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Now that Larry Summers has freely admitted the payroll holiday was something to mollify GOP negotiators, we have to go back and look at what part of this "tax compromise" belongs to whom.

This is important because the president defended this package by saying it was a good deal.  He called the complainers "purists" and said Democrats got more out of this deal than the Republicans.

The initial reporting seemed to support him.  The problem?  The facts don't.  Here is how the deal was reported yesterday.  The graphics are generated from the CBO numbers cited in the press.  Ownership for the different parts were broken out in the Washington Post like this on Wednesday:

Now we know that is not true.  This is how it really shakes out:

Follow me over the fold for the gory details.

Using numbers from the Congressional Budget Office, Shailagh Murray and Lori Montgomery wrote an article in yesterday's Washington Post that appeared on the front page. They identified ten general categories they could assign costs to for the next two years.  The total number was $990 billion.  The ten categories were also color coded based on who supported that portion of the deal, democrats, republicans, or both (bipartisan).  The breakdown was given as this:

Republican Favored:  
 Extension of Bush tax cuts ($79B)
 Cut estate tax rate to 35% ($24B)

Democrat Favored:
 Extension of unemployment insurance ($56B)
 Payroll tax holiday                 ($120B)
 Extension of refundable tax credits ($21B)
 Capital investment writeoffs        ($146B)

 Middle income tax credits          ($280B)
 ATM indexing                       ($140B)
 Increasing estate exemption to $5M ($44B)

TOTAL OVER TWO YEARS                 ($990B)

Graphically, the breakdown of the tentative tax deal looked something like this:

That gives you the pie chart shown above for the claimed breakdown of categories based on the party favoring them:

If that was an accurate rendition of what transpired, the president would be justified in chiding the naysayers for what looks like a pretty fair deal, all things considered.  HOWEVER, Larry Summers has now admitted the payroll holiday was really a GOP idea.  That makes more sense.  We know that ploy opens up a hole into the funding of Social Security and would be used to attack it in the future.  The idea of a payroll tax holiday in this context is clearly a trojan horse.  It looks like a quid pro quo for the tax break to the rich, but it really is stealing from the future to pay the wealthiest at the expense of the working stiffs.  What Democrat was arguing for that?  Short answer: No one.  It was a REPUBLICAN PROPOSAL (h/t Frisbeetarian for finding this in the Republican Roadmap For America.)

It's a shell game that cons 95%+ of the people into thinking they are getting something to offset the gift being given to 2% of the people.  Speaking of small numbers, Chris Van Hollen (D-MD), a Democratic leader interviewed on the Ed Show yesterday,spoke directly to the estate tax issue.  He pointed out that this provision affected only 39,000 families!  That's right.  $68 Billion dollars would go to 39,000 families.  That's about $2 million a pop.  Somehow, I find it hard to believe any of that was favored by Democrats.  Citing Blanche Lincoln (serving the Waltons) as reason to call any of that "bipartisan" is like citing Lieberman's support for anything as evidence that "Democrats were on board with it."

Finally, we have the change in capital investment write offs for business.  That was worth $146 Billion.  This basically allows businesses to write off the entire value of their capital investments next year.  The idea being it stimulates economic activity by giving businesses an incentive to buy stuff.  I find it hard to believe that was just favored by Democrats.  I think it is more realistic to say that was a bipartisan issue.  Claiming it as a Democratic "victory" is only relevant if you want to con people into thinking you got more out of the deal than you did.

When you take into account those three things, the distribution of the elements changes pretty dramatically to this:

That gives you the pie chart shown above for the actual breakdown of categories by party favoring them:

Now you know why the "purists" are so angry.  We know we are being conned.  The give away to the wealthiest 39,000 families at the expense of the rest of us is just the latest transfer of wealth from middle class and working class families to the idle rich.  That's been going on for 30 years.  That's not change.  It offends our conscience almost as much as when people stab us in the back while they lie to our face.

Here's the clincher.  Today the Post published a new graphic showing "the big winners" in this deal.  It's clear when you compare the original Democratic proposal to the original Republican proposal, which one is closest to where the current solution ends up.  I think this confirms what I have been saying.

To show I'm a reasonable guy and not an idealogical purist who just likes to complain, here's a counterproposal that should meet the legitimate needs of all parties:

Kill the payroll holiday for the working class. ($120B savings)
Kill the extra tax cuts for the rich.  ($79B savings)
Keep the estate taxes where they were under Clinton.  ($68B savings)

That counterproposal leaves the following elements in the mix:

That gives you the following pie chart for the breakdown of categories by party favoring them:

Now some may complain there are no "sweeteners" to satisfy just the Republicans, but I would point out that HUGE GREEN AREA CALLED BIPARTISAN because it presumably includes stuff that Republicans endorse. That's about 80% of the total.  It ain't a token gesture.  It means the MAJORITY of things in the package are things they can endorse.  I would also point out DEMOCRATS WON the right to make these decisions.  The fact that Republicans WILL GET the right to have more say doesn't negate the fact that Democrats are in charge RIGHT NOW.  I would even go so far as to say that the reason Republicans have been given an opportunity to have more say IN THE FUTURE is Democrats failed to exercise their authority when they had it and the voters are primarily interested in someone taking charge.  

Before people argue too strenuously for the wounded inner child of Republican senators, I would also point out that the counter proposal would save at least $267B over the next two years, and everyone would be giving up something to do that. You would think the budget hawks would approve it.  Or is that not pragmatic enough for the bipartisan purists?

Originally posted to 8ackgr0und N015e on Thu Dec 09, 2010 at 11:24 AM PST.

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