Will "Failure To Withhold" Penalties Apply Too?

It's like watching the Cuban Missile Crisis of tax/budgeting policy. Or the World Series of Irony, as both sides claim to be taking a principled stand that is wholly at odds with their historical principles. The House Democrats say all tax cuts must be offset with spending cuts or revenue increases, so let's stop hedge fund managers from using offshore trusts to defer/avoid taxes as a way of paying for the latest one-year AMT fix. (AKA: do it our way or we nuke the middle class.) The Senate Republicans say no new taxes; just drop the AMT that nobody was expecting anyone to pay anyway. (AKA: national debt, national schmedt, let the grandkids worry about it.) They're all throwing around words like "unprincipled" and even "immoral."

While I agree with the democrats on this one in principle -- like being a Jet, if you want to do pay-go you've got to do it from your first cigarette to your last dying day -- this is one mighty dangerous game of chicken. My guess is that the republicans are counting on the fact that it's largely blue-staters who get the biggest state tax deductions and therefore will suffer the most from a failure to reach a compromise. The NYTimes seems to be writing it off to a broader republican strategy that maybe could be called Starve The Beast Part Two. But whichever side prevails, this is not a good way to run tax policy.