The political horse trading over tax cuts and jobless benefits

A tax increase

TEXT OF STORY

Bob Moon: President Obama announced a deal with Republicans tonight. He agreed to extend the Bush-era tax cuts for two more years, so the GOP didn't end up forcing a tax increase on all income levels, if those tax cuts weren't extended for the rich. In return, Republicans agreed to extend jobless benefits an additional 13 months. The deal, though, still has to be approved by the House and Senate.

There was some interesting strategy behind the horse trading, as Marketplace's Nancy Marshall Genzer reports.


Nancy Marshall Genzer: The deal reached today means the tax cuts will expire smack dab in the middle of the 2012 presidential election. Congress will have to grapple with the issue again. James Thurber teaches political science at American University in Washington. He says Republicans and Democrats are already sharpening the arguments they'd make during the campaign.

James Thurber: The Democrats will claim that the Republicans want to give tax cuts to the very wealthy, and the Republicans will say the Democrats want to raise taxes and spend money yet again.

Thurber says if the economy hasn't improved by 2012, the Republican argument will carry the day. But some Democrats think their tax-cuts-for-the-rich position will win, no matter what. They relish a tax-cut smack down in the middle of the election. Paul Light teaches public service at New York University. He says that would be quite a gamble. Because voters hate tax increases. For anyone.

Paul Light: The American public hears the word tax increase and that's the only thing they have to hear.

Light says, if he were advising the president, he'd say put off the debate. Extend the cuts for three years so they expire well after the presidential election. Teddy Downey is a policy analyst at MF Global. He says some Democrats did make that argument.

Teddy Downey: There's also a range of conservative Democrats and moderate Democrats that just want this issue to go away and don't want to discuss it in an election year.

But moderates haven't been getting their way in Washington for a while now. Both parties have become more partisan, leaning further left and right. So brace yourself for an election year dustup.

In Washington, I'm Nancy Marshall Genzer for Marketplace.

About the author

Nancy Marshall-Genzer is a senior reporter for Marketplace based in Washington, D.C. covering daily news.

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