Larding the Path to Economic Recovery

Posted: Dec 16, 2010 12:01 AM
Larding the Path to Economic Recovery

When former GOP House Speaker Newt Gingrich proclaims a measure to be "good for the country," that usually means it's good for Gingrich. When President Obama tells the media that his $858 billion compromise tax package is the fruit of negotiations with GOP "hostage-takers," you have to wonder if he even wants it to pass.

Obama finally figured out that Democrats have only hurt themselves in pushing for an extension of the Bush tax cuts -- except for the top 2 percent of earners. You don't raise taxes on anyone during a shaky recovery.

Even so, I think Democrats like Rep. Chris Van Hollen of Maryland are right to object to the measure's $23 billion estate-tax "giveaway."

I'd be happy to discuss philosophical questions on death taxes after the budget is balanced. For now, the country can't afford it. The Concord Coalition sees "no stimulative effect" in this tax break. Congress would do well to return the estate tax rate to 2009 levels -- 45 percent for estates over $3.5 million -- instead of 35 percent after $5 mil as per "the deal."

The tab for extending unemployment insurance benefits for 13 months is $56 billion. In this deal, neither the left nor right pays for its peanuts.

Obama boasts that he won a one-year 2 percent Social Security payroll tax reduction in lieu of his lesser "Make Work Pay" 2009 tax credit.

Remember all those liberal complaints about how wrong it was for George W. Bush to cut taxes while America is at war -- make that two wars?

Well, forget all that.

Obamaland clearly isn't worried about further destabilizing Social Security. Ahead of predictions, this year, Social Security began to pay out more -- a projected $41 billion -- than it takes in. This scheme only makes the situation worse.

Every politician's favorite economist, Mark Zandi of Moody's, called the payroll-tax holiday one of the compromise's "big surprises." The biggest surprise of all would be if Washington doesn't make this temporary tax cut permanent. As Tax Foundation analyst Nick Kasprak observed, "It's a lot easier to cut taxes than it is to raise them."

Then there are billions in corporate welfare, including tax breaks for NASCAR, rum-makers and film producers. Farm-belt senators wanted to extend a 45-cents-per-gallon ethanol subsidy that goes to Big Oil. They got it.

Left Coast Democrats protested and demanded funds for "clean energy." They got it, too.

With 81 senators voting for the package Wednesday, clearly the measure would have passed without the pork. But this Senate doesn't know how to pass a bill without larding it with goodies for special interests.

Having trashed this bill, I nonetheless understand why Democrats and Republicans would vote for this poor excuse of a compromise. They are afraid not to.

Zandi predicts it will add 1 percentage point to the nation's 2011 GDP and create jobs "ensuring that the still-fragile economic recovery evolves into a self-sustaining economic expansion."

No one wants to damage the recovery. Then again, if America's small businesses had known sooner that their taxes wouldn't be going up in January, the recovery likely would be on surer footing already.