Republican leaders, fresh from winning a House majority in last month's elections, pushed for extension of the Bush tax cuts before they expired Dec. 31, but the price was a compromise with President Obama for extending unemployment benefits for another 13 months, which many conservatives opposed as another whopper of a deficit driver.
On the other side of the fence, many liberal Democrats had virtual apoplectic fits over continuing low tax rates for the wealthy and their heirs. Antipathy toward the death tax, a.k.a. the estate tax, in particular, has reached almost epic proportions among some of the left-wingers in Congress.
Clearly, extension of the Bush tax cuts was nothing less than imperative in this economy. Likewise, an argument can be made for extending jobless benefits in this tough economy despite the deficit-swelling effects. And the agreement to cut Social Security taxes, or payroll taxes, by two percent for one year will provide a little help for working Americans and should be stimulus-positive.
But once the compromise was reached on the major issues, the same old congressional habits added a variety of projects or special interest breaks. Sen. John McCain (R-Ariz.), the former Navy pilot, scored a direct hit a couple of days ago when he bemoaned all the tax credits tacked onto the bill as "unneeded, unnecessary, unwanted sweeteners." They ranged from extending ethanol tax credits to hiking the excise tax rebate for rum from Puerto Rico and the Virgin Islands at an estimated cost of $235 million. In Congress, that would be considered a drop in the bucket in the $858 billion bill.
"These credits are a form of special interest spending in the tax code, which is precisely the sort of business-as-usual behavior that Republicans told tea party voters they would not engage in," McCain said - but added, "I'll vote for it, but it's not what the people said they wanted on Nov. 2."
No doubt, political reality and the need to get the deal done before year's end dictated the "yes" votes by Republicans, including Georgia's Republican senators Johnny Isakson and Saxby Chambliss. It came down to the choice that Sen. Orrin Hatch (R-Utah) described: "Opposing this bill is tantamount to supporting massive tax increases that threatens our economic future. Allowing middle-class families, small businesses and investors to keep more of what they earn, while denying Washington hundreds of billions in new tax revenue to spend, is the right thing to do."
Now it's up to the House to decide if middle-class families, small businesses and investors will get to keep more of what they earn.