- Timing is not necessarily of the essence. In a few weeks, the GOP will have a much stronger hand in Congress. Why the rush now? They could certainly work out a retroactive tax cut in early 2011 (and by 2011, it would be a tax cut).
- Keep things in perspective. The GOP could pass a continuation of the tax reductions for everyone making less than the top 1% or 2% today. Those tax continuities are not up for debate. The real points at issue are maintaining a taxation rate of 35% for the highest tax bracket (instead of allowing it to rise to 39.6%) and maintaining some kind of estate tax exemption. In exchange, if reports are correct and the Bush tax cut extension is only 1/3 of the $1-trillion package, Republicans are willing to offer $600 billion in new spending and subsidies. So, $300 billion a year in exchange for tax cuts for the highest wage earners?
- Reputations matter. If the GOP isn't careful, passing this "compromise" could be taking a flamethrower to the Republican mantra that the party has "learned" from the "excesses" of the Bush years and now is serious---really serious---about deficit spending. With that reputation burned to a crisp, the GOP may have running on a message of fiscal sobriety in 2012 and beyond. That image was a big reason for Republican gains among moderates and conservatives, and it is not an inconsiderable benefit to be thrown away. Is two years of tax reductions for top earners really worth that?
- What about the economy? Krauthammer and others have suggested that this tax cut compromise is a Stimulus II (or III or IV or whatever), aimed at buoying the president's chances of reelection through improving the economic picture. If this plan would end up improving the economy, there are two possible responses. One is that, if the president's policies do improve the economy, then kudos to him, and he deserves some credit for that. On the other hand, there is also the risk (and one I at least am worried about) that the economic stimulus of this compromise would create the illusion of authentic economic growth financed through frantic borrowing---but it would not do anything to improve the actual fundamentals of the economy. This compromise, then, could focus as a kind of narcotic that temporarily hides the effect of continuing economic erosion while in fact making this erosion much worse. And if this compromise can help push the president over the top in 2012, it might give another four years to failed economic policies.
Krauthammer's recent column seems a centerpiece of growing conservative opposition to the compromise (some more details here), and other skeptical takes can be found here, here, here, and here. Jonah Goldberg seems to be pushing back against this opposition.