Thursday, December 9, 2010
Obama Tax Deal: Take It and Run
It is often said that if both sides hate it must be okay, and maybe that's what has to be said for this latest deal on taxes and unemployment benefits. Liberals are mad because it prevents income taxes from being increased on the wealthy and Conservatives are mad that unemployment benefits are being extended. People on both sides think they could have done better. Perhaps just the right balance was achieved. Consider the consequences of no bargain. Income taxes will go up over $300B in 2011 and unemployment for millions of people would end. Thanks to the deal, if it passes, the Federal government will not collect that money. You will get to spend it. That also means the total value of the deal is about $100B a year, not $400B as some are saying. In addition people who are unemployed get an opportunity to collect a subsistence level income until the economy improves. Finally if you are working your FICA tax will be reduced by 2-percent, which translates into a little more take-home pay. If the lame-duck Congress can close this deal and go home America will be very lucky indeed. The new Congress can be sworn in January and serious work on the 2011 budget can begin. In the final analysis the $300M will not boost a $14T economy very much but at least the government will not get the money and business can plan ahead. Republicans should take this deal and run.