Will Obama's tax deal boost the economy?
The president and GOP leaders have a deal to extend the Bush tax cuts. But will their compromise help create jobs and spur spending?

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"
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
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."
Sign up for Today's Best Articles in your inbox
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
-
A running list of RFK Jr.'s controversies
In Depth The man atop the Department of Health and Human Services has had no shortage of scandals over the years
By Brigid Kennedy
-
Film reviews: Sinners and The King of Kings
Feature Vampires lay siege to a Mississippi juke joint and an animated retelling of Jesus' life
By The Week US
-
Music reviews: Bon Iver, Valerie June, and The Waterboys
Feature "Sable, Fable," "Owls, Omens, and Oracles," "Life, Death, and Dennis Hopper"
By The Week US