By Jason Tolbert

I remember about nine years ago sitting in a tax class shortly after the tax cut package of 2001 was passed and the professor said something very confusing.

He handed out summaries of the details of the tax cuts and informed us that despite what we may have heard, the largest tax increase in history had just been enacted. As we stared at him with puzzled expressions, he began his explantion. The bottom line was that almost all the tax cuts in the package would sunset on Dec. 31, 2010, resulting in the largest tax increase in history.

I remember thinking that was funny, and no one would let that happen. Congress would take some action beforehand to prevent such a disaster. Besides, it is so far off. We have plenty of time to get to that …

Now, the doomsday tax scenario my professor predicted is only months away and the debate over what to do is beginning to take shape. Because it is an election year, we are certainly not short on demagoguery.

The Democrats’ talking points center on framing the tax cuts as the “Bush tax cuts.” In their world anything associated with former President George W. Bush is automatically bad. Suddenly these “Bush tax cuts” are to blame for all things wrong with the economy, particularly the deficit. They claim that “extending the Bush tax cuts” will skyrocket the deficit and would be fiscally irresponsible.

On the surface, it seems they may have a point. The deficit certainly has increased dramatically over the last 10 years; however, most of that is directly attributable to the economic downturn and related financial bailouts and stimulus spending. In 2007, the budget deficit was just over 1 percent of GDP. By 2009, the budget deficit increased to almost 10 percent. The tax cuts did not change. The economy and spending did.

One of the main problems with the way Washington deals with fiscal policy is that no one wants to consider the long-term consequences of their actions. The expiration of these tax cuts is just one example. Everyone knew that the Dec. 31, 2010, deadline for doing something was approaching, yet no one wanted to tackle the problem filled with land mines.

As the deadline approaches, there is no choice but to deal with it during difficult mid-term elections. But make no mistake — doing nothing would be doing something. It would, in effect, enacting the largest tax hike ever.

The current compromise being pushed by the Obama administration is to extend the current tax rates for individuals making less than $200,000 and families making less than $250,000. The details are not yet hammered out, so we are not sure what this will mean for the different aspects such as the elimination of the marriage penalty or the reduction in taxation on capital gains and qualified dividends.

But Congress and the White House better figure it out fast. They can blame Bush all they want, but doing nothing will make my professor’s words all too true.

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Jason Tolbert is an accountant and conservative political blogger. His blog — The Tolbert Report — is linked at ArkansasNews.com. His e-mail is jason@TolbertReport.com.