For many conservatives, the thumbs-up from Rep. Paul Ryan of Wisconsin is reason enough to support the Obama-GOP tax deal — well, that and the fact so many liberals are in a purple rage about it. And certainly there is nothing wrong about letting individuals and businesses keep more of their money — even for a little while. But Sen. Jim DeMint of South Carolina, another lover of tax cuts and hater of bloated big government, says he will oppose and even filibuster the ginormous stimulus package. Here is DeMint on the Hugh Hewitt radio show:
Congressional Republicans appear to be quietly but methodically executing a plan that would a) avoid a federal bailout of spendthrift states and b) cripple public employee unions by pushing cash-strapped states such as California and Illinois to declare bankruptcy. This may be the biggest political battle in Washington, my Capitol Hill sources tell me, of 2011.
Let’s assume for a moment that the Democrats don’t scuttle the whole thing. And that very well may happen. It’s all very good news from a Keynesian perspective. Unemployment insurance and the payroll tax cut both score especially well in the sort of demand-side economic models run by, say, the Congressional Budget Office. And I will certainly take even temporary tax cuts over more spending to prop up public employee unions and cater to the green lobby.
Fiscal austerity may be coming to America, but it probably won’t be arriving any time soon. President Barack Obama and Republican leaders have agreed to some $1 trillion of economic stimulus over the next two years, mostly in the form of tax cuts (or non-increases). If the package makes it past Congress—and especially past Democrats—the message will be that, for now, Washington is going for growth.
OK, so for sure we seem to be talking about 2-3 year extension, including dividends and capital gains), as well as a one-year extension of unemployment insurance. Other adds on may include the doc fix, Obama’s Making Work Pay tax credit, the R&D tax credit, an estate tax around 35 percent with a$3.5- 5 million exclusion. I am still wondering if the final deal with include raising the debt ceiling. I hope not since I would rather enjoy writing about the battle over the issue in 2011.
Why is Paul Krugman being so unhelpful here:
A few months ago, the Congressional Budget Office released a report on the impact of various tax options. A two-year extension of the Bush tax cuts, it estimated, would lower the unemployment rate next year by between 0.1 and 0.3 percentage points compared with what it would be if the tax cuts were allowed to expire; the effect would be about twice as large in 2012. Those are significant numbers, but not huge — certainly not enough to justify the apocalyptic rhetoric one often hears about what will happen if the tax cuts are allowed to end on schedule.
President Barack Obama’s debt reduction commission defined tough fiscal choices for Washington, though its members weren’t unanimous enough to force the ideas on lawmakers. But even if they had, the panel pulled punches on healthcare cuts. Reducing that burden may be central to the next presidential election.
From Americans for Tax Reform to Gregg, Crapo and Coburn:
You have today announced that you will support the Simpson-Bowles-Obama debt commission report on Friday. This report contains a ten-year net tax hike of over $1 trillion and increases tax revenues from their historical 18 percent of GDP to a record and permanent 21 percent. This report shifts the debate from where it properly should be—spending—and onto deficit reduction, and thereby tax increases.