Deal or no deal?
Compromises are often less than perfect resolutions to thorny problems. The one announced Monday by President Barack Obama and congressional Republican leaders on extending the Bush tax cuts certainly fits that bill.
As numerous observers have noted, there’s something in the plan for everyone to hate — whether it’s extension of tax cuts to the nation’s wealthiest individuals that Democrats detest, or the increased borrowing and debt to which many Republicans object.
But the compromise also includes some critical items that deserve support.
First, and most importantly, it would establish tax certainty for the coming year without allowing tax rates to jump significantly for nearly every income level of taxpayer. That will occur on Jan. 1 if Congress fails to act.
As President Barack Obama noted, settling the tax debate now is a key to keeping the slowly recovering economy on track.
Additionally, the compromise would extend unemployment benefits for millions of Americans who have long been without jobs.
The deal would also bring some rationality to the estate tax, reinstating a tax that was zeroed out this year but exempting estates valued at less than $5 million so that it excludes most small businesses, ranchers and farmers.
Also, the plan would exempt some 22 million upper middle-class families from the cost of the alternative minimum tax, which was originally designed to ensure the wealthy pay their fair share.
Equally important, as Ezra Klein, a liberal blogger with The Washington Post noted, the deal may foretell a change in Washington that goes beyond the details of this agreement.
“The two parties actually have the ability to sit in a room and come to a compromise,” Klein wrote. “It suggests that we may see more get done in the next two years than many of us thought, and there’ll be more capacity to respond to crises than some feared.”
Here’s hoping Klein is right. But that will only be the case if Obama and GOP leaders can persuade recalcitrant members of their respective parties to accept the deal.