On Monday evening, President Obama announced the outline for a tax compromise with Republicans: All of the Bush era tax cuts will be extended for two years, unemployment benefits get a 13-month extension, workers will get a year-long break on payroll taxes, and the estate tax will be re-instituted at 35 percent for fortunes over $5 million. The deal has met resistance from both the Left and the Right. If it is enacted, will it do anything to boost the economy? (Watch an MSNBC discussion about the tax cuts and jobs creation)
The deal will help... a bit: The Bush tax cuts were mostly an economic failure, says Christopher Beam in Slate. Extending them for two years, though, "will help the economy — but just barely" — "taxes don't affect the overall economy much," period. Any real boost will come from the more stimulative tax breaks Obama negotiated, especially lowering payroll taxes and extending jobless benefits.
"Here's the deal"
This is a step backward: Nothing in this deal "will get us out of a recession," says Jimmie Bise, Jr. in The Sundries Shack. Continuing the Bush cuts for only two years still leaves uncertainty for companies, and Obama's additions to the deal will make things worse: Extending jobless benefits will raise costs for states and small businesses. "Turning this economy around" should be Republicans' top priority, but the GOP just got "suckered."
"The GOP's tax deal isn't a very good deal for us or the economy"
The benefits will mostly be psychological: Republicans got the better end of the deal, but both parties got tax cuts they want, says Felix Salmon in Reuters. This "Oprah-style" tax deal — "You get a tax cut! And you get a tax cut! And you!" — is bad policy, "but hey, nearly all of us will end up with extra cash for the next couple of years. Which will make us a bit happier, even if it does little good from a fiscal perspective."
"Tax cuts, Oprah-style"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- The mystery behind China's aggressive push into space
- Here's the schedule very successful people follow every day
- Why Texas' abortion rates aren't falling as quickly as everyone expected
- What would a U.S.-Russia war look like?
- The 5 best and worst states for a well-lived life
- What religious traditionalists can teach us about sex
- The 6 best low-cost smartphones
- Why all drugs should be legal. (Yes, even heroin.)
- Yes, Republicans can impeach President Obama
- Pay yourself first: The habit that can help you build wealth
Subscribe to the Week