House Democrats say Obama caved on tax-cut deal. Are they wrong?
By one analysis of the deal on extending the Bush tax cuts, Obama got more than the Republicans did. The measures he sought cost three times more than those the GOP sought. But can that help him change the minds of Democrats on Capitol Hill?
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Politically, that argument has been reverberating in liberal circles all week. Liberals are angry that the president agreed to a two-year extension of Bush tax breaks for the richest Americans.
From a purely financial perspective, though, it's not so clear that Mr. Obama and his White House team were bad negotiators.
By one tally, this week's great tax-cut bargain includes $3 worth of proposals sought by Democrats for every $1 that Republicans fought for.
Here's the run-down, as calculated by Moody's Analytics, a forecasting firm in West Chester, Pa., which drew on numbers from the US Treasury, the Congressional Budget Office, and the nonpartisan Tax Policy Center.
Over two years, the overall cost of the tax-cut proposals, in terms of lost revenues for the Treasury, is $984 billion. Of that, the tax measures sought by Republicans accounted for $103 billion in lost revenues, the measures sought by Democrats accounted for $336 billion, and bipartisan measures $544 billion.
Both sides agreed that, with unemployment high and the economy still struggling to get into gear after recession, this was not a good time to let the Bush tax cuts expire for the vast majority of Americans. A two-year extension of those cuts, coupled with some business tax breaks, accounts for the bipartisan dollars in the tax-cut deal.
The $103 billion in tax breaks Republicans won include a two-year extension of low tax rates for households earning more than $250,000 – something Obama has long campaigned against – and a favorable estate-tax rate for wealthy Americans.
The $336 billion in Democrat-inspired tax cuts would benefit low- and middle-income Americans and businesses.