The massive set of tax cuts passed during the first year of the George W. Bush administration will sunset at the end of the year — unless, as Republicans are urging, Congress chooses to extend them. The Democrats warn that keeping the cuts in place would add $3.3 trillion to the deficit. Obama's plan is to raise the income tax rates for those earning more than $200,000, but extend the Bush-era rates for people in lower brackets. Republicans counter that lower taxes are necessary — particularly right now — because they spur the economy. Should the Bush-era tax rates be extended, or left to expire? (Watch Sen. Tom Coburn advocate for the tax cuts' extension)
We must extend the cuts for low earners until the economy recovers: Obama's plan to let low earners keep the tax cuts for an extra year "would make sense, actually," says Ezra Klein at The Washington Post. If you "extend the bulk of the tax cuts until the labor market rebounds," you can "take a more sceptical look at them" in a kinder economic environment. Letting them run on indefinitely, however, should not be an option.
"What's Congress likely to do about the Bush tax cuts?"
All the Bush era tax cuts must be left to die: If we're serious about cutting the deficit, says Megan McArdle at The Atlantic, then the Bush tax cuts "have to go" — even those aimed at lower income earners. Any temporary extension is just going to make the expiration harder for the public to deal with next year. We can't "let a tax cut we can't afford live so long that it becomes immortal."
"Just say no to extending the Bush tax cuts"
We should get rid of profligate spending, not tax cuts: Democrats are very keen to blame our spiralling deficit on the "much maligned" Bush tax cuts, says Brian Riedl at The Wall Street Journal. But even if there had been no cuts, "runaway spending" by the Democrat-controlled Congress would have pumped trillions into the deficit anyway. The Bush tax cuts are a "convenient scapegoat" — but cutting spending is the better way to solve the deficit.
"The Bush tax cuts and the deficit myth"
Sensible tax increases are the only option — even if it costs Obama power: Failing to deal with the Bush tax cuts is "a prescription for another economic downturn in a year or so," says Pete Davis at Capital Gains and Games. The only solution is "a sensible deficit reduction package" with "marginal rate lowering tax increases" and spending cuts. That was George H.W. Bush's plan in 1990 and, while it cost him a second term, it "set us on the path for record economic growth in the 1990s." That's the choice facing Obama today.
"To extend the Bush tax cuts, or not to extend the Bush tax cuts, that is the question"