Beyond the payroll tax issue I mentioned in the last post, any serious fiscal talks aimed at avoiding a recession should include other items that aren’t drawing a great deal of attention given the obsession with tax rates. As it happens, TNR Jonathan Cohn has drawn up a comprehensive list. You can go read it yourself, but I’d draw special attention to this subject:
The Refundables: These should be getting a lot more attention than they are. In 2009, the federal government expanded the Earned Income Tax Credit, which basically boosts wages for the working poor; it expanded the Child Tax Credit, which gives working people extra money to pay for their children’s needs; and it created the American Opportunity Tax Credit, which helps people pay for college tuitions. Extending all of these, as President Obama has sought to do, would plow $250 billion into mostly lower- and middle-income families that could use the help.
Once upon a time, conservatives hailed programs like these because they rewarded people who were trying to help themselves, by working or going to school. Now conservatives bash them, because, supposedly, they are creating a class of people dependent on government. Republicans haven’t made a big stink about them in the fiscal cliff debate, but that doesn’t mean they’re ready to endorse them without demanding something in return.
I actually think getting rid of these important tax benefits for the working poor and middle class is a bigger deal to conservatives than Jon suggests: it’s part of what Republicans have been thinking about every time they’ve mentioned “tax reform” or “eliminating tax loopholes” as a way to avoid or mitigate tax rate increases. You know, while we’re cutting back on the tax code yummies of Big Oil or Big Finance, let’s make sure Big Poor takes its hit as well.
Jon’s list concludes with the issue that may well dwarf all the others: the debt limit. Why should the White House and congressional Democrats make concessions to the GOP if Republicans intend to save their real psychotic fire and their real threats to the economy for a debt limit fight just weeks down the road? Beats me.