Ezra Klein - The Democrats have picked the wrong strategy on the Bush tax cuts

Posted at 10:27 AM ET, 11/19/2010 The Democrats have picked the wrong strategy on the Bush tax cuts By Ezra Klein The Democrats are converging around a strategy on the Bush tax cuts that, if it works, would potentially eliminate the tax cuts for the rich. The votes in the Senate are such that legislators on both sides say the strategy won't work, but leave that aside for a second. The "win" here -- eliminating the tax cuts for the rich -- is the wrong one. The tax cuts for the rich are bad for the deficit, but that's about it. And if they're only extended for a few years, they're not that bad for the deficit, and they do have some (minor) stimulative impact. Comparatively, unemployment insurance is going to expire for 2 million Americans in a matter of weeks. That will kick out whatever meager financial security they've been able to cobble together, not to mention depriving the economy of some of the most stimulative spending we've got going. Unemployment insurance can't be allowed to expire, and the extension should be for longer than a few months. It should be until unemployment comes down to 7 or 6 percent. In February, Congress will have to vote to lift the debt ceiling. Eventually, it will do this. It always does, because if it doesn't, it creates a fiscal crisis. But Republicans, despite wanting to increase the debt by extending the Bush tax cuts, don't want to vote to raise the debt ceiling. They're already planning to hold the vote hostage until they get substantial concessions on health-care repeal and spending cuts. And Democrats, at that point, will have little choice but to accede to their demands. The politics of the debt ceiling are tough, and since Democrats both lost the last election and control most of the government, they'll get blamed. Getting rid of the tax cuts for the rich is not as important as extending unemployment benefits or protecting the Affordable Care Act. Right now, Democrats have settled on a strategy that focuses on those tax cuts and leaves unemployment insurance and the debt ceiling alone. That's a bad strategy. If we're extending economic relief, we should be extending it to for the jobless. Giving someone making $195,000 a year a tax cut but cutting off the unemployment benefits for an unemployed machinist in Ohio is cruel and counterproductive. And if both parties want to add trillions to the deficit by extending these tax cuts, then both parties need to raise the debt ceiling at the same time. The right outcome here is not the end of the tax cuts for the rich, though that might be nice. It's an extension of unemployment insurance and an increase in the debt ceiling. Democrats shouldn't vote with Republicans to extend the tax cuts -- which is, of course, the only way the tax cuts can be extended -- unless Republicans will simultaneously vote with them to extend UI and lift the debt ceiling. By Ezra Klein | November 19, 2010; 10:27 AM ET

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