The Tax Cut Deal


I don’t like the deal because it amounts to “you can increase the deficit for what I want, if you let me do the same”. It may be OK if the sunset really applies in 2 years, but I think politics will result in another extension.

In theory you can support the package as stimulus. The problem is that I think fiscal policy doesn’t turn on a dime, or even a silver dollar. One problem for the stimulus bill of 2009 is that it has taken a while to get project going. Shovel ready project aren’t that easy to find, especially the will rehire the kinds of people out of work, the evidence for the effectiveness of stimulus spending is mixed to weak I’d say.

I think if in 2 years turning toward controlling the deficit is needed, its going to be hard to get the will to let the tax cuts sunset at that time.

I wonder if politics of support on the right may be more probematic than is recognized yet. I understand that both Jim DeMint and Sarah Palin oppose the deal, though I suspect their main opposition is just to extending jobless benefits.

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One response to “The Tax Cut Deal

  1. Your first line really illustrates the problem with the “compromise”. Both sides bargained away fiscal restraint that neither group wanted to exhibit in the first place.

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