Tax Cut Poison Pill

I very strongly oppose the President's tax cut poison pill hostage deal.  In exchange for a few small benefits today, it trades away the political economic future of the USA.

The vast majority of Americans are in favor of extending unemployment benefits anyway; that does not have to be combined with tax cuts for the wealthy which are very unpopular.  The extension of unemployment benefits could be put up for a vote every day, and would probably pass before long anyway.

The tax cut deal creates very little economic stimulus for each dollar of federal revenue lost.  By being so large, it squeezes out the possibility of more effective stimulus programs such as federal investment in renewable energy and electrified transportation.

It does nothing to provide long term democratic leadership of the economy which is sorely needed now, in fact it undermines such leadership.

By continuing unsustainable tax cuts on the wealthy, it exacerbates top down class war in the US, possibly leading to future showdowns over Social Security and other social programs.

It undermines the Estate Tax, the best method of taxing large wealth in the US, particularly by lowering the top rate to 35%.  A high ultimate estate tax rate prevents the rise of economic dynasty which means tyranny for most Americans.

It undermines the future of Social Security again by initiating a 2% cut in the Payroll Tax.  Once this tax is cut, it will be politically difficult to restore it, and in future the revenue lost could be counted against Social Security and will certainly be used in rhetoric by opponents of Social Security.

It sets the stage for many future showdowns over extension of unemployment benefits and restoration of tax rates.  The major stimulative effects of the bill will tail off in 2012, likely leading to poor electoral consequences for Democrats that year.

Because of the politicall economic consequences of the deal, Paul Krugman has described it as a hostage deal in which Obama is buying off Republican hostage takers by giving them more hostages.

The House of Representatives, which is supposed to initiate all revenue bills according to the constitution, previously passed a perfectly fine tax cut bill.