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Who Won in the Political Battle over Tax Cuts; and the Nature of Compromise

12.07.10

After scoping out the vast spectrum of reactions to the tax cut package that just passed through government, I’m left wondering where I stand on things.  I am still relatively new to this whole politics business and I find myself going “yeah, but” to both sides of the arguments (on the factual stuff, not the value-based ideology that gets tossed around a lot these days).

From what I can see, these are the major elements of the legislation:

  • 13 months of unemployment extension
  • 1 year of lower payroll taxes
  • EITC expansion
  • College tax credits
  • Estate tax reinstated but only affects the.25 percent of estates – those inheritances that are worth over $5 million
  • Tax rebates for the middle and lower classes

All of it adds up to about $700 billion added to the deficit.  For those keeping score at home, that’s roughly the size of the Recovery Act (aka, the stimulus).

So, where do I stand on this?

Good question.  Clearly there was compromise on the side of the Democrats in that they were against extending the tax cuts for the rich (who still would feel some of the effects of those proposed tax cuts, regardless, since all of their income under $250,000 would’ve continued to be taxed at the lower rate) and yet the tax cuts across the board is what got passed. Also the estate tax being reinstated but at a lower rate than before and only for a small amount of inheritances. Mark a couple in the win column for the GOP.

But there was compromise on the other side, too.  13 months of unemployment extension is a big deal, especially considering that it was paid for by the deficit, which is precisely what the Republicans did not want.  Throw in the college tax credit and the rebates to the middle- and lower-classes, and those are some wins for Democrats.

For those truly worried about the debt, well, it seems like those are the ones without any real silver lining other than perhaps the Bush-era tax cuts were extended temporarily instead of permanently, so there’s still a chance that the deficit-funded cuts could expire in two years.

There will be Democrats angry about this.  There will be Republicans angry about this.  It seems like from what I’ve read, the Democrats feel the most shafted.  Part of me agrees with that group; but, then part of me wonders: what exactly is compromise? You give up something and the other party gives up something, so you each get something but not everything you want.  Does it have to be an even split to be a successful compromise? Do you still have to feel like you “won” for it to be a negotiation you can live with?  And when it comes down to things like tax cuts versus unemployment benefits, are these exactly apples to apples?  Meaning: can you really trade one for the other and have it even be something you can weigh as one being equal enough to the other for their trade-offs to feel fair?

You can also define compromise as everyone being equally as disappointed.  It’s the cynic’s view of everyone getting something: everyone didn’t get something.  Which is fine so long as you also note that you’re not the only one who didn’t get something rather than just focusing on the items that you wanted but didn’t receive.

Either way: what’s done is done.  Some see a long-term strategy at play that, when spelled out, does make sense. But, is it a planned method to the madness, or is it just an attempt to find a pattern in the chaos?  I guess we’ll find out in a couple years, won’t we?

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3 comments

  1. There’s also the immediate benefit to those who will not have to pay increased taxes under already dire economic situations. As Obama put it, he still disagrees with maintaining a tax cut for the wealthiest Americans, but chose not to protract the fight with the Republicans at the expense of those Americans mentioned above.

    I agree that compromises – especially when they affect people on such a broad scale as the one in question – cannot necessarily be measured by who got what. I think the question that needs to be asked is: are the American people better off? If so, then the compromise was good. If not, then no matter what was won or lost the compromise was not a successful one. Different people have different answers to this question, and I think that’s the source of the unhappiness. I believe that in the short-term, Americans are better off than they would have been had the fight been protracted. The long term implications will reveal themselves with time, I suppose.


    • I am of the same mindset as you, James. Well said. In the short term, it’s another dose of stimulus which the country needed (even the majority of Americans said that they wanted spending to boost the economy even though some of that same majority disagreed with the Recovery Act and want the debt to be tackled… interesting). Which then poises the economy to be doing better in 2012 when Obama is up for re-election, positioning himself in a strong spot to get another term. Could be very shrewd. The long term though is going to be interesting…


  2. […] This post was mentioned on Twitter by Ryan Mason, Political A. Science. Political A. Science said: RT @masonry: Who Won in the Political Battle over Tax Cuts; and the Nature of Compromise: http://ow.ly/3lw2t […]



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