I have mixed feelings about the tax cut deal. I’m going to go against the conventional wisdom and say that when I first saw its basic outline, I thought it was a pretty good package given the political realities. In exchange for the extension of tax cuts for the wealthiest on both income and estates, which I obviously oppose, we got an unemployment extension and an extension of several Obama tax cuts from the stimulus that are good for lower income people. I was frankly surprised at how much Obama managed to wring out of the Republicans, who at this point I just expect will be totally unwilling to give an inch.
The conventional progressive wisdom, of course, is that this is a terrible deal because Obama gave in on the core principle – extending the Bush tax cuts for the wealthiest. And I’m all for that wisdom being repeated over and over and over, because as I said in my post about McCarthyism, I think one of the most important things we can do is keep up vocal demands for truly progressive change. But I also think that the political reality is that this is how it goes.
The Republican base probably isn’t so happy today either (to wit: Michelle Bachmann, Jim DeMint, and the Club for Growth), but that’s the way politics plays. Our job is to keep pulling the debate farther and farther to the left, so that the next time we’re disappointed – which we will be – at least the compromise will be farther to our side than this one.
That said, there's plenty to be pissed off about in this deal. According to David Kocieniewski's analysis at the NY Times, tellingly called "Tax Package Will Aid Nearly All, Especially Highest Earners," "at least a quarter of the tax savings will go to the wealthiest 1 percent of the population." People with extremely large incomes, inheritors of million-dollar-plus estates, and hedge fund managers can all look forward to huge tax savings. And the only people who stand to LOSE money from the deal are - wait for it - people earning less than $20,000/year (individuals) or $40,000/year (married couples). Granted, the tax increase they would face would be very small, "a few dollars a week," but that's pretty horrific given the $28,000 tax savings people in the top 1% of incomes can expect to see. As I said yesterday, this might be one of the problems with conceptualizing the entire lower 98% of the income scale as "middle class," because it blinds us to the differential impact fiscal policy has on people at different places in that 98%.
Some recommended reading: David Leonhardt on the plan as a "back-door stimulus"; A Talking Points Memo reader eloquently summing up why this deal might be the best Democrats could hope to get.