There is growing conservative opposition to the tax cut deal, to the point that some are speculating the Tea Party will punish Republicans who vote yes. Of the Republican senators who voted against the deal, only George Voinovich has a history of voting against tax cuts. The rest were conservatives like Tom Coburn and Jim DeMint.
The trouble is the deficit spending that has been included to win Democratic votes: an unfunded unemployment extension, an ethanol boondoggle, and other government goodies. In return, President Obama and the ever-malleable former President Bill Clinton swallowed their bogus opposition to foregone revenues from the tax cuts. But here is the problem: if something isn’t done by the end of the year, tax rates will rise across the board. This will be difficult to fix retroactively and any solution after that will wreak havoc on withholding tables.
The Bush tax cuts were tarnished from the beginning because they were unaccompanied by spending restraint, cluttered with Keynesian rather than supply-side provisions, and a temporary rather than permanent. These problems largely remain. Congress is likely to extend the tax cuts for now. Will the new House majority try to fix these problems later?