If the legislation passes, Democrats in the coming days will bill it as a historic win for the party by saying it broke the Republicans’ no-new-tax orthodoxy. That is true, but the small-scale deal poses its own problems over the long run for the White House and congressional Democrats.
Sure, the deal extends the middle class tax cuts permanently, but part of that extension involves accepting a huge swath of the Bush administration’s tax policy legacy. The deal also defines the wealthy as those who earn close to half a million a year. That’s hardly a tax just to benefit the middle class. Even high-income earners in expensive states like New York or California would be hard-pressed to define anyone making $395,000 as just another hard-working Joe.
That’s a huge political victory for the Republicans, because it ensures that the Bush-era cuts have become part of our accepted reality. “This is now part of the tax code,” says Roberton Williams, a senior fellow at the Tax Policy Center. “Any change in taxes is now measured relative to that.”