The Obama/Republican Tax Compromise: Should Conservatives Support It?

Liberals are furious that Obama has cut a deal with the GOP on taxes. However, some conservatives aren’t happy about it either. Jim DeMint and the Club for Growth, for example, aren’t fans:

Senator Jim DeMint (R-SC) says he will oppose the tax deal President Obama made with the Republican leadership. He’ll join the likes of liberal Sen. Bernie Sanders (I-VT) in filibustering it.

“Most of us who ran this election said we weren’t going to vote for anything that increased the deficit. This does.” DeMint said this morning on the Hugh Hewitt radio show.

He doesn’t like the fact that the tax cut extension is temporary and he doesn’t like the extension of unemployment insurance.

“I don’t think we need to extend unemployment any further without paying for it, and without making some modifications such as turning it into a loan at some point. It then encourages people to go back to work,” DeMint said. “The biggest problem I have, Hugh, is we don’t need a temporary economy, which means we don’t need a temporary tax rate. A permanent extension of our current tax rates would allow businesses to plan five and ten years in advance, and that’s how you build an economy.”

Even the estate tax provision — which has enraged liberals because it would cut the scheduled increase in the estate tax from 55 percent to 35 percent and only apply it to estates valued at over $5 million — doesn’t satisfy DeMint.

“It raises the death tax,” DeMint says, presumably because this year, in an anomaly, the estate tax is zero percent.

Could this be the beginning of a conservative revolt against the deal? Probably not. But DeMint is not alone here. The conservative group Club for Growth — which supported a lot conservative Republicans in this year’s election, is also opposed.

“This is bad policy, bad politics, and a bad deal for the American people,” said Club for Growth President Chris Chocola. “The plan would resurrect the Death Tax, grow government, blow a hole in the deficit with unpaid-for spending, and do so without providing the permanent relief and security our economy needs to finally start hiring and growing again.”

Just because liberals aren’t happy about this deal, doesn’t mean that it’s a landslide win for conservatives.

First off, keep in mind that we’ve already handed out a record breaking 99 weeks of unemployment,

Congress has extended unemployment benefits in every recession since the 1950s. The current extension – up to 99 weeks – far exceeds the previous longest extension of 65 weeks in 1975.

Now we’re adding another 13 months on top of that? How smart is it for us to borrow money from the Chinese in order to pay people NOT TO WORK for 3 years? It’s not. It’s actually pretty dumb.

Then there’s the death tax. Currently, it’s zero. Under this deal it goes up to 35%. So, yes, we will be raising taxes in a recession — and we won’t be getting a permanent deal on the Bush tax cuts either.

So, the criticisms being leveled at the bill by Jim DeMint and the Club for Growth are very valid. If you’re a conservative who doesn’t like this bill, in all honesty, you have good reasons not to like it.

That being said, we’re still in a lame duck session where the Democrats have an overwhelming numerical advantage in the Senate and unless SOMETHING is done, the Bush tax cuts will expire and the death tax will go up to 55%. Moreover, although temporary tax cuts are far from ideal, given the state of the economy, cutting payroll taxes and alternative minimum tax, while keeping capital gains at 15% can only help. You can argue that McConnell and company should at least be holding out to make the Bush tax cuts permanent, but the chances of a deal like that being cut in the lame duck session are zero.

In other words, the choice is to take this deal or let the Bush tax cuts expire in the middle of a recession, when we desperately need to stimulate the economy. On the merits, it’s far from a perfect deal, but it moves the ball more our way than the Left’s way and I think Republicans in the Senate should take it.

PS: This was a post about whether conservatives should support the deal on principle, but politically, it’s actually a very good deal, too. You’re not going to get hurt extending unemployment benefits when the unemployment rate is 9.3%. Moreover, not only do liberals hate this deal, but if the economy improves, Republicans can now take credit for it because of this deal. Moreover, if Obama wants to run on raising taxes in 2012, that’s good for the Republican candidate and it will simultaneously infuriate the Left, which won’t trust him after his betrayal this time around.

Update #1: Why I’ve Changed My Mind About The Obama/Republican Tax Compromise

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