Let's not do the crazy thing with the Bush tax cuts
How can leaders proclaim their intent to get our fiscal house in order, while arguing to keep (forever) the fiscally-reckless and economically-ineffective Bush tax cuts?
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That’s why I think it’s crazy to be arguing about which portions of the Bush tax cuts should be permanently extended. The first-best debate should be over whether to extend any of them at all, because whether it comes to our short-term tax policy needs (stimulate demand in the economy) or our longer-term tax policy needs (raise more adequate revenue in pro-growth ways), the Bush tax cuts are far from the best (even tax) policy to address those needs. Note that today the President’s own fiscal commission echoed the Bipartisan Policy Center’s call for a payroll tax holiday as a far more effective way to use tax cuts to stimulate the economy in the short-term. (See page 43 in the final commission report.) But if letting them all just go away is off the table, the second-best (but still “non-crazy”) debate should be whether we should be even considering letting the then-Bush-soon-to-be-Obama tax cuts go on for longer than the next couple years. And we should be talking seriously about whether we will continue to play the charade of “expiring tax cuts that never expire,” or if we can start making hard and better choices and honoring our other promises (like the one about reducing the deficit) that are contradictory to our bad habits on expiring tax cuts.Skip to next paragraph
'EconomistMom' (Diane Lim Rogers) is Chief Economist of the Concord Coalition, a non-partisan, non-profit organization which advocates for fiscal responsibility, and the mom of four (amazing) kids to whom she dedicates her work. She’s been blogging since Mother’s Day 2008.
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I think most Americans who are paying attention to today’s fiscal policy news are probably shaking their heads and/or cussing and/or laughing in a dark-humor sort of way. It seems both ridiculous and tragic that our leaders can proclaim their intent to get our fiscal house in order out of one side of their mouths, while arguing to keep (forever) their favorite piece of the fiscally-reckless and economically-ineffective Bush tax cuts out the other. They are so busy screaming at each other from their (sticky, embedded) corners that they can’t see the common ground between them.
So I make one open wish today, regardless of how politically-unrealistic I’m told this wish is: that policymakers could consider doing at least the “non-crazy” thing with the Bush tax cuts and stop proposing that any of them be permanently extended. Instead of frantically trying to “decouple” the high-end Bush tax cuts from the “middle-class” ones, we should be thinking about the best way to eventually “decouple” ourselves from all of them.
**UPDATE, 2:30 pm: note the latest news about an anticipated House vote on Thursday on the extension of the “middle-class” Bush tax cuts and Steny Hoyer’s somewhat “delirious” (crazed?) presentation of the issue to the press. I think he’s catching his own schizophrenia on the issue, when he says: “Why am I laughing?…And the answer to that is, I do not know.”
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