Please hear me out on this one:
The Democratic party has complete political cover for allowing the Bush tax cuts to expire. They could simply refuse to vote and the public, except those who would never vote for Democrats anyway, would correctly understand that it was in fact the Republicans who actually voted for the tax cuts to end this year.
But, being that we are in a recession, it makes sense as something that is both somewhat stimulative and politically possible to at least temporarily extend tax cuts to those who aren't rich ("Why not the rich?"). So, the Democrats should quickly bring a cloture vote on a bill that extends only the tax cuts for those who aren't rich, force a filibuster, and use those votes to paint Republicans as against the middle class, against the poor, and against anything that doesn't help the rich.
But then what?
Republicans will filibuster everything between now and the midterms unless it results in an extension of the Bush tax cuts for the wealthy for two years and little else (e.g. extension of the rest of the Bush tax cuts and maybe $50 billion in direct stimulus) or extension of the Bush tax cuts for the wealthy for ten years and... medium else (e.g. extension of the rest of the Bush tax cuts and maybe $100 billion in direct stimulus).
Democrats are after a huge stimulus package by any Republican's standard, as they should be. It has been estimated that our output gap was as large as $2.1 trillion, meaning (after economic multipliers) we needed about $1.4 trillion in direct, effective stimulus to get GDP and job growth back on track. With the first stimulus package we got some direct, effective stimulus and a bunch of other, less-effective stuff, which worked out on average to be a little more than half as effective as it could have been for the price tag, or the equivalent of $0.5 trillion in direct, effective stimulus. That leaves us with about $900 billion more we need to spend as soon as possible. (background here)
After their filibuster-prompting gambit above, Democrats will have a small but newfound political momentum and both parties will still be chomping at the bit to pass tax cuts. But there is no direct way to turn this into $0.9 trillion in spending. Even without the filibuster, it'd be impossible to get Democrats to pass a huge stimulus bill before the midterms. But in the lame-duck session after the midterms, their only hope of passing anything is by reconciliation, and the whole point of increased spending is that it isn't deficit neutral. As such, I think it is best if Democrats allow all Bush tax cuts to be extended for 10 years and accept their $100 billion in stimulus in return. This leaves them $800 billion short of their goal, but the story doesn't end there and this isn't merely a "something is better than nothing" strategy.
Independent and non-partisan Pew estimates that extending the Bush tax cuts for everone for ten years would cost $0.8 trillion more than extending them only for those who aren't rich, and hopefully you see where I am going with this now. By allowing Republicans to extend the Bush tax cuts for the rich for ten years, what Democrats are really doing is giving themselves $800 billion in reconciliation spending money, and conveniently that's exactly as much as they need. There are at least fifty Democrats in the senate (plus Biden) who do not want the Bush tax cuts for the wealthy extended, and that easily describes half of the house as well. Both parties have already made it clear that they don't plan on doing much else between now and January, so by focusing on nothing but getting $100 billion in stimulus before the elections and then focusing on nothing but forcing through a bill that eliminates the extension of the Bush tax cuts to the rich in exchange for $800 billion in stimulus after the elections through reconciliation, the Democratic Party can do the only thing it really urgently needs to do regardless of whether it controls the house or the senate next year: fix the economy.
Now, there's one obvious question that arises which makes this tactic very risky: Can they actually get fifty senators to vote for the reconciliation package? If not, then they've just lost $800 billion with no upside. In reassurance, I'd pose a question back to you: can you name eight Democratic senators, in addition to Lieberman, who would be afraid to vote against the extension of Bush tax cuts for the rich, even in a lame duck session? I can name a plausible six, not eight, and two of the remainder knocking off in four months is extremely unlikely.
The rest of the questions that could be raised are about politics and reputations, etc. etc. that honestly don't matter anywhere near as much as fixing the economy does. Unless Democrats can miraculously get strong cap-and-trade passed along with substantial reform of public education, there is no combination of policy accomplishments that will help out Americans as much as fixing the economy will, so they might as well blow their wad on the best thing that they can hope for.
I honestly don't see it as being as bad as all that, though. Democrats can, in passing this reconciliation bill, aggressively push the message that they are simply allowing the Bush tax cuts on the wealthy to expire as the tax cuts would have anyway. This forces Republicans into the position of explaining that there's technically a procedural difference between simply allowing them to expire and extending them and then voting for them to end anyway, at which point the Democrats will have won the spin war as far as people who don't watch Fox News are concerned and no one will care about the procedural details come the next election: Democrats will have ended the unpopular and irresponsible Bush tax cuts for the rich.
Democrats will also have to bear the burden of another stimulus, but guess what: the effects of this one will be visible rather than simply preventing what didn't happen as was the case with the other. With Republicans making sure nothing else significant gets passed over the next two years, the American public will be able to draw a lesson uncluttered by other plausible contributors for once in history: raise taxes on the rich and spend to benefit the poor and the economy grows while unemployment falls. Who knows, if unemployment drops to 7% by November 2012, Obama might even have a shot at getting reelected. ;)
Even if I'm completely wrong on the politics here, this is still worth doing: Democrats have to be willing to use unusual rules to do what's right if their opponents are willing to continually use unusual rules to do what's wrong. And so, Democrats should pass an extension of tax cuts for the rich, because it is the only practical way for them to accomplish what needs to be done.
Update I'm very surprised that no one seems to be reading and comprehending this journal. To address some of the comments made thus far:
Lefty Coaster: You're talking about tax cuts, I'm talking about passing an $800 billion stimulus package with no input from Republicans, which cannot be done through reconciliation unless you raise $800 billion in taxes elsewhere, which extending and then eliminating the tax cuts on the rich will do.
chaboard: The budget they would be reconciling is the 2011 budget passed on July 2nd.
standard deviant and metal prophet: What compromise am I proposing? Where does my plan depend on cooperation of the Republicans? If anything this would be seen as deceiving them and then going around them.
burrow owl: There's a link explaining why tax cuts for the rich aren't stimulative right in the journal intro, behind "Why not the rich?".
irate: Yes, Republicans are obstructing everything, so we must live within those bounds, which my plan does.
reddbierd: Republicans voted for the tax cuts to end when passing them in 2001 and 2003.
The rest of the comments made up until right now simply don't address this diary I'm very sad to say.