Paul Krugman wants the president to call the Republicans’ bluff and let all the Bush tax cuts expire, essentially raising taxes on everyone who isn’t living in poverty. Krugman acknowledges that this will complicate the unemployment situation but he thinks it’s worth it to protect the long-term solvency of the country and our Medicare and Social Security benefits. I think I have made similar arguments in the past, but I’m not so sure that high-end tax rates should be our number one concern right now.
If part of the deal involves a year-long extension of unemployment benefits and an extension of the middle class tax cuts in the Stimulus bill, those are some of the most important things that can be done to stimulate the economy right now. If the deal also involves a vote on the Defense Appropriations Bill that contains the repeal of the Don’t Ask, Don’t Tell policy, that would rescue that promise from the ashes of defeat. And if the deal also involves a vote in the New START Treaty in the lame-duck Congress, that would be a major bonus with very big potential upside.
What do you think?