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Reject The Estate Tax Giveaway

By The Reverend Published: December 11, 2010

Steve Benen of the Washington Monthly comments on a question President Obama responded to while he was talking to National Public Radio's Steve Inskeep.....

Question: "Please ask him how keeping the tax rate for the richest the same as it has been for a decade creates one single job."

The president replied: "It doesn't, which is why I was opposed to it -- and I'm still opposed to it.

"The issue here is not whether I think that the tax cuts for the wealthy are a good or smart thing to do. I've said repeatedly that I think they're not a smart thing to do, particularly because we've got to borrow money, essentially, to pay for them.

"The problem is, is that this is the single issue that the Republicans are willing to scotch the entire deal for. And in that circumstances -- in that circumstance, we've got, basically, a very simple choice: Either I allow 2 million people who are currently getting unemployment insurance not to get it, either I allow the recovery that we're on to be endangered, or we make a compromise now."

I don't disagree with Steve Benen when he says Obama has been consistent about not favoring tax cut extensions for the top 2%. Yes, it is true that Obama, consistently, has been in favor of returning tax rates on high earners back to Clinton-era rates. No, President Obama is not flip-flopping when he restates that he doesn't believe tax cuts on millionaires creates jobs. They don't....and they won't.

But The Reverend thinks a more important part of Obama's answer to the NPR-listener's question is found here...

"The problem is, is that this is the single issue that the Republicans are willing to scotch the entire deal for. And in that circumstances -- in that circumstance, we've got, basically, a very simple choice: Either I allow 2 million people who are currently getting unemployment insurance not to get it, either I allow the recovery that we're on to be endangered, or we make a compromise now."

If it is true that the "single issue" for Republicans.....the only issue they won't back down on.....the one thing Republicans will hold out for come hell or high water....is those income tax extensions for the top 2%....then what explains the egregious estate tax giveaway to Republicans in the deal?

What explains that? If the "single issue" for Republicans in negotiations was income tax rate extensions, how the hell did estate tax reduction get into the compromise?

Brief review....because no one acted,.... in the year 2010 no one paid ANY estate tax. The estate tax rate for 2010 was....zero. What was scheduled to happen next with the estate tax?........

....the estate tax, which had expired for 2010 but was set to be restored in 2011 at a rate of 55%, with inheritances under $1 million exempted. A bill that passed in the House set the tax rate at 45% and exempted inheritances under $3.5 million, while the provision in the tax deal would exempt estates up to $5 million and set the tax rate at 35%.

If the "single issue" that would make or break a deal with Republicans was the income tax rate for the filthiest of America's rich...the top 2%....then, once again.....how in the hell did the estate tax reductions, both in rate and exemption.....get into the compromise?

If the estate tax was eliminated altogether.....the goal of Republicans....the Treasury would lose $800 billion of revenue over the next 10 years. Sounds like real money. If Obama's compromise estate tax rate and limit are passed, the additional deficit to the federal government will be $262 billion over ten years. Still serious money.

That $262 billion, of course, would be added to the $65-70 billion per year addition to the deficit created by the "single issue" which would queer the deal for the GOP'ers....not extending income tax rates on the top 2%. That's according to Obama.

If the estate tax "compromise" were trashed as proposed in Obama's compromise agreement.....something I think should absolutely be done.....then Democrats could vote for the package.

As is, I don't give a damn if Slick Willy comes out and bites his lip...and tells us how Third Way triangulators would handle the situation. With the estate tax giveaway as part of the compromise, Democrats shouldn't vote for the bill.

That's where the line should be drawn.

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