A short-term extension of the Bush-era tax cuts for everyone may be the most workable solution, given partisan recalcitrance, but it's a shame that President Obama is being forced into a pact without significant Republican concessions.
Doing nothing isn't an option. That would cause the cuts to expire on Dec. 31, raising taxes for all workers in a weak economy.
Given the hard times and high deficits, the most sensible option is what Obama proposed originally - extending the tax cuts only for families earning $250,000 or less. Letting the tax cuts expire for the wealthy would prevent adding $700 billion to the deficit over the next 10 years.
The House approved this fiscally responsible plan Thursday, but Senate Republicans have vowed to block it. As leverage, the lawmakers had refused to extend jobless benefits to the long-term unemployed.
The Republicans made no moral connection between their carrying water for the rich while turning a blind eye to the jobless poor. They preferred extending tax breaks to $2 million households while cutting off $300 checks to the unemployed.
If the wealthy's tax cuts are allowed to expire, the highest income-tax bracket of 35 percent would rise to 39.6 percent on Jan. 1. The next highest would rise from 33 percent to 36 percent.
But Republican gains in the midterm elections on Nov. 2 have changed the dynamic. The House will come under GOP control in January, and most Republican lawmakers favor making the tax cuts permanent for everyone.
For a party purportedly passionate about reducing deficits, this path makes no sense. A permanent extension of tax cuts for all would add about $3.6 trillion to deficits over the next 10 years.
Cutting spending will help. But the level of cuts it would take to offset these future tax cuts is neither reasonable nor desirable, nor would the tax cuts shrink the massive debt that the government has already accumulated.
House Republicans propose saving $100 billion through program cuts next year. That's about 7 percent of last year's deficit of $1.4 trillion. Clearly, cutting spending alone simply won't solve the problem.
Republicans seem adamant about keeping the wealthy's tax cuts. Obama appears just as determined not to approve permanent tax relief for all, which would swell future deficits.
Given those realities, and deep partisan distrust, the most likely solution is a compromise - a two-year extension for all. That would add $501 billion to the deficit, which voters should remember when Republicans talk about fiscal sanity. But the temporary fix would give the economy more time to recover.
It would also give policymakers more time to prepare for an adult conversation about the need for tax increases to be included as part of a long-term strategy for lowering the nation's debt.
If Republican lawmakers can stop gloating over the midterm elections, they might even recognize that approving a two-year extension of tax cuts now, rather than pushing for permanent cuts, would likely frame the 2012 presidential campaign as a choice between tax relief (Sarah Palin, Mitt Romney, or fill in the blank) and tax hikes (Obama).