Think back two years ago when the Bush-era tax cuts were initially designed to expire. President Obama wanted to extend those tax cuts only to people making less than $250,000, while the Republicans argued the economy was still too fragile to raise taxes on everyone making more than that threshold. Of course, the GOP has steadfastly refused to support virtually any tax increases at any time. At the end of 2010, Obama and the Dems backed down to that Republican call, which ended up being an $858 billion hit to the deficit over two years time (Mother Jones' David Corn has a contrarian view about the idea that Obama 'capitulated,' which he wrote about in November).
You didn't hear much about how extending the Bush tax cuts added to the deficit, but you sure are hearing about that today, with Republicans angrily denouncing the legislation alleviating the so-called fiscal cliff that will add $4 trillion to the deficit compared with current law.
According to The Hill:
The extension of lower tax rates for the bulk of the nation's taxpayers and the addition of a patch to the Alternative Minimum Tax would add roughly $3.6 trillion to the deficit over the next decade, the CBO said. Other individual, business and energy tax extenders would add another $76 billion. The extension of unemployment benefits would cost roughly $30 billion, and the so-called "doc fix" would tally another $25 billion through fiscal 2022.
The CBO says the budget agreement will lead to an overall increase in spending of about $330 billion over 10 years.
While some conservatives are blasting House Republicans for allegedly "getting rolled" in negotiations with the president, what do the the two most famous men in America — when it comes to arguing that Washington must come together on a fiscal deal — have to say about the soon-to-be-signed legislation?
We're talking about Simpson-Bowles. That would be former Wyoming Republican Sen. Alan Simpson and former Bill Clinton chief-of-staff Erskine Bowles, who led a bipartisan debt-reduction committee whose final report was never acted upon in 2010.
The duo called the just passed bill, "truly a missed opportunity to do something big to reduce our long term fiscal problems, but it is a small step forward in our efforts to reduce the federal deficit."
Like most Republicans — and some centrist Democrats — the two men are bemoaning the fact that entitlement spending (Medicare, Medicaid) was not addressed in the deal (and the draconian spending cuts known as sequestration were kicked down the road for a couple of months).
"It is now more critical than ever that policymakers return to negotiations that will build on the terms of this agreement and the spending cuts in the Budget Control Act," Simpson and Bowles said today in a statement.
"In order to reach an agreement, it will be absolutely necessary for both sides to move beyond their comfort zone and reach a principled agreement on a comprehensive plan which puts the debt on a clear downward path relative to the economy."
Democrats are hailing the compromise. House Minority Leader Nancy Pelosi called the bill "gigantic progress," while Republicans appear to be extremely divided, if not downright angry about their fate.
However, there is good news. Grover Norquist said he won't hold it against the 151 Republicans in the House and the dozens in the Senate who signed a pledge promising never to raise taxes.
On Tuesday, Norquist tweeted that because the Bush tax cuts officially expired at midnight on Monday night, "Every R voting for Senate bill is cutting taxes and keeping his/her pledge."
As Washington Post's Felicia Sonmez asked, can the votes of those 151 Republicans (including Pinellas County's Bill Young) now be considered ballots cast against cutting taxes?