By now, you've probably heard the details:
2 year extension on tax cuts for the rich
2 year extension on tax cuts for everyone else
$120 billion Payroll Tax Holiday
13 month unemployment extension
$40 billion in tax cuts for students and families
$30 billion tax write-off for businesses
As you can probably tell from the diaries here, this has ruffled a few feathers. But I have to - reluctantly - support this compromise.
Follow me after the jump to find out why.
In November, the number of job openings in the US was only 2.4 million. Compare this to the 15.1 million unemployed, or the 6.3 million long-term unemployed.
These people need help.
Blame the Republicans for putting us into this situation if you want. But we can't get the middle-class tax cuts or the unemployment extension through without them - and they won't come along unless tax cuts for the rich are part of the equation.
We need to think about what we stand for, as liberals, or progressives, or Democrats. Is it to stop the Republicans from getting what they want? Or is it to help the least of us, to help those who cannot help themselves?
And we're getting more out of the deal than that. We're getting further economic stimulus - which I thought would be literally impossible. Let's look at how this would stimulate the economy based on Moody's Mark Zandi:
$120 billion in Payroll Tax Holiday (x 1.24 multiplier)
$60 billion unemployment extension (x 1.61 multiplier)
$30 billion business write-offs (x 0.25 multiplier)
$40 billion extension of Earned Income Tax Credit, Child Tax Credit, student loan credits (unknown, lets assume x 1.0 multiplier all combined)
$149b + $96.5b + $7.5b + $40b = $293 billion in GDP growth through 2011
An older blog post from Nobel Laureate Paul Krugman indicates that stimulating $300 billion in GDP growth would reduce unemployment by a full percentage point.
That's 1.5 million jobs created.
Also, by extending the middle-class cuts for only two years as well, we can continue the fight then. Show that the Republicans will hold the middle-class tax cuts hostage no matter what, because the rich and ultra-rich are all that matter to them. That fight will go much worse for them then, during a Presidential election year, when turnouts are higher and more Democrats are headed to the polls.
In short, I feel that we just can't afford not to accept this compromise. Is it exactly what I'd like to see? No. But it's the best option we have.