Let the tax cut expire at the end of the year. We now have a new base rate, the one voted and signed by a Republican Administration. Fox News and Rush Limbaugh, and the collection of members of congress will all spout the same outrage, but let them do exactly that. Each time they do, read a list of every Republican Representative and Senator who voted for the bill that mandated this rate increase in the vote of 2001.
To make the distinction clear between the Bush Tax Cut of 2001 and the Obama Tax Cut of 2011, the exact marginal rates should be slightly changed, made a touch more progressive, still keeping the campaign promise not to raise tax for the vast majority. The Republicans will control the House next year, so while Democrats will not be able to introduce this Obama tax cut there, he can do so during the state of the union message to Congress. And then let the Republican dare ignore this proposal for a massive tax reduction!
Once the Bush Tax increase has been allowed to take effect, there would be enough to place various stimulus items for the working class, that would have an immediate multiplier stimulus effect. It would also be the perfect balance, the combination of increased revenue and lowered spending, that Obama showed he had the courage to take on with freezing federal salaries.
This is a rare opportunity for the Democratic party to reverse the growing disparity of wealth in this country, while beginning to solve the malignant deficit. This would be a game changer, it would make it absolutely clear to the public whose side the two parties are on.