abuse
Posted by: lauren2010 | December 10, 2010 8:37 AM | Report abuse
Posted by: countrycarl | December 10, 2010 8:43 AM | Report abuse
Posted by: countrycarl | December 10, 2010 8:44 AM | Report abuse
Posted by: patriot17 | December 10, 2010 9:25 AM | Report abuse
Posted by: 54465446 | December 10, 2010 9:26 AM | Report abuse
Posted by: 54465446 | December 10, 2010 9:38 AM | Report abuse
Posted by: eggnogfool | December 10, 2010 9:51 AM | Report abuse
Posted by: eggnogfool | December 10, 2010 10:00 AM | Report abuse
Posted by: jackjudge4000yahoocom | December 10, 2010 10:08 AM | Report abuse
Posted by: theorajones1 | December 10, 2010 10:11 AM | Report abuse
Posted by: 54465446 | December 10, 2010 10:19 AM | Report abuse
Posted by: eggnogfool | December 10, 2010 10:21 AM | Report abuse
Posted by: eggnogfool | December 10, 2010 10:33 AM | Report abuse
Posted by: 54465446 | December 10, 2010 10:33 AM | Report abuse
Posted by: kitchendragon50 | December 10, 2010 10:35 AM | Report abuse
Posted by: 54465446 | December 10, 2010 10:42 AM | Report abuse
Posted by: justin84 | December 10, 2010 10:46 AM | Report abuse
Posted by: eggnogfool | December 10, 2010 11:40 AM | Report abuse
Posted by: 54465446 | December 10, 2010 12:20 PM | Report abuse
Posted by: eggnogfool | December 10, 2010 1:27 PM | Report abuse
Posted by: 54465446 | December 10, 2010 1:40 PM | Report abuse
Posted by: dionflowers | December 11, 2010 4:49 AM | Report abuse