Tonight's news of the "deal" on taxes between obama and the GOP is actually quite funny. I particularly enjoyed the media that is spinning this as a victory for the president. The truth is that Obama has basically accepted the tax views of the Republicans for the next two years. Income tax rates will remain unchanged (clearly the GOP's most important position). Estate taxes will be reinstated with a $5 million exemption per estate and a 35% estate tax rate (again, the more moderate of the Republican viewpoints.) Social security payroll taxes will be reduced by 2% (a variant of the payroll tax holiday that the GOP has been pushing as a means of stimulating growth in the economy). Unemployment benefits will be extended for 13 months (a victory for the Democrats who would have won this one in any case.) A few other minor points are included, but these are the major planks.
The truth is that this resolution is a victory for the country. People need to know what the future tax rates will be in order to make investment decisions. Finalization of this deal should release a bunch of investments that have been on hold for a while pending outcome of the tax issues. All in all, this should lead to many jobs saved or created (sorry, I could not resist saying that.)
The obstacle to this deal is now the congressional Democrat majorities. Of course, if the Democrats block the deal, they will be responsible for raising taxes on the entire country. My guess is that they will not have the courage to do that.
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