Let's Make a Deal

The tax cut extension is a good sign for the country: it shows Obama can compromise and that House Republicans know how to drive a hard bargain.

The tax cut deal that President Obama and congressional Republicans have reached seems like a good omen to me. According to current media reports, Obama has signed onto a two year extension of the Bush tax cuts--which is absolutely necessary to stop deflation--and got an additional payroll tax cut of his own, a new estate tax, plus an extension in unemployment benefits. The extension of unemployment benefits, which will discourage job seeking, is a problem but, in all probability, opposing extended unemployment benefits would have been a political loser anyway. The promised resumption of the estate tax is a loss for the Right but, given that the tax is more symbolic than anything else, it was a good place for the Republicans to give and probably won't hurt the economy. The deal looks so good for the Right, in fact, that I have some doubts that it will actually be able to muster enough votes to become law without some more give-aways to the Democrats. For now, it's a good deal and a good sign for the country: it shows that Obama can compromise and that House Republicans know how to drive a hard bargain.