Ezra Klein is explaining the proposed tax cut deal with a different perspective today.
Update #1 Soooo........ Ezra was right.... interesting....
Ezra is stating that even though the White House has done a poor job on negotiating this thing, they see the long term goal is to buy the stimulus more time to improve the economy (more jobs) and have more proof on how the tax cuts are adding to the deficit, which would make it much harder for Repubs to pass permanent tax cuts. If the gamble works they will have something to pound the republicans with in 2012.
Can the White House win in 2012 by losing on the Bush tax cuts now?
http://voices.washingtonpost.com/...
Summary: They are fighting to keep the stimulus going and Bernake in the Fed is working on his end with monetary policy to do the same thing.
There seems to be a goal here. In the mean time, the House Repubs will act so stupidly that their antics will draw public attention to them. Will the people understand and support it? Don't know.
The White House has stopped negotiating for ideal -- or even acceptable -- tax policy and moved to negotiating stimulus policy. The tax cuts for income over $250,000 will pump about $100 billion into the economy over the next two years. It's not the most stimulative way to spend $100 billion, but it's more stimulative than not spending it, or than raising taxes. And it won't be alone.
The deal isn't done, but right now, Democrats look likely to get a 13-month extension of both unemployment insurance and many of the tax breaks built into the stimulus (Making Work Pay, the bump in the Earned Income Tax Credit and the Child Tax Credit, the business tax breaks and so on). That totals about $180 billion over two years. So if the White House gets the deal that the early reports suggest are close -- and that they seem to think they'll be able to get -- this is a two-year stimulus package that approaches $300 billion.
Snip....
The irony of the situation is that the White House may strike a better deal because they handled the politics so poorly. If they'd showed more backbone early on and publicly demanded that the Republicans extend a package of tax breaks from the much-hated stimulus bill, it might've made it impossible for Republicans to agree to anything of the kind. As it is, the White House defined an extension of the tax cuts for the rich as a loss for them -- and now they're going to extend those tax cuts, and lose. They were not playing for this outcome.
But though they're coming out on the wrong side of the short-term politics and the wrong side of the tax policy, they may be coming out with a win on stimulus that no one expected, and that may ultimately matter much more for both the economy and Obama's reelection campaign.