A Compromise Is A Deal Nobody Likes !

Today's Wall Street Journal just posted an article on the tax deal reached between the Democrats and Republicans in Congress.  It definitely is a compromise, but I am not sure that the 'true believers' on either side of the spectrum will be happy with it.

Many conservatives felt that the Republicans should have held out for a permanent extension of the current tax rates--after all, those tax rates have been in effect for ten years.  Many Democrats believe that the tax rates for high income earners should be raised regardless of the recession. 

For me, there are a few problems with the compromise reached.  To extend unemployment benefits for thirteen months seems to be excessive to me.  Does the Obama Administration have that little faith in the number of jobs being created in the next year?  It bothers me to see people collecting unemployment insurance for three years.  To me that creates a disincentive to work.  Another problem is the uncertainty that only extending the current tax rates for two years creates.  Businesses need to know their tax rates more than two years into the future in order to plan expansion.  We need permanent tax rates.

There is another problem with the reaching of this compromise.  As soon as this legislation is passed, Congress will be able to move on to other things--such as the DREAM Act and the START Treaty.  A lame duck session is not the place to discuss either of those items.  If they were that important, they could have been done in the last two years while Democrats  had control of Congress.

There is a mixed blessing in this compromise.  Included in the compromise was a 2% cut in the payroll tax for workers.  This will put more money in people's pockets, and thus will stimulate the economy.  Ironically, that may make Barack Obama a two-term President!

The thing to remember here is that it's our money--not Washington's.  Government is too big, and we are paying too much for it.  We will never lower the deficit until we cut the size and spending of government.  The deficit is not a revenue problem--it is a spending problem!