Why One Liberal Favors Obama's Tax Cut Compromise with the GOP Though Sen. Bernie Sanders (I-Vt.) considers it a "moral outrage," the tax cut deal made by President Obama and Republicans this week would help millions of Americans, including me.

Since I am a freelancer, my wife and I already pay more annually in federal taxes than I earned in my first job out of college. Were the Bush tax cuts allowed to expire -- the one middle-class ones that politicians on both sides of the debate appear to agree on -- we would owe Uncle Sam several thousand dollars a year more, so we'd like to see them be extended. The 2 percentage point reduction in the payroll tax would even give me an unofficial "raise." Moreover, we are happy to see that the president negotiated a 13-month extension of unemployment benefits, since my wife was laid off in July.

Overall, it feels to me like a good deal for my household, and it turns out that I'm far from alone.

According to a recent Gallup Poll, 66% of Americans backed extending the tax cuts and extending jobless benefits. Not surprisingly, the deal was supported by 85% of Republicans. The deal also was backed by majorities of independents and Democrats as well. Apparently, most people are ignoring those Democrats in Congress and progressive pundits who accuse President Obama of having caved to Republican demands. That notion is ridiculous, given that the president got many of his own priorities into the agreement, but it seems to have driven House Democrats to reject the compromise in a nonbinding vote Thursday. There are now serious questions about whether the compromise bill will make it to a vote in the House before the next Congress is seated.

Making the Perfect the Enemy of the Good


The American people elect people to get stuff done, which is exactly what President Obama did. Sticking to his guns against tax cuts for the wealthy would have likely ensured no legislation at all, throwing millions of people off the unemployment rolls and raising taxes on everyone in the middle of a recession. And while a majority of Americans polled say they would prefer to let taxes rise on the rich, Americans also hate what they consider to be pointless political debates. In this case, partisan ideology gave way to economic practicality. People like myself care most about improving our financial situation. Who gets the credit is immaterial, though I believe that Obama has done plenty right.

Obama deserves credit for saving the Estate Tax (called by critics the "Death Tax") from extinction. Under the terms of the deal, the levy, which was suspended this year, would return at a rate of 35% in 2011, down from 55% in 2009. The tax will exempt the first $5 million of the estate of individuals, up from the $1 million level previously. Though I am hardly wealthy, many of my friends could easily have wound up paying the tax, as would a fair number of small business owners. Raising the threshold seems fair. Eliminating the Estate Tax entirely, a move opposed by many super-wealthy individuals, among them Warren Buffett, would have been fiscally irresponsible at at time when the federal deficit tops $1 trillion.

Critics of the president's compromise are making the perfect the enemy of the pretty good. True, the deal is far from perfect. That Republicans held unemployment benefits hostage to win tax cuts for the rich was shameful, but hardly unprecedented. It's a game that's as old as the Republic, if not older.

"Congress should approve this package -- its rejection will likely lead to a more problematic package that does less for middle- and low-income workers and less for the economy," writes Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities. "Then, in 2012, when the economy should be stronger, the President should make clear he will veto any legislation to extend either the high-end tax cuts or the weakening of the estate tax beyond the estate-tax parameters that were in place in 2009, and he should take that case to the country."

Sen. Sanders, MoveOn.org and the rest of the uncompromising progressives can make a stand in the name of ideological purity, but they aren't speaking for people like me, who would prefer to see an imperfect deal that helps most of the country now, rather than no deal at all. I admit I'm conflicted, though, because this compromise, if enacted, will add hundreds of billions to the deficit. That's something we really can't afford to do.

Then again, we can't afford not to do it either.

Increase your money and finance knowledge from home

Economics 101

Intro to economics. But fun.

View Course »

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Add a Comment

*0 / 3000 Character Maximum

7 Comments

Filter by:
Sug

There is no one fighting for a modified version of the bill that democrates have already passed in the house. Why is the repuplican bill that has not made it to a vote determined to be the right frame work and not the democrate bill, that has been passed by the majority

December 10 2010 at 7:17 PM Report abuse rate up rate down Reply
Pat

You are entirely correct, Mr.Berr. The latest unemployment numbers support the notion that we are beginning to climb out of the Bush recession and the deal President Obama brokered with the Republicans, while I don't think it should get credit for producing all the jobs the economists are claiming it will, will at least not throw us back into another recession. I am a member of MoveOn.org and several other online progressive organizations. I have declined to participate in their campaign to decry President Obama's plan. All of us need to point the finger of blame where the blame truly belongs. The "Just say no" Republicans are holding the entire country hostage to their demands which the polls clearly show are not the will of the people the Republicans claimed they would listen to. The focus of Democrats at this point should be on moving as much progressive legislation through the Congress by the end of the year as they possibly can. If Republicans continue to "Just say no" they will be providing powerful ammunition for shooting them down in 2012. I do not expect Congress to accomplish much during the next two years but President Obama must absolutely veto any bill the Democratic Senate allows the Republicans to push through that extends the current tax rates and tax expenditures for the benefit of the wealthy. As the economy continues to improve, as I expect it will, President Obama must continue, by executive action if legislative action is not forthcoming, to keep the heat on business with regard to the enforcement of environmental protection laws, worker safety, and food safety. He must, during the recess, make as many appointments as possible to punish Republicans for their refusal to allow confirmation of his appointees. As for the Congress, what Congressional leaders must do is keep the Congress in session straight through to the starting date of the next Congress if Republicans continue to obstruct the work of the Congress. Let Congress sacrifice its Christmas holiday if Republicans continue to work to destroy the Christmas of the millions of unemployed.

December 10 2010 at 6:07 AM Report abuse +1 rate up rate down Reply
ELLEN

This article lacks knowledge of the facts. The "tax deal" was done in the dead of night, behind closed doors, and some of the details are not even available for the elected members of congress to read! We are just now learning about how the payroll tax deduction will affect the solvency of social security, and how the poor actually lose money under the "framework". No wonder Obama did not want the deal to see the light of day -- how convenient that lawmakers could either take it as is or not at all. Where was the normal process of review, debate, and deliberation? This is not a democracy but a cabal structured by Goldman-Sachs shill Timothy Geithner. What a joke.

December 10 2010 at 2:17 AM Report abuse rate up rate down Reply
Kris

Jonathan Berr writes of his personal situation (including his wife): "People like myself care most about improving our financial situation." Most of us do Jonathan. I agree the President had to strike this deal now, for a whole host of reasons. But when I look at my own financial situation I say low taxes would be great if I had a job (or unemployment benefits) to pay taxes on. What is being missed with this broad-brush proposed legislation is all of the particular ways that millions of middle-class and poor Americans have completely fallen through the cracks. How am I supposed to be grateful that millionaires/billionaires can escape their fair share of American taxes when I can't even qualify for the Unemployment Benefits the President fought for? Many states in this country have formulas that prevent people from collecting Unemployment Benefits past the first 26 weeks. The federal Emergency Extended Unemployment Benefits are not available to someone who was paid low wages on a job they took because they couldn't get anything else and then were laid off (again) after 8 months (they are considered "not significantly attached to the workforce" - insult follows injury). **NEWSFLASH** People who must use their life-time retirement savings to survive because they can't get hired are having to pay the 10% early tax penalty for withdrawal prior to age 59 1/2. How is it that the President and Congress can't strike a deal to revoke this tax on the middle class? How is it that the President had to give up the "Making Work Pay tax credit" for the working poor, so the millionaires can keep their estate tax credits? What happens to the homeless people who cannot find shelters and are freezing to death in the cold on our city streets? We are all supposed to only care about our own personal situations and cannot imagine, listen to, or even care about what happens to our neighbor? This is indeed a revisit to the times of Charles Dickens, most especially his famous character, Scrooge, who said "Let the poor die and decrease the surplus population."

December 09 2010 at 6:05 PM Report abuse -1 rate up rate down Reply
2 replies to Kris's comment
warrenbent

Kris, Americans are notorious for their ability to listen to and care about our neighbors. Government confiscation of our resources has significantly limited our abilty to act on those concerns. In aggregate, government already consumes roughly 40% of the average Americans income. And then of course, this average American needs to feed, clothe and house his family. Of course, that doesn't include items such as health care or education or transportation, etc. If the government quit confiscating 40% of Americns income, do you imagine this would result in Americancs helping their neighbors more or less?

December 09 2010 at 8:35 PM Report abuse rate up rate down Reply
Kris

Did you even hear what I said “warrenbent?” I'm asking for the revocation of the 10% government confiscation (which is levied on top of the regular income tax) of an American's retirement savings when they must withdraw those savings prior to age 59 1/2 in order to survive (after already having been forced out of the American workforce and off of unemployment benefits after only 26 weeks). Seems to me the tax cuts that were enjoyed by all Americans over the last 10 years did nothing to improve their ability to really listen to and help each other as fellow human beings. Ten years of tax cuts did not prevent media conglomerates from poisoning and polarizing our social, political, and cultural discourse. We can't discuss or debate anything with our fellow citizens without labeling ourselves and others. Even without explicitly applying labels to ourselves and others, we deeply suspect and respond to each other as if from the "other" side.

December 10 2010 at 12:35 PM Report abuse +1 rate up rate down Reply