The Tax Deal with Republicans — Cui Bono?

There’s been a lot of hemming and hawing on the American left about President Obama’s deal to extend tax cuts for the rich (the Bush tax cuts) and the estate tax in exchange for tax credits for working families and 13 more months of unemployment insurance. One nice thing about it is that it has shown that the American left still has some fight — it was inspiring to see a little bit of piss and vinegar from Bernie Sanders, who became an overnight twitter celebrity for his filibuster in the Senate.

Clearly this was not the best deal for low-income Americans, but it could have been worse. The chart below from the Center on Budget and Policy Priorities shows the breakdown of benefits. The odious provisions — the tax breaks for the rich — account for $129 billion, hardly chump change. These have to be weighed against the provisions for working families ($44 billion), a huge payroll tax reduction ($112 billion) and the unemployment insurance ($57 billion). The bulk of the bill were things that Dems and Republicans both agreed to should happen — tax cuts for the middle class (broadly defined).

I would have liked to have seen more on the table for low-income populations (which is where we get the biggest bang to the stimulus buck in any case), but I think President Obama had a point when he said that we should not make American families collateral damage in partisan politics.

About Brendan Saloner

I am a postdoctoral fellow at the University of Pennsylvania in the Robert Wood Johnson Health and Society Scholars Program. I completed a PhD in health policy at Harvard in 2012. My current research focuses on children's health, public programs, racial/ethnic disparities, and mental health. I am also interested in justice and health care.
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2 Responses to The Tax Deal with Republicans — Cui Bono?

  1. CJ Rose says:

    So…in summary, are you for or against the deal? Butero would be disappointed that you wrote three paragraphs on a topic without clearly stating your opinion…Skinner would have asked you to return from the Bahamas.

    I’m against it. I understand the point that “American families should not be collateral damage in partisan politics,” but I think that the long-term damage to these same American families outweighs the short-term benefits. Additionally, it sets a dangerous precedent; as you mentioned, a large majority of the cuts were agreed upon, so there was little compromise to the bill. Instead, to use Krugman’s frequent phrase, it was the Republicans holding the middle class hostage in order to get additional provisions.

    Finally, I think the general public has a certain disgust with the fact that both parties have spent the past 6 months admonishing the growing deficit, and yet here’s an agreement by both sides that contradicts what they had been arguing for.

  2. I thought I was pretty clearly in favor of the deal, but I’d be glad to take some writing pointers from my high school English teachers (I’m not willing to come back from the Bahamas though, the tax breaks are too great). I agree with Krugman’s assessment that the middle class was hostage in the deal, but to use a different metaphor, you have to play with the hand that you are dealt. The biggest long-run threat to the American economy is a drawn out non-recovery, or a double-dip, and I’ve blogged a bit about why I think we’re far from out of the woods when it comes to the economic prospects for ordinary families. Plain and simple, the deal gives us another infusion of stimulus and a continuation of vital benefits. If you don’t like it, hold your nose.

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