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The Tax Deal

By Matthew Yglesias  

"The Tax Deal"

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I’ve been on a bunch of planes, but catching up on my blog and email reading the progressive wonk consensus seems to be that the tax cut deal is . . . not as bad as people feared it would be based on what was happening the previous week. And I totally agree, though that’s largely a case of expectations management so I’m not going to break out the flowers.

What I will say, though, is that this has partially set my mind at ease about the prospects of a GOP strategy of economic sabotage. The tax policy the right wants, though in general bad for the country, is not bad for short-term economic performance. And the concessions they were willing to give Obama in exchange for boosting the incomes of rich people are expansionary in the short-term. So the terrain here exists well within the range of “normal” politics where conservatives want lower taxes on rich people. This is kind of nutty in my view, but it’s a deeply held article of faith on the right and not some ad hoc effort to sink the economy or anything.

In a non-optimistic vein, though, this is really kind of sad statement on where Washington is at the moment. What you can say in favor of this deal is that it is a kind of expansionary fiscal policy. But if expansionary fiscal policy is the order of the day, then this is a mighty ineffective way to go about. And if the reason we can’t have a real robust jobs program is that deficits are evil, then why on earth is it that we need huge deficit-expanding tax cuts for the children of the hyper-wealthy?

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