If Republicans take the House, how much likelier is a full extension of the Bush tax cuts? I'd say the odds that the cuts for income over $250,000 remain in place for at least a few more years go up by at least 50 percent, and if those cuts are extended once, I think it's also likelier that they get extended again. If Republicans take the House and the Senate, how much likelier is a full extension of the Bush tax cuts? I'd say it goes up to 70 percent, and the only reason I don't say 100 percent is that President Obama has more incentive to pick a fight with Congress. Nevertheless, the compromise will almost surely include a temporary extension of the tax cuts for income over $250,000.
Now, if Republicans take the House, how much likelier is a deficit-reduction deal that increases revenues or cuts spending by at least $700 billion over the next 10 years, thus making up for the tax cuts? Maybe 10 or 20 percent? And I think I'm being generous here.
What if the Republicans take the Senate, too? I'd think the chances might actually go down, as Obama would need to fight on behalf of his base if he's going to remain viable for 2010. You might see some changes made to Social Security, but nothing on the order of $700 billion over the next 10 years.
When you get concrete, in other words, it's much easier to see how divided government worsens the deficit and very hard to see how it reduces it. The vehicle for worsening the deficit already exists and has Republican support. The vehicle for reducing the deficit doesn't. And that's before we talk about health-care reform, where Republicans have supported both repeal and, more specifically, repeal of the bill's cost controls, either of which would worsen the deficit picture further.
That, anyway, is where I'd put the odds. For those who disagree, what are the deficit-reducing bills divided government will pass that will have more impact on the deficit than the tax cuts (and, if you think it'll happen, repealing health-care reform, which CBO says will worsen the budget outlook)?
