What the deal does (and what it could have done)

WHAT THE DEAL DOES (AND WHAT IT COULD HAVE DONE)…. The Center for American Progress’ Michael Linden and Michael Ettlinger crunched the numbers on the tax policy agreement reached between the White House and congressional Republicans. They expect modest-but-positive results, but pay particular attention to the caveats.

Our analysis of the framework tax agreement that President Barack Obama announced yesterday, including additional tax cuts and an extension of unemployment insurance, finds that 2.2 million jobs will be the end result. In this time of economic distress, millions of new jobs are, of course, very welcome. It is, however, unfortunate that these jobs have to come from an agreement that is a balance between large, unneeded, bonus tax breaks for the wealthiest Americans and the needed continuation of unemployment benefits, middle-class tax relief, and additional help for the economy for the rest of us.

While the terms of the deal are understandable given the effective veto power of conservatives, it is unfortunate that policies aimed at the vast majority of Americans and at boosting the economy were held hostage to wasteful tax cuts for the wealthiest 2 percent. But the Obama administration clearly had its eye on job creation in its willingness to accept $133 billion in misallocated bonus tax breaks for the rich in exchange for policies to sustain the economic recovery and help the middle class.

That’s not bad. It’s not amazing, but as estimates go, if there are 2.2 million Americans with jobs as a result of this agreement, it will have been pretty successful.

But Linden and Ettlinger went a step further and considered a hypothetical — what if the specific tax breaks Republicans demanded were instead devoted to additional payroll tax cuts? At that point, their analysis finds a plan that would save or create 2.7 million jobs.

Let this be a reminder: to add GOP provisions to an economic policy is to make it worse.

What’s more, Pat Garofalo and Michael Linden report on who’ll benefit from each side’s priorities.

Obama’s components of the tax deal (extended unemployment benefits, the payroll tax cut, and the extended credits) will cost $214 billion to aid 156 million people. The Republicans priorities (extending the Bush tax cuts for the rich and cutting the estate tax), meanwhile, will cost $133 billion, but only benefit roughly 4.8 million people.

I can appreciate why this debate has stirred a lot of strong emotions, but right about now, I’m stuck thinking about what kind of policymaking would be possible if the Senate still operated by majority rule.