Peter Orszag's first opinion piece in the New York Times has certainly made a splash, hasn't it? Media outlets are hyping that the former head of the Office of Management and Budget (OMB) has come out in defiance of the White House to argue that Congress should extend all the Bush Tax Cuts. Take a closer look at Orszag's column, though, and one will recognize this meme as a silly controversy distracting from the real issue raised in the piece.

Orszag opens his column by concisely citing the two budget pressures currently facing lawmakers: weak short-term demand and unsustainable mid- and long-term budget deficits. Considering these two pressures, Orszag proposes a compromise on the Bush Tax Cuts:

In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether. Ideally only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it.

Did you catch the compromise? It's not between those that favor extending the middle-class tax cuts and those that want an extension of all the tax cuts; it's a compromise between those favoring permanent extension of the Bush Tax Cuts (in whatever form they may take), and those arguing for the complete expiration of the tax cuts.

Orszag's concession that Congress may have to extend the high-income tax cuts to extend the middle-class cuts is simply an astute observation in the current political environment. Indeed, if faced with similar circumstances, I doubt the president would forgo extending tax cuts to the middle-class if that meant he had to extend the cuts to high-income earners as well.

Nevertheless, all of that is in the periphery of Orszag's argument. Including the top two rates in a temporary extension of the middle-income rates is just a means to his end of ending the Bush Tax Cuts.

Granted, Orszag is in a rather small boat compared to the cruise ship you could populate with those advocating for permanent extension of either some or all of the Bush Tax Cuts, which, in case you hadn't noticed, includes the White House and both parties in Congress.

But Orszag's argument is an important one, and even more so because so few are echoing it.

As the former head of OMB asserts, "[W]e’re not going to solve our budget problem over the next decade unless revenue is part of the equation." And raising revenue from allowing the tax cuts to expire is sensible because extending them, no matter what form they take, locks "us into a budget scenario out of which there are few politically plausible routes of escape."

I will leave the potential economic consequences of higher taxes to the economists, but there is no doubt that letting the Bush Tax Cuts expire would save the country $3 trillion over ten years, which would lower deficits to the theoretically desirable level of 3 percent of gross domestic product (GDP).

The problem is, it's hard to imagine that congressional Democrats, if they're still in power in two years, or the White House, which would be facing reelection, would allow the tax cuts to permanently expire at that time. In which case, we'd replay the argument over the Bush Tax Cuts, but the filthy rich would be a little more filthy and the country would be a few billion poorer.

Image by Flickr user Center for American Progress used under a Creative Commons license.