Though I’m going to have to disagree with Maureen. Your concerns are the same concerns as mine, so it’s not about intentions. I just believe that the economic policy you are advocating has proven to fail, and I’d say has contributed to the current economic crisis.

We need to extend the tax cuts for the bottom 80% of the population–I would even settle for extending them for the bottom 95%. However, the top percentiles’ taxes need to be increased, and here is why.

First, history shows that they can handle. In the golden age of capitalism–a time where GDP growth rates vastly outpaced those of the last 30 years–the top tax brackets paid taxes as high as 94% of their income. High rates lasted up until as late as the early 1970s, with them paying 70%.

Second, it is good for the economy and the budget. It provides government income that can be used to provided vital services to the working class–like unemployment benefits, subsidized housing and healthcare, increasing the minimum wage, etc.–as well as be a source of funding for infrastructure spending–which we need badly, especially in addressing the ecological crisis. Both of these things stimulate the economy and provide jobs. Providing the social services reducing inequality and lessens the chances of economic meltdown. It also puts more dispensable income in the hands of people who will spend it, increasing demand and stimulating the economy. Infrastructure spending will directly create jobs–that’s an easy one.

Third, tax cuts for the wealthy do not create jobs at the level we need, if any at all. Wealthy people do not put their money into the economy the same way that working class and middle income people do. They are more likely to save it or sit on it to wait for more profitable times in the market. For example, reports came out recently stating that non-financial companies are sitting on over a TRILLION DOLLARS. Yet, they are not hiring people. This is because they don’t have confidence in the market. They don’t think they’ll make the profits the want. Here’s the link to the article.
http://www.usatoday.com/money/economy/2010-08-31-1Anationaldebt31_CV_N.htm

What we need is a high road, Wage-led growth, not low road, Profit-led growth. The latter is what we’ve had since the 70s–the neoliberal era. This can be done in the short term by providing adequate fiscal stimulus–much, much, larger than has already been provided–and this can be paid for by taxing the wealthy, and, as you said, cutting wasteful spending (a few wars come to mind). Also, the government needs to have a more active role in creating jobs through infrastructure spending, etc. Trickle-down economics just doesn’t work.

But here’s the catch. I don’t think ANY of this is going to happen in the next two years. We couldn’t get meaningful economic legislation passed under a Democratic majority, never mind under a Republican controlled house. We need to consolidate our forces on the ground and build so we can pressure for change from below now, and get some people elected in 2012. This does not, however, suggest extending tax cuts for wealthy becomes the only option. That will exaccerbate the crisis even more. We need to buckle down and make sure that they DON”T get extended, and defend all of the other programs that are good–like social security.