Opinions Range on the Tax Deal

Suffice it to say, there are a wide range of opinions on the tax deal President Obama announced last night. There's a lot to like and dislike about this deal, but it's clear that, in terms of actually moving the economy over the next two years, this was better than a lot of the alternatives. A quick round-up of some opinions.

Ezra Klein:

So is this a good deal? It's a lot better than I would've told you the White House was going to get if you'd asked me a week ago. There's some new stimulus in the form of the payroll-tax cut and the expensing proposals. The older stimulus programs that are getting extended -- notably the unemployment insurance and the tax credits -- probably would've expired outside of this deal. The tax cuts for income over $250,000 are a bad way to spend $100 billion or so, and the estate tax deal is really noxious.

It's bad news for the deficit, though the White House and Congress are right to make the deficit less of a priority than economic recovery. And speaking of that economic recovery? This isn't enough, and it's not well targeted. The deal amounts to the White House throwing some bad money after good. But the end result is between $200 and $300 billion more in tax breaks, tax credits and unemployment insurance than there would've been if not for this deal (I say $200-$300 billion because of the uncertainty over what would've been extended in the absence of this package). That's better than nothing -- or to be more specific, better than backsliding.

The TNR team - Jon CohnJonathan Chait and Chait again:

Why were Republicans so flexible? They are willing to deal away a lot if they're getting tax cuts for the rich. President Clinton got Republicans to establish a Childrens' Health Insurance Program in 1997 in return for a capital gains tax cut. Now Obama got a fair amount of stimulus in return for upper-bracket tax cuts. Unfortunately, it tends to be terrible policy. But it's the party's core policy goal, and if you help them attain it they can be surprisingly reasonable.

Brad DeLong:

Most of this round of stimulus does look to be relatively low bang-for-buck, and it is not paid for over ten years, but it does look to me as though it is better than a poke in the eye with a sharp stick.

Paul Krugman: There are no deficit hawks in Congress.

Mark Zandi to Michael Scherer:

"In the current environment, emergency unemployment insurance is much more efficacious that tax cuts for upper income groups,” said Zandi, in an email to TIME. “Given the fragility of the recovery, however, I would do both."

David Frum says the deal is "a win for the President."

More economists: Mark Thoma is concerned about social security and the financing mechanism for the payroll tax cut, Greg Mankiw likes it, with some caveats, and Dean Baker cautions that this package is anti-contractionary, not really stimulative.