It's a Really Terrible Deal
As I've said before, America has a permanent de facto Republican governing majority. Even if Democrats take over the Presidency and both houses of Congresses with historically large margins, the country will still be governed as though the entire city of Washington, DC, is populated by Tom DeLay clones. Democrats can run on ending pointless and idiotic wars, win by decisive majorities, and then take office and stay the course on the Republican foreign policy agenda. Democrats can run on ending tax cuts for the rich and shoring up Social Security, win by decisive majorities, and then take office and cut taxes for the rich while looting money designated for Social Security.
The latter is the "bipartisan compromise" we just saw brokered, passed by large majorities in both houses of Congress and now signed by the President, to the eternal shame of every last one of them. And even the few sensible liberals who opposed this abomination did so with the caveat that "there are a lot of good things in here...". Like what I ask? Far as I can tell, this "compromise" is one of the first sweeping pieces of legislation in ages in which every item in it is a very obvious mistake.
On the surface, I suppose you could say 13 months of additional unemployment benefits are a good thing, but what's not mentioned is that the people running out of benefits who need them most are not covered by this deal. I'm struggling to understand who is getting additional benefits that wouldn't otherwise. Far as I can tell, what Obama and the Democrats got out of this deal is merely the unemployment insurance program continuing to exist until 2012 before the Republicans get the opportunity to dismantle unemployment insurance entirely.
And a payroll tax holiday? Seriously? This coming only one week after the most recent breathless frenzy on Washington about Social Security's imminent financial trainwreck and how we HAD TO DO SOMETHING....QUICK! Who knew that for all the bluster about Social Security's financial desperation, Washington politicians only nonrhetorical remedy would be to defund the program's current insufficient financing? What could Democrats be thinking by allowing this defunding, expediting the program's financial ruin and strengthening Republican arguments that Social Security's shortfall is so dire that it must be redirected to Wall Street. Even before that, the Democrats also most likely made permanent yet another tax cut that Obama insisted upon himself, as Republicans will scream bloody murder in 2012 about "raising taxes on working families" in the event of the payroll tax holiday expiring. Does anybody really think in a Presidential election year that Republicans will be unable to win that argument in a nation as mindlessly gluttonous as this one? Especially since they're winning arguments now in which only 26% of the public agrees with them?
Also, how exactly did the shrinking of the estate tax get into this "compromise"? Isn't the idea of a compromise that the other side gets things it wants in exchange for giving them exactly what they want? The Republicans got exactly what they wanted with the extension of the Bush tax cuts on high-income earners. How does any negotiator with any mojo at all somehow throw in that freebie as part of the negotiation rather than fight for things HE SUPPORTS?
The new narrative of both the tax deal's supporters and its detractors is that Obama was able to sneak in a second economic stimulus under the Republicans' noses. Well if it's a stimulus it's a stimulus in name only. Nothing in this package will beget economic growth and has the potential of actually stalling it further by weakening America's financial standing in the global markets with another $1 trillion in borrowing. Any serious overture towards stimulus would include financial relief for the states who are beholden to a stack of unfunded mandates from the federal government as well as a balanced budget requirement even in the middle of a serious economic recession. For Obama's negotiating emissaries to not fight for that even while presumably securing a second stimulus for the opposition suggests stunning incompetence as deep cuts to much-needed programs are on the horizon in state governments across the country in 2011.
What should have been done is a two-year extension of existing tax rates only for the middle class, with them set to expire on January 1, 2013, barring an economic calamity. It's almost comical that politicians of both parties pretend to support the draconian budget-balancing recommendations of the debt commission yet can't even ask for sacrifice on the easy stuff like returning to the Clinton era tax rates.
Even the tax rates on the middle class have very little role in the trajectory of the business cycle, but at the current point in time where the hour of reckoning has befallen consumers whose lengthy expanse of financing a consumer binge on credit, it's probably true that it would be economically harmful to let their tax cuts expire. No such equivocation is needed on extending tax cuts for the rich, which will have absolutely no impact on the economy. These "job creators" are already sitting on $2 trillion of idle money and not creating jobs with it. Extend the Bush tax cuts and they'll merely be sitting on $3 trillion and not creating jobs with it. Robust consumer demand is required to propel even marginal job growth, and the fundamentals of our economy indicate that's unlikely to happen anytime soon.
That's why the Republican Presidential candidates who are coming out against this deal (usually justified with the typically monstrous Republican arguments, such as its being too generous to the unemployed) are wise. They're making a credible calculation that this latest mindless and profligate giveaway will not trigger meaningful economic growth, and even if it does, it won't be felt by Joe Sixpack. I'd be very surprised to see unemployment below 9% in November 2012, and it appears that Mitt Romney and Sarah Palin are coming to the same conclusion given that they've come out in opposition to the deal. By doing so, they get to paint the inevitable ineffectiveness of extending tax cuts for the rich as the Obama economic plan while simultaneously being in support of extending tax cuts for the rich permanently. And this will play effectively to the typical low-information voter.
How on Earth do Democrats continually get themselves in this situation? Superficially, there is still a wide chasm of differences between the two parties, but in practice they all seem to agree on the most indefensible public policies when push comes to shove. As I said in the lead-up to the election, the Democratic Party is making it very hard to justify its very existence by folding on this issue. We could just as well have a Republican President and 535 Republican members of Congress because they all end up governing the same destructive way.
The latter is the "bipartisan compromise" we just saw brokered, passed by large majorities in both houses of Congress and now signed by the President, to the eternal shame of every last one of them. And even the few sensible liberals who opposed this abomination did so with the caveat that "there are a lot of good things in here...". Like what I ask? Far as I can tell, this "compromise" is one of the first sweeping pieces of legislation in ages in which every item in it is a very obvious mistake.
On the surface, I suppose you could say 13 months of additional unemployment benefits are a good thing, but what's not mentioned is that the people running out of benefits who need them most are not covered by this deal. I'm struggling to understand who is getting additional benefits that wouldn't otherwise. Far as I can tell, what Obama and the Democrats got out of this deal is merely the unemployment insurance program continuing to exist until 2012 before the Republicans get the opportunity to dismantle unemployment insurance entirely.
And a payroll tax holiday? Seriously? This coming only one week after the most recent breathless frenzy on Washington about Social Security's imminent financial trainwreck and how we HAD TO DO SOMETHING....QUICK! Who knew that for all the bluster about Social Security's financial desperation, Washington politicians only nonrhetorical remedy would be to defund the program's current insufficient financing? What could Democrats be thinking by allowing this defunding, expediting the program's financial ruin and strengthening Republican arguments that Social Security's shortfall is so dire that it must be redirected to Wall Street. Even before that, the Democrats also most likely made permanent yet another tax cut that Obama insisted upon himself, as Republicans will scream bloody murder in 2012 about "raising taxes on working families" in the event of the payroll tax holiday expiring. Does anybody really think in a Presidential election year that Republicans will be unable to win that argument in a nation as mindlessly gluttonous as this one? Especially since they're winning arguments now in which only 26% of the public agrees with them?
Also, how exactly did the shrinking of the estate tax get into this "compromise"? Isn't the idea of a compromise that the other side gets things it wants in exchange for giving them exactly what they want? The Republicans got exactly what they wanted with the extension of the Bush tax cuts on high-income earners. How does any negotiator with any mojo at all somehow throw in that freebie as part of the negotiation rather than fight for things HE SUPPORTS?
The new narrative of both the tax deal's supporters and its detractors is that Obama was able to sneak in a second economic stimulus under the Republicans' noses. Well if it's a stimulus it's a stimulus in name only. Nothing in this package will beget economic growth and has the potential of actually stalling it further by weakening America's financial standing in the global markets with another $1 trillion in borrowing. Any serious overture towards stimulus would include financial relief for the states who are beholden to a stack of unfunded mandates from the federal government as well as a balanced budget requirement even in the middle of a serious economic recession. For Obama's negotiating emissaries to not fight for that even while presumably securing a second stimulus for the opposition suggests stunning incompetence as deep cuts to much-needed programs are on the horizon in state governments across the country in 2011.
What should have been done is a two-year extension of existing tax rates only for the middle class, with them set to expire on January 1, 2013, barring an economic calamity. It's almost comical that politicians of both parties pretend to support the draconian budget-balancing recommendations of the debt commission yet can't even ask for sacrifice on the easy stuff like returning to the Clinton era tax rates.
Even the tax rates on the middle class have very little role in the trajectory of the business cycle, but at the current point in time where the hour of reckoning has befallen consumers whose lengthy expanse of financing a consumer binge on credit, it's probably true that it would be economically harmful to let their tax cuts expire. No such equivocation is needed on extending tax cuts for the rich, which will have absolutely no impact on the economy. These "job creators" are already sitting on $2 trillion of idle money and not creating jobs with it. Extend the Bush tax cuts and they'll merely be sitting on $3 trillion and not creating jobs with it. Robust consumer demand is required to propel even marginal job growth, and the fundamentals of our economy indicate that's unlikely to happen anytime soon.
That's why the Republican Presidential candidates who are coming out against this deal (usually justified with the typically monstrous Republican arguments, such as its being too generous to the unemployed) are wise. They're making a credible calculation that this latest mindless and profligate giveaway will not trigger meaningful economic growth, and even if it does, it won't be felt by Joe Sixpack. I'd be very surprised to see unemployment below 9% in November 2012, and it appears that Mitt Romney and Sarah Palin are coming to the same conclusion given that they've come out in opposition to the deal. By doing so, they get to paint the inevitable ineffectiveness of extending tax cuts for the rich as the Obama economic plan while simultaneously being in support of extending tax cuts for the rich permanently. And this will play effectively to the typical low-information voter.
How on Earth do Democrats continually get themselves in this situation? Superficially, there is still a wide chasm of differences between the two parties, but in practice they all seem to agree on the most indefensible public policies when push comes to shove. As I said in the lead-up to the election, the Democratic Party is making it very hard to justify its very existence by folding on this issue. We could just as well have a Republican President and 535 Republican members of Congress because they all end up governing the same destructive way.
posted by Mark at 8:55 PM
3 Comments:
It is a terrible deal and something that never would have happened had McCain been President with a Democratic Congress. It takes a Democratic President to gut welfare and it takes a Democratic President to extend the Bush tax cuts.
Im voting Republican at the Presidential level from now on just to stop these Democratic Presidents from undermining the party. Obama has wrecked the Democratic party.
I'll ask it again...what good is a Democratic Congress if there's a Republican Presidential veto awaiting them on every piece of legislation of significance? Even in the event of once-in-a-century Democratic Congressional supermajorities that manage to override Republican Presidential vetoes, any progressive legislation would be overturned by nine conservative Supreme Court judges appointed by the permanent Republican occupant of the executive branch.
The Democratic Party's Congressional presence has no value by merely existing as you seem to claim. If it's not accomplishing anything more than what was accomplished under all-Republican rule, then why bother? And for all of Obama's shortcomings, it's been the Democrats in Congress who've been the most cowardly and disorganized. If they hadn't adjourned a month before the election and dramatically weakened Obama's hand for the tax deal in a lame-duck session, perhaps the deal wouldn't have sucked as bad as it did.
What good is having a Democratic President if you have a Republican Congress dictating all legislation?
I think the best option for Democrats is to hope and work for Obama's defeat in 2012 and in 2014, try to win back the House.
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