The White House just announced that it has settled on the details of the deal it’s been cooking up with Congressional Republicans over the coming expiration of the Bush tax cuts. In return for a two-year extension of all the Bush tax cuts — including those for the richest two percent of Americans and those on capital gains and dividends — currently expired unemployment benefits will be extended for 13 months, there will be a two percent reduction in payroll taxes for one year, and both the expanded Earned Income Tax Credit and Child Tax Credit enacted in the 2009 Recovery Act will be retained.

The deal also includes reinstating the currently expired estate tax in a way proposed by Sens. Blanche Lincoln (D-AR) and Jon Kyl (R-AZ) — 35 percent with a $5 million exemption (which means that $5 million can be passed on tax free). President Obama had proposed permanently setting the estate tax at the 2009 level of 45 percent with a $3.5 million exemption. Under current law, the estate tax comes back next year at a 55 percent rate with a $1 million exemption.

“I’m not willing to let working families across this country become collateral damage for political warfare here in Washington,” Obama said in a statement. “Sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do.”

So in return for continuing the fiscally irresponsible and economically unsuccessful Bush tax policy, Democrats receive an desperately necessary extension of jobless benefits of the sort that used to be completely uncontroversial until this Congress came to town, as well as some helpful tax breaks for the working class that Republicans likely would have supported under any circumstance.

As the Center on Budget and Policy Priorities noted, what Obama had proposed doing prior to this deal was cheaper and better for the economy:

Extending federal UI for one year and some of the Obama tax cuts (expansion of the child tax credit, improvements to the earned income tax credit, and the higher education tax credit) for two years would generate more economic activity — including creating 500,000 more jobs next year — than would a two-year extension of the Bush high-income tax cuts. It would also add $30 billion less to deficits over the 2010-2015 period than extending the high-income tax cuts would.

CAP economist Adam Hersh added that, in comparison to the roughly $60 billion that will be spent on tax cuts for the rich in 2012 alone, “the $50 billion President Obama has proposed for financing critical infrastructure investment would yield $60 billion in economic activity and 500,000 jobs.”

But the most pernicious piece of this deal is the estate tax cut. It will amount to another $7 billion in tax breaks in 2011 that benefit no one but the ultra-wealthy. Under Obama’s plan, just 0.25 percent of estates in the country would conceivably have to pay the estate tax, but Lincoln and Kyl proposed spending billions to lop another 0.11 percent off of that.

Now, many are arguing that this is a way for the Obama administration to bring in new stimulus spending through the back door, boosting the economy in the short-term. While this is true, conceding on the Bush tax cuts and the estate tax is a big price to pay in terms of perpetuating irresponsible and unaffordable Republican tax policy.

Reportedly, the Obama administration and Congressional Republicans are cooking up a “compromise” when it comes to the expiring Bush tax cuts. In return for a temporary extension of all the Bush tax cuts — including those for the richest two percent of Americans — Congress would also extend long-term unemployment benefits (which are currently expired) and keep in place some of the tax breaks included in the American Recovery and Reinvestment Act (like the “Making Work Pay” tax credit).

Of course, this deal would reveal the consistent Republican deficit hysteria of the last two years as a complete sham, since it will cause a big increase the short-term deficit. Today, Sen. John Cornyn (R-TX) was asked about this obvious contradiction, and instead of admitting that Republicans are fine with deficit spending so long as it is done in the name of reducing marginal tax rates for the wealthy, he scoffed at the notion that tax reductions increase the deficit at all:

Q: I take your point, that we have a spending problem, not a tax problem, but you have to acknowledge that extending these Bush tax rates for all Americans exacerbates the deficit just as much, and in fact more than, the extension of unemployment benefits, correct?

CORNYN: Savannah, I don’t agree that extending current tax policy, which has been the law for ten years, exacerbates the deficit, unless you assume that all of this is the government’s money and they just let ‘we the people’ have some of it back. The fact is, we need to continue to stimulate our economy, not through the sort of Keynesian approach of spending borrowed money that we’ve seen over the last two years.

Watch it:

To be clear, this “compromise” is hardly a compromise. It involves Republicans getting exactly what they want when it comes to the Bush tax cuts, in return for agreeing to some steps to alleviate economic pain that past Congress’ approved without hesitation time and time again.

Cornyn, like many of his colleagues, may incorrectly believe that tax cuts pay for themselves, or he may just be engaging in rhetorical somersaults, but the fact remains that extending the Bush tax cuts reduces federal tax revenue (which is the lowest its been in sixty years), thereby increasing the deficit. According to the Center on Budget and Policy Priorities, the Bush-era tax cuts are one of the largest drivers of the country’s long-term structural deficit.

Finally, in the same breath that he scoffs at Keynesian-style stimulus, Cornyn is endorsing just that, in the form of large, deficit-financed tax cuts for the rich (which the Congressional Budget Office ranks as the least effective tax policy for boosting economic growth). Just because the borrowing and spending is done in the name of tax breaks doesn’t make it something other than Keynesian fiscal stimulus. After all, the Recovery Act was one-third tax cuts, for just that reason.

In fact, the first Bush tax cut was passed under the guise of Keynesian stimulus. All of which goes to show that Congressional Republicans are willing to embrace any rhetoric that enables them to extract from Democrats tax cuts which the public opposes.

Last week, President Obama’s debt commission released its final report, but failed to find the required 14 votes to advance the proposal to Congress. Of the commission’s 18 members, 11 voted for the final report, and only four of those affirmative votes came from members of the incoming 112th Congress.

Even though the commission failed to craft a plan that could receive enough votes to move forward, many of the commission members cited the proposal as a good starting point for discussions on reducing the country’s deficit and debt. “I believe we’ve crossed an important hurdle here and laid out a plan that will be resurrected because it must be,” said commission member Sen. Kent Conrad (D-ND).

But the deficit commission’s plan is not a feasible path toward reducing the long-term structural deficit, and it included some very misguided policy prescriptions like raising the retirement age for Social Security and cutting huge swaths of the non-defense discretionary budget. In a new report, “The First Step: A Progressive Plan for Meaningful Deficit Reduction by 2015,” the Center for American Progress has laid out an alternative vision for deficit reduction that gets the budget into primary balance by 2015 (which means that federal revenue equals outlays), while protecting vital and popular programs and promoting economic growth, as opposed to austerity. Here’s how it works:

– New Revenue: The plan, which relies on roughly equal parts revenue increases and spending cuts, proposes removing the cap on the employer side of the payroll tax, which raises about $76 billion in 2015; imposing a new fee of $5 per barrel on foreign oil imports, to raise about $22 billion; and applying a new surtax of 2 percent to adjusted gross income above $1 million, and an additional 3 percent to adjusted gross income above $10 million, to raise about $29 billion. These increases would raise federal revenue to about 19.8 percent of GDP, which is higher than it was under the Bush administration, but lower than when President Clinton brought the budget into surplus.

– Spending Cuts: The plan also lays out about $128 billion in total spending cuts in 2015, including about $60 billion in defense spending cuts, $35 billion in tax expenditures (which are essentially spending programs that are administered through the tax code), and $12 billion in non-defense discretionary cuts. The plan would also cut $3.8 billion from in agricultural subsidies and index all relevant federal programs to the chained Consumer Price Index for all Urban Consumers, which would result in “slower increases to those aspects of the code that are indexed.”

As CAP President and CEO John Podesta wrote, “Our plan would achieve primary balance by 2015 through an even mix of spending cuts and new revenue. We identify specific spending cuts, rather than employing opaque budget mechanisms, or mere ‘illustrative examples.’” And it should be remembered that getting the long-term structural deficit under control does not contradict with short-term efforts to boost the economy and ensure that those still feeling the effects of the Great Recession have an adequate social safety net on which to fall back.

Read more in today’s Progress Report, “The Progressive Plan For Deficit Reduction.” Cross-posted on ThinkProgress.