Monday, December 6, 2010

What Compromise?

Obama administration is touting a "compromise" they made with Republican congressional leaders to extend Bush-era tax cuts for two years for every one, including the richest people in this country, as part of a package that would extend jobless aid and cut payroll taxes, despite its previous demand that the tax rates for people with the highest income would be restored to previous higher level.

The White House was also said to have agreed to Republican demands on the estate tax that would result in an exemption of $5 million per person and a maximum rate of 35 percent.

The package would cost about $900 billion over the next two years.  The deal includes reducing the 6.2% Social Security payroll tax on employees by two percentage points for a year, which would put about $120 billion back in the pockets of workers and the unemployment benefits would cost about $60 billion, officials said.  Continuing the lowered tax rates for the highest-earners, by contrast, would cost the government $700 billion in lost revenue over the next 10 years, according to budget analysts.

Obama administration would like to call this a deal, but it is capitulation, considering that Democrats still have the majority of both House and Senate at this moment, this so called deal is absolutely unacceptable.

Nobel Prize winner Paul Krugman said right in his article Let's Not Make a Deal
But while raising taxes when unemployment is high is a bad thing, there are worse things. And a cold, hard look at the consequences of giving in to the G.O.P. now suggests that saying no, and letting the Bush tax cuts expire on schedule, is the lesser of two evils.

Yes, letting taxes go up would be politically risky. But giving in would be risky, too — especially for a president whom voters are starting to write off as a man too timid to take a stand. Now is the time for him to prove them wrong. 

Lone Traveler / 孤獨的旅行者 / Einsamer Reisender
Lone Traveler © Matthew Felix Sun

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