Bush signs his tax cuts into law, ushers era of red ink and economic catastrophe
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There are a few liberal pundits out there who believe that a cuts-only deal like this one isn't all that bad. Jon Chait is one of the leading proponents of this theory, and it goes like this: Maybe an all-cuts deal is bad, but by leaving taxes off the table completely it opens the door to letting all the Bush tax cuts expire at the end of next year. Basically, Obama just needs to keep insisting that he'll only sign a bill that extends the middle-class tax cuts1 but allows the tax cuts for the rich to expire. Republicans will flatly refuse to send him such a bill, and as a result all the tax cuts will expire without Obama having to break any promises.
So here's the question: Do you think this is how things will play out? Or alternatively, will Republicans cave in at the 11th hour and send Obama a bill he can sign? Or will Obama cave and end up agreeing to extend all the cuts? My guess is that Obama will stick to his guns on this and Republicans will eventually cave, which means that the middle-class cuts will get extended permanently. Prof. Kleiman, like Chait, thinks Republicans will never, ever agree to throw rich people under the bus and will never send Obama a bill that extends only the middle-class cuts. Thus, the whole Bush package will expire. You can vote in comments on how you think this will play out.
I'll play!
The Bush tax cuts expire December 31, 2012. House Republicans will push legislation to extend them before the election (because they create jobs, or somesuch bullshit that is patently false). Democrats may hope to ignore the issue until after the election, but they won't be able to. The House and the GOP presidential candidate will make it impossible to ignore.
So Obama has said he won't allow tax cuts for the rich to continue. Democrats don't want them to continue.
But they didn't want them to continue last round, and they caved. So words and intentions are irrelevant to this analysis.
Now Republicans won't allow the tax cuts to be split into "middle class" and "rich" halves. They won't turn their backs on their rich buddies. Democratic efforts to decouple the two are doomed from the start. It won't happen. Period.
Democrats will face two options—letting all the tax cuts expire, and be accused of a massive tax hike just before the election, or extending all of them. Even if they vote to extend, they'll still be accused of raising taxes by Republican candidates, but for some reason they keep believing that their votes somehow protect them. They don't.
So after scared (or compromised) Senate Democrats help Republicans pass a full extension of the Bush tax cuts, what happens when it ends up on Obama's desk? Will Obama veto a middle class tax cut with his reelection just weeks or months away?
That's not a bet I'd take. I'd fully expect some blather about how "this isn't the deal I would've preferred," and a promise to fight to repeal cuts for the ultra wealthy the next time they were due to expire. That is, assuming Republicans don't manage to extend them indefinitely.
