Tuesday, December 7, 2010

President Barack Obama Calls His Tax Cut a Compromise

Compromise is a dirty word to many in Washington, DC. Go to Washington and Don't Compromise is the mantra of both the right and the left. But to actually get things done, Washington needs Deal Cutters.

President Barack Obama explains the tax cut deal he has made with Republicans:

President Obama says this compromise is the right thing to do but acknowledged, "I know some folks, even good friends, who are unhappy with the plan."

He traded a two year extension of tax cuts for wealthly Americans for tax cuts for Americans who are not so wealthy, payoroll tax cuts for American employees, and extended unemployment benefits for Americans who are out of work.

I always applaud getting a tax cut but must recognize that these tax cuts and increased unemployment benefit spending will push up the already high federal budget deficits even further. That may help the economy, but will push up the country's debt.

So I will agree with the President on one of his own reservations:

"There are things in here I don't like, namely the extension of the tax cuts for the wealthiest Americans at a time when we need to focus on bringing down the deficit."

The counter argument is that the high deficits are needed because of the deep recession. But need was the argument for the bank bailouts, auto company bailouts, and stimulus spending too. Where does it end? And when?

The best part of the plan, from my perspective, is that the extension being only temporary buys time, time that can be used to put together a workable deficit reduction plan. Some Democrats say they want to go to the barricades to stop the tax cuts, but that's just politics. If they are serious, they will instead spend the next two years working on reducing the deficit.

If Democrats expect Republicans to give up tax cuts for deficit reduction, Democrats should expect to offer spending cuts. So far their leaders in Congress, Nancy Pelosi and Harry Reid, have nothing on offer. And it is now four years after the Democrats retook the House and Senate from Republicans in 2006. They've been campaigning against these tax cuts as budget busters longer than that, but still have nothing to offer on spending cuts.

After the winners of the November 2010 election are seated in January, the Democrats still have the Senate but don't have the House. We'll see if the leadership of the new House Republican majority has any spending cuts to offer. Deficits and spending were key issues for tea party voters in the election. Will Republicans deliver, which means finding a deal they can cut with Barack Obama on reducing deficits, or will they just spout empty rhetoric as did Nancy Pelosi and Harry Reid. I'm watching.

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