I’ve been struggling to find the right Lando Calrissian quote to describe the deal the White House made to extend the Bush era tax cuts for the top 2% of earners, but this one works. Yesterday, responding to Paul Krugman‘s grim assessment, Ezra Klein wondered how the deal might affect Barack Obama‘s election chances:
The payroll-tax cuts look like the Bush tax cuts in reverse. By slapping an expiration date on the cuts, the Obama administration got twice as much as they otherwise would’ve (Making Work Pay, the tax cut being replaced, was only half size of the payroll-tax cut in 2011). And just as it was very difficult to let the Bush tax cuts expire, it’ll be very difficult to let the payroll-tax cut expire. So the likely outcome here is that Democrats got $240 billion of payroll stimulus rather than $120 billion. That sounds good for Obama’s reelection.
Rich Lowry got some deserved grief for his argument that “Liberals should care about one thing and one thing only: Re-electing Obama,” but he’s right that if Obama isn’t reelected the Affordable Care Act is in serious danger. I’m still not sure that if the payroll tax holiday actually puts Social Security in danger as Dean Baker and David Dayen write, the deal is worth it. Still it’s not as though Republicans are going to stop going after Social Security whether the deal fails or not.