I don't write much about tax cuts over here, because, well, that's not really my bag. But since the WaPo decided my post at Greg's yesterday was worth printing in the dead-tree version, I figured I might as well repeat my analysis of the conflict over extending the Bush tax cuts over here:
Republicans win if the Bush tax cuts get made permanent, and they win if the tax cuts expire. If its the former, Republicans get their preferred policy option. If it's the latter, they get to accuse Obama of raising taxes. The way the White House really loses politically is if the tax cuts simply expire, since even if the White House capitulates to Republicans on making all the tax cuts permanent the administration gets to claim they worked with Republicans to cut taxes.
But because Republicans win either way, they have no incentive to compromise, and can simply hold out for whatever they want. The more willing to negotiate the White House appears, the more likely Republicans are to move the goal posts. As with health-care reform, Republicans are left with the stronger negotiating position because they're willing to shoot the hostage. The deficit doesn't matter, and even preserving tax cuts for the wealthy comes second to the Republicans' primary goal, which is to destroy the president.
As long as the fight is over actually passing legislation, Republicans can do what they want. Because ultimately, they're fine with absolutely nothing getting done.
