Tax Cuts Again?

While it has yet to be voted on, pending agreement from the House Dems, it looks as if all Bush-era tax cuts will be extended for two years.  For those of you that don't know, back in 2001 and 2003, Bush made tax cuts to all tax brackets and these cuts were set to expire on Dec 31, 2010.  The proposed plan by Democrats, one that was passed by House Dems, would have extended the rates for people making under $250,000 a year but kept the cuts for all other families.  However, the Senate Republicans all pledged to filibuster any new legislation until the tax cuts were extended.  The Senate Democrats had two options, stand strong on their plan to fight the extension for all families, or cave in to the Republican pressure.  Unfortunately, they gave in to let all tax cuts extend.

So the question for this blog is why does this matter for young voters?

• First, this will likely lead to cuts in education in the next year as part of "fixing the deficit".  While restoring the tax rates wouldn't have solved Congress' budget problems, it would have certainly helped, adding $60 billion to next year's budget.  Instead, Congress will have to make cuts and one of the usual go-to moves is cutting education.

• Second, this continues to shift the deficit onto the shoulders of the next generation to take over Congress. Congress does not have an infinite amount of goodwill and eventually, will have to pay back the debt it's accumulated.  Each year of increased spending that goes by is another year further down the road where that spending will have to be made up by painful cuts. 

• Third, this will likely be an election cycle issue as the cuts will expire in two years.  However, in two years, the Democrats won't have the House and will have less Senators then they do now.  Instead of making the cuts under $250,000 permanent and the $250,000+ cuts temporary, all cuts are temporary and will have to be extended.  All the Democrats seem to be doing now, is setting themselves up for failure further down the road.

Paul Krugman proposes another way the Democrats could have handled this situation.

The Washington Post runs down a few of the myths that are talking points of why the cuts should be extended.

Ezra Klein shows how the Democrats failed to capitalize on their momentum.