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Three-Card Monte, Republican Style

Ezra Klein does a service today by reminding us of a little history--specifically, the history of the Bush tax cuts. Republicans wanted to enact the cuts via the budget reconciliation process. Yes, that's the same process that Republicans would, years later, declare illegitimate when Democrats used it to pass health care reform. But there was one key difference. A bill can't pass through reconciliation if it increases the deficit after ten years. Democrats dealt with this problem by passing, at considerable political risk and cost, a bill that actually reduced the deficit after ten years. Republicans dealt with this by setting their tax cuts to expire after ten years--which would have been fine if they intended to make the tax cuts temporary or to find offsetting money that would pay for them permanently. But skeptics always suspected Republicans had no such intentions. 

And the skeptics were right. Here we are, in 2010, with the tax cuts set to expire. Democrats long ago said they'd let the tax cuts for lower- and middle-income Americans stay. But they're not going to renew the tax cuts for wealthier Americans, which would cost an additional $820 billion. Republicans, naturally, are screaming "tax hike" and are demanding Democrats extend all the tax cuts. No, they have not seriously proposed how to pay for them.

Understandably that's left Ezra at wits end:

It's really hard to know where to start with this one. It's not a tax increase passed into law by Democrats. It's a reversion to old tax rates passed into law by Republicans. It's not how law is supposed to work. It's the result of twisting a budget process meant to reduce the deficit so you could use it to massively increase the deficit. And as for the policy itself, it's a fiscal nightmare: No one who professes concern for short-term deficits can argue for the extension of these deficit-financed tax cuts and retain credibility on debt issues. This is a litmus test. It's not Democrats who are trying to pass the largest tax hike of all time, but Republicans who are calling for the largest increase in the deficit in memory.

This is the reason the attitude of fiscal scolds like Robert Samuelson is so frustrating. Democrats are not perfect. They could push harder to bring the budget closer to balance--by, for example, letting even some of the middle-income tax cuts expire and reducing health care spending more aggressively. But at least they are pushing in the right direction. Republicans, by contrast, propose plans that would make the fiscal situation far worse and then, when it power, do their best to make these plans law. But the scolds barely notice.