Former OMB director Peter Orszag has an op-ed in today’s Times pushing a 2-year extension of the 2001/2003 tax cuts as a compromise. Auspiciously, Pew just updated its cost estimates of different policies surrounding these cuts. The 2-year full extension Orszag favors would cost $561 billion over the next ten years, including interest costs. Note that this assumes taxes revert back to their higher 2000 rates beginning in 2013. By contrast, permanently extending all the tax cuts would cost $3,259 billion over ten years, and permanent extending the cuts only for “middle-class” filers (as proposed by the president) would cost $2,212 billion over the next ten years.
The Times also reported late today that the president will insist against any extension of the the 2001/2003 tax cuts for the rich. That presumably means that Orszag’s proposal for a full albeit temporary extension is off the table. Luckily, in its update, Pew added a new policy option: a 2-year extension of just the “middle-class” cuts, which comes to $387 billion over the next ten years.