Greg Sargent thinks that the rift between Peter Orszag and Barack Obama on the Bush tax cuts is overblown:
“The point I was trying to make is that we can’t afford the tax cuts over the medium term, and they shouldn’t be made permanent — but the middle class tax cuts should not expire today,” Orszag told me.
“If the price to be paid for that a temporary extension of the upper income tax cuts, my view is that we should reluctantly accept that,” Orszag continued. “I would prefer that that not be the price that is paid.” […]
But, in truth, there’s not too much daylight between the two positions. In the real world, the White House can’t come out for a compromise right now, because it needs to stake out a tough negotiating position. Orszag, by contrast, isn’t constrained by that imperative. In reality, his position is largely in line with that of the administration — both want to end the tax cuts for the rich, though there’s a bit of disagreement over how to get there.
Uh, actually, it’s a far bigger rift, Greg. Orszag wants all the Bush tax cuts to expire. Obama doesn’t; he wants to keep them all but the ones on the top 2%. That’s a $3 trillion dollar difference over the next ten years.
In addition, those “middle class” tax cuts that Obama would preserve, because of their effect on the lower tax brackets which the rich also use, would actually aid the rich more than the poor:
I know I’m supposed to hate on Peter Orszag, and I think a lot of what he said in that op-ed was absurd, but here’s the difference between him and the President on this one. He wants to return the tax policy on everyone to the policies of the late 1990s, preventing an additional $4 trillion dollar hole in the budget over the next ten years. Obama doesn’t. He wants to extend the tax cuts of George W. Bush in every capacity except the ones directly targeted at the upper class. But even the cuts not directly targeted in that manner would benefit the upper class greater, in terms of raw dollars.
Orszag’s mistake was even bringing up the possibility of a compromise, which Republican leaders are running with today. But they’re conveniently sidestepping the part where Orszag wants all the tax cuts to expire. They want to extend all of them for two years and then “have the debate” to extend all of them at that time. Politically, Orszag is a moron for giving this opening. On the policy, his prescription is far different than pretty much anyone in this debate, further than virtually any politician in America is willing to go.
Personally, I believe there are some better places to look for revenue than in the pockets of the middle class, and Orszag’s theories that you can’t wring out more than 0.5% of GDP from the military budget are absurd (he actually says that anything more isn’t politically feasible, as if letting all these tax cuts expire is!). But let’s just better define the terms here.