Color me stunned. The Democrat controlled Congress passed a real tax cut measure that will help the middle class and the economy. And they did it without raising taxes elsewhere (usually democrat tax cuts come with so many offsets it is always a tax increase in disguise).

Last week Congressional Democrats formally renounced their ballyhooed budget pledge to offset any new tax cuts with other tax increases or spending cuts. We’re delighted to see this false promise go, but there’s a larger lesson in this failure for the tax and spending battles of 2008.

Senate Democrats gave up on “paygo,” as it’s called, when they realized they lacked the votes to offset the $50.6 billion cost of protecting more than 20 million middle-class taxpayers from getting whacked by the Alternative Minimum Tax this year. They’ve spent the year floating all kinds of tax increases to make up the difference. But in the end they passed an AMT relief bill without a penny to pay for it. Paygo is now pay gone.

We should stress that this is the right decision for the economy and the federal budget. The AMT was never supposed to hit the middle class, and it only does so now because the Democrats who designed it failed to index it for inflation and raised AMT rates under Bill Clinton in 1993. With the economy in a slowdown, the last thing anyone needs now is a tax hike. The budget deficit is a little above 1% of GDP, which is below the 25-year average, and should remain so as long as the economy keeps growing.

Of course it seems they were forced into doing the proper thing, but hey – they did it and I applaud it.