Politics & Policy

A Qualified Victory on Taxes

When President Bush and a Republican Congress cut income taxes for everyone who paid them, most Democrats were opposed. Once the legislation passed, though, they quickly realized that as a matter of politics they had to support the bulk of the tax cuts. They could not be seen to oppose the reduction in tax rates for middle-income workers, or the expansion of the child tax credit. They remained hostile, however, to the tax cuts on dividends, capital gains, and high incomes. They ran two presidential campaigns on a platform of extending the “good” tax cuts while letting the “bad” ones expire.

#ad#President Obama has now moved into the second phase of capitulation. He has agreed to delay any tax increases, on anyone, for at least two years. The top marginal income-tax rate will stay at 35 percent; the dividend and capital-gains tax rates will stay at 15 percent. Over the next two years, the estate tax will be lower than it has been for almost any part of the last decade. The president has also agreed to an additional reduction in tax rates: Payroll taxes will also be temporarily reduced. And his own administration’s best policy proposal, allowing businesses to deduct the full cost of all investment expenses over the next two years, is also included in the deal.

What liberals got out of the deal was the extension of some of their favorite tax credits and, above all, a 13-month extension of federal subsidies for unemployment benefits — with no compensatory spending cuts. But the deal is still worth taking: If it won’t do much good for the economy, it will avert a serious blow to it.

It is possible that Republicans could have gotten an even better deal next year, since their numbers in Congress will increase in January. But that would have left them having to cut taxes retroactively and left households paying first higher and then lower taxes. Acting now reduces both uncertainty and volatility. Republicans can now spend the next two years advancing spending cuts and long-term tax reform.

White House aides are talking big about renewing the debate over tax rates in 2012. But they had to make a deal on unfavorable terms because, when the issue is looming tax increases, the public trusts Republicans more than Democrats. If Obama is unwilling to have this fight in 2010, why will he be more eager in a year when he is on the ballot? Consider these claims to be sweet nothings from the administration to a Left that feels jilted. And consider the debate over whether Obama is seeking reelection settled.

CORRECTION: The original version of this editorial contained an inaccurate statement that the extension of unemployment benefits would make recipients eligible for three years of payments; in fact, 99 weeks remains the cutoff, but federal support for the extended benefits will be extended for another 13 months.

The Editors comprise the senior editorial staff of the National Review magazine and website.

Most Popular

How to Avoid a China-Led World Order

As the COVID-19 crisis has unfolded, it has opened our eyes to China’s rapidly expanding role in the international order and global economy. Beijing’s outsize role in the World Health Organization has come under attack, as has the muscular diplomacy used by China’s foreign ministry in responding to ... Read More

How to Avoid a China-Led World Order

As the COVID-19 crisis has unfolded, it has opened our eyes to China’s rapidly expanding role in the international order and global economy. Beijing’s outsize role in the World Health Organization has come under attack, as has the muscular diplomacy used by China’s foreign ministry in responding to ... Read More
World

Hong Kong, All Alone

China is currently transgressing the terms of its 1997 treaty over Hong Kong, which promised a “one country, two systems” settlement that preserved Hong Kong’s somewhat autonomous democratic institutions. These institutions guarantee rights to Hong Kongers and guard its common-law inheritance. China’s ... Read More
World

Hong Kong, All Alone

China is currently transgressing the terms of its 1997 treaty over Hong Kong, which promised a “one country, two systems” settlement that preserved Hong Kong’s somewhat autonomous democratic institutions. These institutions guarantee rights to Hong Kongers and guard its common-law inheritance. China’s ... Read More
Immigration

The Party’s Over — No More Guest(worker)s

Last month's Presidential Proclamation temporarily suspending a tiny sliver of permanent immigration in response to Great Depression 2.0 also called for a review of the alphabet soup of foreign-worker programs. The relevant cabinet departments were instructed to offer recommendations "to stimulate the United ... Read More
Immigration

The Party’s Over — No More Guest(worker)s

Last month's Presidential Proclamation temporarily suspending a tiny sliver of permanent immigration in response to Great Depression 2.0 also called for a review of the alphabet soup of foreign-worker programs. The relevant cabinet departments were instructed to offer recommendations "to stimulate the United ... Read More
Elections

Against Jo Rae Perkins

On Tuesday, Jo Rae Perkins won the Republican nomination for U.S. Senate in Oregon. The Oregon GOP says it will back her candidacy notwithstanding her associations with the “QAnon” movement. That’s a mistake. Perkins is an unreconstructed exponent of a batty and corrosive conspiracy theory running a ... Read More
Elections

Against Jo Rae Perkins

On Tuesday, Jo Rae Perkins won the Republican nomination for U.S. Senate in Oregon. The Oregon GOP says it will back her candidacy notwithstanding her associations with the “QAnon” movement. That’s a mistake. Perkins is an unreconstructed exponent of a batty and corrosive conspiracy theory running a ... Read More
U.S.

Unsustainable America

Americans are having fewer babies than ever, or at least than since the government began tracking the general fertility rate in 1909. The total fertility rate ticked down to 1.7 in 2019, meaning that the average number of babies an American woman would have over her lifetime is well below replacement ... Read More
U.S.

Unsustainable America

Americans are having fewer babies than ever, or at least than since the government began tracking the general fertility rate in 1909. The total fertility rate ticked down to 1.7 in 2019, meaning that the average number of babies an American woman would have over her lifetime is well below replacement ... Read More

The Makings of Modern Madness

The paradigm of mind–brain dualism, like the story of syphilis, is by no means virgin territory. However, Allan Ropper and Brian Burrell’s How The Brain Lost Its Mind: Sex, Hysteria, and the Riddle of Mental Illness puts both the legacy of dualism and the story of syphilis under the microscope, and offers a ... Read More

The Makings of Modern Madness

The paradigm of mind–brain dualism, like the story of syphilis, is by no means virgin territory. However, Allan Ropper and Brian Burrell’s How The Brain Lost Its Mind: Sex, Hysteria, and the Riddle of Mental Illness puts both the legacy of dualism and the story of syphilis under the microscope, and offers a ... Read More