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Two Charts That Explain Obama's Great Or Horrible Tax Deal

My line on the Obama-Republican tax deal is that it's too soon to tell whether it's a good thing -- it's either a huge victory or a massive defeat. There's an easy way to show this in chart form. The White House has a graph depicting what it won against what the Republicans won:

Looks pretty good! And that doesn't even include the Bush tax cuts on income under $250,000 , which is definitely something the administration wanted.

Of course, that chart assumes that the Bush tax cuts on income obver $250,000 truly will expire after two more years. What if they don't?

Moveon has made a chart of its own to depict what that outcome looks like:

That's pretty bad! And that shows why Obama and the republicans made the deal -- because they have different views about which chart will eventually prevail. The administration thinks it bought time, to get past the economic crisis and its reelection, and it will ahve a much stronger position from which to veto any extension of the upper-bracklet tax cuts. The Republicans think that they won this fight in 2010 and they can win it again. Essentially, Republicans antied up some unemployment benefits and progressive tax cuts in order to keep the Bush tax cuts for the rich alive for two more years, and win another chance to make them permanent.

From the perspective of the first chart, the liberal revolt against Obama is crazy. He prevented mass economic suffering by winning a second sgtimulus that Republicans would otherwise never have agreed to. On the other hand, they can't be sure he really will hold the line in 2012. But the liberal revolt does help demonstrate the costs the administration will pay if it capitulates on the upper-bracket Bush tax cuts in 2012. In that sense, their complaining is quite helpful.