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Who Loves You More, Obama or McCain (or Bush)?

June 17th, 2008 . by economistmom

The Tax Policy Center just updated their estimates of the cost of the Obama and McCain tax plans–estimates that show that the Obama tax proposals would reduce revenues by $2.7 trillion over ten years (same as their previous estimate), while the McCain tax proposals would reduce revenues by $3.6 trillion over ten years (slightly lower than previous $3.7 trillion).  As I’ve pointed out before, these are the revenue loss amounts compared with the official CBO baseline under current law, and as such, these are the revenue losses that matter if one is determined to comply with the pay-go rules.  (Revenue neutrality becomes very hard to do.)  Note that the total cost of these proposals, with debt service (interest on the added debt), is even higher ($3.3 trillion and $4.3 trillion for Obama and McCain plans, respectively). 

Both candidates want us to compare their tax plans not with current law, however–which after all, corresponds to a bizarre, unrealistic policy path where all of the Bush tax cuts expire after December 31, 2010–but to a “current-policy-extended” baseline, which assumes the 2001 and 2003 tax cuts and AMT relief are permanently extended.  Compared with the revenue loss under the ”policy extended” baseline, Obama’s tax proposals raise $262 billion over ten years, while McCain’s lose $615 billion.  (In other words, extending the Bush tax cuts costs $3.0 trillion over ten years compared with current law.)

So in aggregate, at least in terms of tax cuts, McCain loves taxpayers (even) more than Bush loves taxpayers, and Bush loves taxpayers more than Obama loves taxpayers.  All of them are not so fond of our children and grandchildren though, because they’re all willing to have our children and grandchildren (aka future taxpayers) pay for all that love they’re willing to give to us current taxpayers.

But how much the candidates love you, in particular, depends a great deal on how “rich”, or not, you are.  With his tax cuts, Senator Obama loves those who are not so rich a lot more than he loves those who are.  Senator McCain, on the other hand, really loves the really rich.  In fact, with his tax cuts, Senator McCain loves the really rich even more than President Bush has loved them.

Here’s what I mean, from Tables 3 (pg. 25) and 8 (pg. 31) of the Tax Policy Center’s preliminary analysis of the candidates’ tax plans:

Under Senator Obama’s tax proposals (not including the Social Security payroll tax increase, by the way), compared with the policy-extended baseline (so relative to the Bush tax cuts permanently extended):

  • Lower-income households, those in the bottom 20% of the income distribution with income less than $19,740, would receive an average tax cut of $617 in 2012–a 5.4% increase in after-tax income;
  • Middle-income households, those in the middle 20% with incomes between $38,980 and $69,490, would receive an average tax cut of $969 in 2012–a 2.0% increase in after-tax income;
  • High-income households, those in the top 20% with incomes above $117,535 (so mixing the sort-of-rich with the ultra-rich), would face an average tax increase of $7,748–a 3.4% decrease in after-tax income.
  • Really-rich households, those in the top 1% with incomes above $619,561, would face an average tax increase of $133,715–a 9.4% decrease in after-tax income.
  • Ultra-rich households, those in the top 1/10th of 1% with incomes above $2.8 million, would face an average tax increase of $789,241–a 12.4% decrease in after-tax income.

Now, this really looks like Obama hates rich people, but to be fair, you should look at Table 2 (pg. 24) in the Tax Policy Center analysis, which compares the distribution of the tax cuts to the current law baseline.  If you look there, you’ll see that Obama still “loves” rich people (gives them tax cuts) more than current law (with tax cuts expiring at the end of 2010) does.  It’s just that Obama doesn’t love rich people nearly as much as President Bush loves rich people, and in fact, even relative to current law (expiring tax cuts), Obama doesn’t love the really rich people or the the ultra rich people. 

And if that’s testimony to how much President Bush has “loved” rich people with his tax policy, well, he hasn’t loved them nearly as much as Senator McCain would love them…

Under Senator McCain’s tax proposals, compared with the policy-extended baseline (so relative to the Bush tax cuts permanently extended):

  • Lower-income households, those in the bottom 20% of the income distribution with income less than $19,740, would receive an average tax cut of $20 (yep, 20 bucks) in 2012–a 0.2% increase in after-tax income;
  • Middle-income households, those in the middle 20% with incomes between $38,980 and $69,490, would receive an average tax cut of $282 in 2012–a 0.6% increase in after-tax income;
  • High-income households, those in the top 20% with incomes above $117,535, would receive an average tax cut of $2,826–a 1.2% increase in after-tax income.
  • Really-rich households, those in the top 1% with incomes above $619,561, would receive an average tax cut of $31,628–a 2.2% increase in after-tax income.
  • Ultra-rich households, those in the top 1/10th of 1% with incomes above $2.8 million, would receive an average tax cut of $190,653–a 3.0% increase in after-tax income.

And remember, those are tax cuts above and beyond the tax cuts from President Bush.  (See Table 7 (pg. 30) to compare the McCain tax cuts with current law.)

So, who loves you the most?  If my husband and I were childless and selfish, McCain loves us the most–even more than the President has loved us.  But with the four future taxpayers I have to worry about, I think I could use a little less lovin’ from all of these politicians.

DC-Area Screening of I.O.U.S.A. Next Sunday!

June 16th, 2008 . by economistmom

Bob and Dave in I.O.U.S.A.DC-area EconomistMom.com readers:  You’ve got to check out this week’s Silverdocs Film Festival (in Silver Spring, MD), where on Sunday the 22nd the documentary I.O.U.S.A., featuring the Concord Coalition’s ”Fiscal Wake-Up Tour” and starring Concord’s Bob Bixby (on left, above) and former Comptroller General David Walker (on right), will be showing on Sunday.  (I’ve wrote about it before, on the “about” page of this blog.)  Out of 108 movies that will be showing there over the next 8 days, the “Going Out Gurus” of the Washington Post’s blog recommended just 5 documentaries–and I.O.U.S.A. is one of them:

“I.O.U.S.A.”: Most of us are not fiscally-minded. We don’t spend a lot of time thinking about the national debt or trade deficits. But “I.O.U.S.A.” makes a convincing argument that we should. Featuring commentary from such financial authorities as former Comptroller General David Walker (who embarks with a few colleagues on a Fiscal Wake-Up Tour of America), this documentary raises significant questions about the economy at a time when they couldn’t be more relevant. (Screens Sunday, June 22 at 3 p.m.)

Check it out if you’re in town, because it won’t hit wide distribution in the theatres until late summer.  If you’re someone who enjoys this blog, you’ll enjoy the movie, for sure.  Unfortunately, I’ll be in Arizona with the family next week, so again I’ll have to miss a screening event.  (I’ve already seen the movie but never on the big screen.)

Ross Perot is Back!

June 16th, 2008 . by economistmom

Good news for columnist Mark Shields, who wrote in 2004 (as we had just posted a record $413 billion federal budget deficit) that he missed Ross Perot (as had many of us who label ourselves budget hawks).  He’s back!  Not in a candidacy for the presidency, but at least in time to maybe influence the quality of debate during the campaign.  Ross Perot has just launched a website (with blog and lots of charts) called Perot Charts.  (I’m adding it to my blogroll today.)  It’s very much in the spirit of the Concord Coalition and in particular the Fiscal Wake-Up Tour, in its mission.  I think the “giant sucking sound” that Perot used to use to express his objections to free trade policy can now be applied to his dismay over the federal debt and all the borrowing from abroad our country’s doing.  From the premiere blog entry (and press release):

“The economic crisis facing America today is far greater than anything since the Great Depression,” said Perot. “Our federal government continues to spend us deeper into debt. The American people must get directly involved and demand an end to deficit spending. This website will provide information for citizens to do just that.”

Like the economic charts Perot employed in his 1992 and 1996 presidential campaigns, which served as snapshots of complex economic issues presented in simple terms, PerotCharts.com features the latest official government figures about the real conditions of our economy for everyone to see and consider. The site is designed to be a reservoir of information about the economy, and provides an accurate look at where the money comes from and where it goes.

…“We simply cannot wait any longer to do something about runaway deficit spending,” Perot said. “This website addresses a number of issues, and we will add more in the coming weeks and months. But there is a common thread running through all of them. We cannot solve these problems unless we have the ability to pay for the solutions. Getting spending under control is the first step in that process.”

Why and From Where Came the “Donut Hole” in Obama’s Social Security Tax Proposal?

June 15th, 2008 . by economistmom

OK, I’m starting to pay more attention to what the candidates are saying regarding tax and budget policy, now that there are only two candidates to follow.  Obama’s announcement on Friday regarding his proposal to raise Social Security’s maximum taxable income level was news (here’s an AP story) because for the first time he explicitly spelled out to what level the taxable max would be raised.  And while I give his campaign lots of credit for coming out with the details, I’m disappointed that those details were not as sensible as I had hoped–no plain “eliminate the maximum” (now at $102,000), and no simple “raise the maximum to $___”. 

Instead, Obama is proposing that the current Social Security payroll tax of 6.2% apply to wage incomes up to the current maximum of $102,000, not at all to the wage dollars earned between $102,000 and $250,000, but again for wage dollars above $250,000.  This is what the “donut hole” term refers to.  

(Now brace yourselves for some math… or skip the next paragraph and trust me, if you’d rather…)

In other words, someone with wage income of $150,000 would see no change in payroll taxes from current law (the tax would still be 6.2% of $102,000 (the taxable maximum) or $6,324, for an average or effective tax rate on a $150,000 earner of $6,324/$150,000 = 4.2%.  But someone with wage income of $500,000 would see an increase in payroll taxes from what under current law is the same maximum tax paid by anyone with income over $102,000, of $6,324, to what under the Obama proposal would be $6,324 + ($500,000-$250,000)*.062 = $6,324 + $15,500 = $21,824.  That’s an increase in the effective tax rate for the half-millionnaire, from $6,324/$500,000 = 1.3% to $21,824/$500,000 = 4.4%.

So what the rather capricious “donut hole” structure buys the Obama campaign is some consistency in their general theme that taxes on the rich (implicitly defined as those with incomes above $250,000) are too low and that the federal tax system overall is not progressive enough.  The “donut hole” structure turns a tax that is proportional up to the taxable max and regressive (with effective tax rates declining as income rises) above the taxable max, into a tax that becomes progressive (with effective tax rates rising with income) at very high incomes (beyond $250,000).  Yet the “hole” part of the “donut hole” means the payroll tax would still be regressive when one compares the burden of anyone below the current taxable maximum (who can legitimately be considered “middle-income”) with anyone above it–because anyone above $102,000 has at least some income that would be completely exempt from the tax.  (Only people with wage income below $102,000 would pay an effective tax rate as high as the statutory marginal rate of 6.2%.)

This strikes me (and Len Burman of the Tax Policy Center) as a very messy and inefficient way to try to introduce more progressivity into the federal tax system.  It doesn’t work well because it goes at it through the wrong tax instrument, through a payroll tax that is intended to be mostly proportional in incidence, instead of going at it through the parts of the federal tax system that are actually intended to be progressive–such as, for example, the individual income tax, and in particular (if we care mostly about adding progressivity at the very top) the alternative minimum tax. 

Note that you won’t find this “donut hole” way of raising Social Security taxes in revenue option #39 of CBO’s “Budget Options.”  (You will find various income-tax ways of making the overall tax system more progressive–or less progressive–though.)

Here’s the radical idea I have:  look at the purposes and inherent structures of the taxes we have, and work to improve these taxes so they achieve those purposes more efficiently.  Keep Social Security payroll taxes mostly or even entirely proportional, by raising or even eliminating the taxable maximum.  If you’re worried about those people who earn between $100,000 and $250,000 that the candidates sometimes refer to as “middle income” (so I’m one of them), then that probably stems from the fact that you know that the alternative minimum tax is sort of unfair on folks in this income range, compared with the really rich people with incomes above $500,000.  But if that’s why you feel sorry for these people (i.e., feel sorry for me), then fix the part of the tax system that is responsible for the inequity.  Don’t go arbitrarily mucking up one part of the tax system (the payroll tax) to treat the symptoms of disease coming from another part of the tax system (the AMT and its interaction with the rest of the individual income tax).

So today I did a little Tim Russert-style investigating as to how the Obama campaign would have come up with this idea for a payroll tax “donut hole.”  I had not heard the “donut hole” concept floated about before, but it turns out that was because I wasn’t really focusing on the candidates’ tax and budget proposals before.

It turns out that back last September, Senator Obama published an op-ed in the Quad-City Times that said, regarding Social Security reform (emphasis added):

I do not want to cut benefits or raise the retirement age. I believe there are a number of ways we can make Social Security solvent that do not involve placing these added burdens on our seniors. One possible option, for example, is to raise the cap on the amount of income subject to the Social Security tax. If we kept the payroll tax rate exactly the same but applied it to all earnings and not just the first $97,500 [the taxable max in 2007], we could virtually eliminate the entire Social Security shortfall.

In other words, in September 2007, Senator Obama seemed to be floating the idea of eliminating the taxable maximum altogether.  (But note:  Obama was already saying last fall that he did not want to cut Social Security benefits by, for example, raising the retirement age.  That’s pretty explicit in the above.)

Meanwhile, also in September, Senator Edwards had a different idea for how to raise Social Security taxes, as reported in this ABC News story (which incidentally also quotes the above Obama op-ed as well as Concord’s Bob Bixby): 

Former Sen. John Edwards, D-N.C., has also talked about raising the Social Security tax cap. But he would do so in a more limited way than suggested by Obama.

While Obama has suggested imposing the 12.4 percent tax on all income above $97,000 per year, Edwards would only impose it on those making more than $200,000 per year. Income between $97,000 and $200,000 would continue to be exempt from Social Security taxes under the Edwards proposal.

“I do think we need to have a bubble above $97,000, probably up to about $200,000 so we don’t raise taxes on middle-class families,” Edwards said at Thursday’s AARP forum. “But, above the $200,000, these millionaires on Wall Street ought to be paying their Social Security taxes.”

…Interesting…

And by November 11, in an interview with none-other-than Tim Russert on NBC’s Meet the Press, Obama was floating the idea of the “donut hole”–as reported in this MSNBC article which includes a link to the video:

[D]uring an interview on NBC’s “Meet the Press,” Obama said subjecting more of a person’s income to the payroll tax is the option he would push for if elected president.

He objected to benefit cuts or a higher retirement age.

“I think the best way to approach this is to adjust the cap on the payroll tax so that people like myself are paying a little bit more and people who are in need are protected,” the Illinois senator said.

“That is the option that I will be pushing forward.”

Obama’s proposal could include a gap or “doughnut hole” to shield middle-income earners from paying more in taxes, he said.

(Also note:  he was still objecting to benefit cuts/higher retirement age–and Tim Russert was giving him a hard time for having taken real solutions “off the table” when they had been on the Obama table earlier in 2007.) 

I wish Senator Obama had stuck with what seemed to be his first instincts on the Social Security tax–to raise the cap in a simple, sensible way.  I think as time went on he started thinking too much and trying to do too many things with it–trying to please too many people.  And that’s the discouraging part–that such mucking up of well-intended policies can happen even during the campaign, well before the elected President has to do such mucking up (”compromising” is what it’s called) in order to find agreement with a diverse, bipartisan Congress.  It shouldn’t yet be time to bring out the donuts.

To Tim Russert, Even the Budget Was Exciting

June 14th, 2008 . by economistmom

What a huge loss for the DC media-politics community.  He was one of those you’d love to watch because his enthusiasm was so contagious, you’d feel it leap out from the TV screen, and he’d make anyone who works in the crazy world of DC politics feel pumped about what they were doing. 

The passage that caught my attention from today’s Washington Post story by Howard Kurtz:

“He was a junkie,” said Washington Post writer Sally Quinn, a close friend. “He would say, ‘People find stories about the budget boring — that’s crazy.’ And then he would talk about the behind-the-scenes fights, the cast of characters, and it was interesting.” 

GAO: Government Accountability ONLINE

June 13th, 2008 . by economistmom

OK, here’s my post as today’s “guest blogger” at the Association of Government Accountants’ (AGA) Weblog.  Go check it out.  I suppose this is the most controversial (meanest?) thing I say there:

[EconomistMom.com's online appeal to ordinary parents and grandparents] is in line with Concord’s “grassroots” approach—EconomistMom.com is a sort of “virtual Fiscal Wake-Up Tour” after all—which in my common-sense opinion has promise to be almost infinitely more effective than strategies that gather old (no offense), wise (fiscally-hawkish) men in grand ballrooms inside the Beltway to say that politicians ought to listen to them because they’re smart. (And no offense to those policy groups who pursue such strategies, because I still see merit to an “attack on all fronts.” I just think the grassroots approach will prove to be the much more cost-effective strategy—maximizing political bang per buck.)

If you venture onto the AGA homepage, you will see they are promoting the I.O.U.S.A. movie I’ve talked about here (see my “about” page).  They are big David Walker (former Comptroller General of the real GAO) and Concord Coalition fans, so I hope many of them will like what they see if they come visit here today for the first time…and that they’ll point their moms and others who are not normally such “GAO types” here.

I’m One Month Old! (What’s That In “Blog Years”?)

June 12th, 2008 . by economistmom

Well, it’s been a month since I launched this blog, and I have to say it’s been a lot of fun, and thanks to all of you visitors out there who have been so supportive and have helped to bring the “contagion” of the blogosphere to my little space.  I love that I have increased the population of the blogosphere…and not just by adding my mom, really!  ;) 

Tomorrow I’m the “guest blogger” on the AGA Weblog–that’s the blog of the Association of Government Accountants.  Even if it doesn’t exactly sound like your kind of place, I’ll ask you to please visit it tomorrow anyway.  It’ll also be good to draw the government accountability types to this website, to show them how I’m trying to get the message to more ”ordinary people.”  (Maybe they will share it with their moms.) 

I get much more excited about the visitors that I recruit from the rest of my varied life, like Lisa, the pharmacist mom from West Virginia, whom I met at the yoga workshop this past weekend, who only knew me as a fellow yogi, who in random small talk with me about our drives to Pittsburgh on Sunday morning commented on the condition of the interstate highways, to which I asked “did you hear the NPR story this morning on dams?”, to which she responded by going on about how neglectful our country’s been at keeping up our infrastructure, and then ended with a rather breathless “…and what about the federal debt–all that money we’re borrowing!“  You can imagine how my face lit up, and how at that moment I realized that Lisa had amazing insights as the pharmacist mom and citizen mom she is, and that I wanted to keep up my connection with her.  I told her about what I did as my “real job” and about EconomistMom.com, and that evening she told her WVU daughter, who coincidentally has been assigned to read Freakonomics for one of her honors courses.  The fact that Lisa and her daughter have promised to visit is what has made this blogging experience so wonderful to me–even just one month into it.

Yesterday I put in another application to be one of the blogs featured on BlogHer (the “community for women who blog”), because I had to rack up at least one month of blogging history, with a decent frequency of posts, before they’d consider me.  (I obviously haven’t had any trouble with the frequency thing.)  …UPDATE (4 pm):  Hey, BlogHer just added me to their roll!  :)

A few weeks ago I had found this directory/ranking of economics blogs by Aaron Schiff, based on “Technorati” ratings, which I have to admit I do not understand and am having trouble finding explanation–even on Technorati’s site.  But in Technorati rating terms (whatever those are) I’m like 140-something out of the 250+ economics blogs listed, and I think those ratings might be based on traffic over a more-than-one-month (maybe two-month?) period, so given that I’ve only been out there for half the time, well, that seems pretty decent.  Of course, I’m not even listed on Brian Gongol’s directory/ranking of economics and business websites, so I just sent him an email today to ask him to please consider me.

It’ll be interesting to see who “accepts” me first–the women’s blogging community, or the economists’ blogging community.  (Oh, and by the way, when I sent an email last month to workingmother.com’s “MomBlog” managers, I didn’t even get a reply–so I’m not doing very well with the moms’ blogging community, so far.  But I’m persistent and not easily discouraged…)

One month old in the blogosphere, and I feel like I might be the equivalent of a one year old, if I translate to the human lifespan equivalent.  So it strikes me that my “blog age” in “blog years” might go something like the translation one does to figure out “dog years”–I think that’s something like for the first two chronological years, one month is like one year, and then after that, one year is like seven years?…  So by the time you get to ten chronological years, that’s a fairly long life (translates to 80 years if you do that math)–whether you’re a dog or a blog.  Sort of seems about right, doesn’t it?

(Actually, it takes my blogging to get me to do important research like this.  I found this “dog years calculator”–yes, really!–on the web that says that the first two years are equivalent to 10.5 dog years, and then the rest are equivalent to 4 dog years each… so under that math, a 10 year old dog, or blog, is really only slightly more than middle-aged, or 53.  I think I disagree with that at least for dogs who weigh more than 10 pounds, or blogs who have authors that have more than blogs as their livelihood.)

So thanks for visiting and reading, everyone.  I’d really love to hear from you more, via your public comments here.  In particular, I’d really love to know who’s out there?–what kind of diversity I’m drawing.  Because it’s not so much whether I’m mentioned in the Wall Street Journal or how high my economist-blog rankings are that matter to me (which seems based mostly on how many other economists are visiting here), but how many people are visiting and reading who would not otherwise think about economic policy or fiscal responsibility as relevant to their daily lives.  So please “talk to me” here!

The Candidates’ Tax Plans: Revenue Neutrality Is Hard To Do

June 11th, 2008 . by economistmom

The Tax Policy Center (via their TaxVox blog’s Howard Gleckman) has delivered their first installment of bad news to the Obama and McCain economic teams:  they’ve got their work cut out for them if they want to be both tax cutters and deficit hawks.

On Obama’s (not-quite) “bottom line” (the calculation does not include a big potential offset from an increase in the maximum income subject to Social Security taxes):

Obama’s generosity [toward the middle class in tax cuts] comes at a price, however, He’d raise the national debt by a staggering $3.3 trillion over the next decade, and that includes more than $900 billion in promised revenue raisers that TPC could not verify.

On McCain’s “bottom line” (regarding taxes, so not including the potential deficit reduction he’d accomplish via spending cuts):

Keeping to the pattern of Bush-era Republicans, McCain would also go deeper into the red than Obama. Including interest, he’d increase the national debt by $4.5 trillion over a decade.

Howard/TaxVox ends with a caution about revenue baselines:

Finally, a quick word about baselines. Both McCain and Obama insist that we should assume that the Bush tax cuts will be made permanent before estimating what their own tax cuts will cost. This is little more than an outrageous bit of accounting legerdemain. There is, in fact, zero chance that all the Bush tax cuts will be made permanent, just as there is no chance they will all be allowed to expire.

I’d like to put a sharper point on that warning on revenue baselines.  The revenue baseline that matters for legislative purposes and complying with the pay-as-you-go (PAY-GO) rules is not the revenue path that is most likely to occur (and Howard is right that either extreme is highly unlikely)–but the revenue path that would be achieved under current law.   Current law says all of the 2001 and 2003 tax cuts expire after December 31, 2010.  That means that for pay-go purposes, letting some of the tax cuts expire in order to “pay for” the tax cuts you want to extend (Obama’s general strategy) is not really paying for it at all.  Such a strategy would not technically be a revenue-neutral or deficit-neutral one, but a revenue-losing, deficit-increasing, pay-go violating, one (albeit, less of one than if you’re not willing to let any of the tax cuts expire, a la McCain).  So if Obama is as committed to complying with pay-go as he is saying he is (as I am hoping he is), he will indeed have to embrace some of those tax increases, such as the increase in payroll taxes paid by higher-income Americans, that Howard calls “extremely controversial.”

They say that revenue neutrality is hard to do, and I’m afraid we’ll soon see that that’s oh so true.

Delay-ing Paying for the War

June 11th, 2008 . by economistmom

I really like Ruth Marcus’ column in today’s Washington Post.  I think she must be a mom.  She is appalled at the unwillingness of our politicians to fund the war in a fiscally-responsible manner, whether that shirking of duty to our children and grandchildren comes from actively pursuing fiscally-irresponsible policies, or passively wimping out on objecting to those fiscally-irresponsible policies.  (I’ve sung that same tune over and over again here on this blog, of course.)

But what really struck and shocked me in Ruth’s column was the Tom Delay quote:

“Nothing is more important in the face of a war than cutting taxes,” then-House Majority Leader Tom DeLay declared in March 2003.

Wow.  Did he really say that?  I mean, I know they’ve been thinking that (or rather believing that) all along (you could do a “Mad Libs” type thing with that sentence and fill in the blank on “in the face of ____”), but to actually say that out loud?

Why the Senate Refuses to Pay for Tax Cuts

June 10th, 2008 . by economistmom

The tax extenders bill (H.R. 6049) is coming up in the Senate this week–maybe even today.  (Here’s the revenue estimate for the House-passed version.)  I’ve commented on the trouble with tax extenders before.  But here’s a scoop:  today’s CQ.com news notes that it’s not just a handful of Blue Dog Democrats that don’t have a problem paying for (offsetting the cost of) the extension of expiring tax cuts (my emphasis added):

The tax bill’s fate will depend on the outcome of a bruising partisan fight over revenue-raising offsets.

The House passed the bill, 263-160 — with 35 Republican “yes” votes — on May 21. The legislation would provide incentives for renewable energy and institute new tax policies intended to help low-income families, homeowners and trial lawyers. But the inclusion of revenue-raising offsets to comply with congressional pay-as-you-go rules leaves the measure facing the same trouble most tax bills have had during the 110th Congress.

Senate Republicans oppose the revenue-raising offsets, arguing that they are not needed to extend existing law.

Last year, Republicans blocked a similar attempt to offset an “extenders” package (HR 3996), and a number of major tax provisions expired at the end of the year.

The new House-passed bill would raise revenue to cover the cost of reviving those tax breaks and extending others that are set to expire at the end of this year by curtailing an offshore deferred-compensation technique and delaying a rule that benefits multinational corporations.

Business Support

Democrats say including offsets is fiscally responsible, and they note the relative lack of corporate objections to the specific offsets.

“A lot of the business community wants it, including the offsets, wants to get this bill done. They want the extenders so badly,” said Senate Finance Chairman Max Baucus, D-Mont. “These offsets do not matter to business very much.”

So these Republicans who are refusing to pay for these tax cuts–including the big AMT extension still to come later this year–are only doing it on principle, not for practicality?  I.e., are they doing this just to be stubborn?  I mean, if Max Baucus is willing to offset a tax cut…

Sure seems that way from this April 23 letter signed by Senate opponents to pay-go-compliant tax extenders.  (Thanks to Chuck Konigsberg for posting on his WashingtonBudgetReport.com website.)  Note whose signature is on page 4. 

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