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Tony Ondrusek is founder and publisher of Insurance & Financial Advisor and IFAwebnews.com.

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Update: Obama ends uncertainty about income, estate tax rates for 2011, 2012

President Obama’s compromise on extending “Bush-era” tax cuts is good in the sense that folks finally know what to expect, at least for the next two years.  That’s if Congress approves the plan, which appears somewhat likely.

But it is bad in that this is only a two-year extension, so in typical Washington fashion, the can has been kicked down the road again, left for more debate when the president will be up for re-election and when Congress will again debate whether to keep the tax code for a longer period because either: a) the economy improved; or b) the economy didn’t improve, or even got worse. Either way, Congress and whatever president we have will likely fall right back into form; acting irresponsibly.

Almost unbelievably, the New York Times is calling the proposed tax legislation a “stimulus bill,” implying and actually quoting some who say that it will lead to job creation. The logic leading to that conclusion is somewhat sketchy, at best.

(What happened to the “change” the president promised, or the rhetoric from Republicans a few weeks ago following mid-term elections about not backing down?)

Here’s a crazy idea: Pass legislation to make the current tax code permanent.  What a wild, novel idea! But, alas, too logical and too responsible to even be considered in Washington.

Even  better would be for Congress and the president to enact some serious, responsible tax reform. (That word “responsible” keeps coming up.)  In the manner that the president took on a health insurance overhaul law (which a majority of Americans didn’t want or like), President Obama could change the tide in Washington and across the nation by making tax reform his landmark presidential legacy, something that would change America for the better and start the process of improving our fiscal situation, if not our future. It might even overshadow the debacle of health care reform.

FDR brought us the New Deal. JFK made a commitment to put men on the moon. President Reagan’s pressure on the USSR helped bring down the Berlin Wall. President Obama could begin the process of making the American tax code simple, efficient and fair. It would take commitment and standing up to special interests that prefer our current climate of confusion. But he would have one thing on his side: The American people. We are clamoring for responsible tax reform, and would back up a system that was not only fair, but addressed our fiscal deficits. It COULD be done.

Unfortunately, the ugliness of Washington politics will reign, and it WON’T be done. But one can dream, no?

I digress…

There is one other good thing about the extension, and that is that the estate tax exemption was changed to be more palatable.

The current law calls for the estate tax to be reinstated next year at a rate of 55%, with inheritances up to $1 million exempted. President Obama conceded to the GOP to a new rate of 35% with an exemption up to $5 million. Last year, the House passed a bill that would set an exemption threshold of $3.5 million and a tax rate of 45%.

Congressional Democrats are fuming at President Obama’s concession, and have held heated closed-door meetings and are openly criticizing him. They are quick to remind Americans that while voters may have overwhelmingly signaled their displeasure with the current House political wrangling, Democrats hold the reins, at least until Republicans assume control in January. And it is their prerogative to vote down the proposal or make significant changes in spite of the deal the president made, or the will of the people.

“The majority of the House is still Democratic,” sniped House Majority Whip Steny Hoyer (D-MD), when asked about Vice President Joe Biden’s plan to address the House and encourage the chamber to vote for the president’s proposal.