In the end, there were neither the votes nor the backbone nor the time to do the right thing in Washington. The agreement between President Barack Obama and congressional Republicans that extends the Bush-era tax cuts for everyone for two years and heaps other cuts on top of those is nothing to celebrate. It is not a defensible compromise, it is not responsible tax policy and it is not the real shot in the arm the tenuous economic recovery requires.
The best that can be said about congressional approval of the legislation is that it will avoid handing a lump of coal to some of the neediest Americans at Christmas. Unemployment benefits for about 7 million Americans will be extended another 13 months, and allowing that modest aid to expire because of partisan politics would have added unnecessary hardship to many families. But a more reasonable agreement could have accomplished that goal without piling on tax cuts in a package that will add $858 billion to the federal deficit over 10 years.
For all of the rhetoric in Washington about the federal deficit, this legislation is only more evidence of the lack of will in either political party to get serious about it. Both of Florida's U.S. senators, Democrat Bill Nelson and departing Republican George LeMieux, bemoaned the cost of the legislation and then voted for it. The rebellion by liberal House Democrats on Thursday over the ridiculously high threshold for the estate tax was more a show of frustration than anything else and could not lead to reasonable consensus.
The result of continuing an irresponsible approach of tax cuts for all and pain for no one is that it will be even harder to get the debate in Washington on the right track. Now the fate of the Bush-era tax cuts will be a focal point of the 2012 elections, and it will be even harder down the road to adjust them. There also are worries that the temporary cut in payroll taxes dedicated to Social Security, which will help stimulate the economy a bit, will be difficult to abandon and further undercut the financial viability of that entitlement.
Obama focuses on the more defensible targeted tax breaks in the legislation, such as the extension of child tax credits, partially refundable tax credits for college and temporary tax breaks for business investment. But the president emerges from this deal politically weakened and lacking support from many Democrats who worked so hard for him two years ago. Emboldened Republicans who take control of the House in January have succeeded in holding unemployment benefits hostage in exchange for tax cuts for the wealthy, and they can be expected to resort to that strategy again.
With the immediate tax cut standoff ending, the president and congressional leaders from both parties should turn to a more serious discussion about national priorities and the federal deficit in 2011 — and voters should demand it.