Discourse that allows us to express a wide range of ideas, opinions, and analysis that can be used as an opportunity to critically examine and observe what our experience means to us beyond the given social/cultural contexts and norms that are provided us.
This panel discussion on Lawrence O'Donnell's political talk show on MSNBC yesterday was by far the best overall discussion I've heard/seen yet of what the real stakes are in the current fight within the Democratic Party over Obama's abject and cynical capitulation to the Republicans with regard to his "compromise" two year extension of the heinous Bush Tax Cuts for the super wealthy. Everyone was excellent in this discussion with the highest honors going to the always amazingly prescient and still absolutely extraordinary 76 year old Ralph Nader, and the very impressive now ex-Democratic congressional representative from Florida Alan Grayson (who was unfortunately sacrificed in the now infamous November 2 Midterm elections in which the Republicans won the highest number of seats in Congress in a midterm election since 1948!) Check it out for a critical assessment with real teeth and intellectual clarity in it. Nader is a man who truly understands American politics in a profound sense and realizes that our job on the Left is not to sit idly back and kiss the President's clearly opportunist, inept, and transparently manipulative ass but to fight intelligently and courageously for what's right no matter what the odds are or appear to be. Finally, a very significant number of experienced, serious, and truly dedicated people on the Left generally are beginning to wake up from the national stupor and almost zombie-like state they've been in since Obama came to power...Check out and view the video link below. You won't be disappointed...
Senator Bernie Sanders, Independent from Vermont (who happens to be the only authentic card carrying SOCIALIST in the entire U.S. Congress!) speaks the whole truth to arrogant self serving power and along with his congressional colleagues in the House DEMANDS that the President do the right thing which Bernie reminds us is not cynical politicians pimping for a new extension of the Bush Tax Cuts deal. Check out video link of Mr. Sanders being interviewed on CBS News below...
The brilliant Keith Olbermann--one of the most consistently outstanding and courageous journalists of our time-- performs a searing and breathtaking vivisection of the lies, empty platitudes, self serving evasions, egomania, and sheer cowardice masquerading as self sacrificing martyrdom in President Obama's ludicrous and thoroughly dishonest and insipid "defense" during today's press conference of his cave in to the Republicans on the Bush Tax cuts yesterday. A video link of Obama's utterly pathetic performance earlier today follows tonight's 'Special Comment' video of Mr. Olbermann from his award-winning program 'Countdown' on MSNBC below.
Kofi
President Obama Defends His Bush Tax Cuts Deal with Republicans (Click on the following video links for viewing)
There is absolutely no "nice" or "polite" way to say the obvious and I won't pretend to try, so let's just say what it really is and be done with it: THIS IS NOTHING BUT A HUGE SELLOUT AND RANK CAPITULATION TO THE REPUBLICAN RIGHTWING THAT WILL HAVE NOTHING BUT TRULY DIRE CONSEQUENCES FOR THE AMERICAN PEOPLE IN BOTH THE SHORT AND LONG RUN AND THAT'S ALL IT IS. There is nothing even remotely resembling a "compromise" (get real!) much less a "negotiated settlement" (pleeze!!) in this. In other words: Let's not play stupid rhetorical games here and simply tell the straightup truth for once--Obama has pathetically allowed both his and our most virulent, relentless, and destructive enemies to completely bully, corner, and then openly pimpslap his cowardly ass in public, and at the same time made him and the Democrats glumly thank them for the "privilege." It's a brazen display of sheer ineptitude and bumbling self pity masquerading as "political dealmaking" and anyone who says it ain't is nothing but a LIAR and a clueless apologist...
Obama outlines tax cut deal that extends jobless aid Over the objection of many Democrats, he gives in to Republicans on keeping breaks for the wealthy.
Reporting from Washington —
LOS ANGELES TIMES December 6, 2010
Over the objections of many in his own party, President Obama on Monday announced a deal with Republicans to extend the Bush-era tax cuts for all taxpayers, keep jobless benefits flowing for 13 months and continue a series of tax breaks for the middle class.
The deal, which breaks a weeks-long standoff between Republicans and Democrats, also includes a GOP-backed proposal to revamp the estate tax and lower Social Security payroll taxes by 2 percentage points to put more money into workers' pockets.
Obama made it clear that he disagreed with some aspects of the deal — in particular, the extension of tax cuts to the wealthiest earners, something he has vowed to fight since his election campaign two years ago.
But Obama said that it was more important to settle the issue so that middle-class taxpayers did not incur a tax increase after Dec. 31, when the cuts are scheduled to expire.
"I have no doubt that everyone will find something in this compromise that they don't like. In fact, there are things in here that I don't like," Obama said. "For now, I believe this bipartisan plan is the right thing to do."
But many Democrats said Monday that they were deeply troubled by the compromise, which gives them some substantive concessions from the Republicans but goes against the Democrats' longstanding opposition to extending tax breaks for the wealthiest Americans.
The dispute represents the clearest sign yet of the gaping divide between the White House and congressional Democrats as Obama strives for bipartisan accord to accommodate a Republican Party emboldened by last month's midterm elections.
As a result of the unusual split, many Democratic lawmakers may vote against the deal, despite the president's blessings.
Underscoring the division, liberal activists pelted the White House and congressional Democrats on Monday, tying up phone lines with a massive call-in campaign to oppose a deal that extends tax breaks on earnings beyond $250,000.
The White House now faces the daunting task of winning congressional support for what administration officials billed as a bipartisan compromise. House Republicans signaled their agreement with the deal, and Sen. Mitch McConnell (R-Ky.), the Senate GOP leader, said Obama's outline marked an acknowledgement by the White House that "a new direction is needed if we are to revive the economy and help put millions of Americans back to work."
Obama moved to quell the rebellion by congressional Democrats, summoning them to a White House session Monday to explain the "framework" of the proposal. Democrats left the afternoon meeting without signing on to the agreement.
Despite additional tax breaks for middle-class households, "Democratic leaders are not completely comfortable with this," said one Democratic aide, speaking on the condition of anonymity to describe internal discussions.
The White House is dispatching Vice President Joe Biden to meet with Senate Democrats on Tuesday.
Senate Majority Leader Harry Reid (D-Nev.) issued only a terse statement after Obama unveiled the compromise.
"Now that the president has outlined his proposal, Senator Reid plans on discussing it with his caucus," his spokesman said.
Underscoring the partisan ambivalence, the president stood alone at the White House in making the announcement of the tentative agreement, which came after tense days of negotiations.
Earlier Monday, Obama foreshadowed the likely deal in an appearance in Winston-Salem, N.C.
"There are some serious debates that are still taking place," Obama said at a technical college. "We've got to make sure that we're coming up with a solution, even if it's not a hundred percent of what I want or what the Republicans want. There's no reason that ordinary Americans should see their taxes go up next year."
Congress faces a Dec. 31 deadline to resolve the impasse over tax cuts passed during the George W. Bush administration. Without action, American taxpayers would see their income tax rates rise an average of 3% in January, an outcome neither party wants.
Republicans last week blocked Democratic attempts in the Senate to extend tax breaks on earnings up to $250,000. A compromise was increasingly seen as a foregone conclusion, and the White House has been negotiating with Republicans who have held out for an extension of all tax cuts, despite the additional $68 billion annual cost of tax breaks for the wealthy.
Extending unemployment insurance through 2011 would cost $56 billion. Without action, an estimated 2 million jobless Americans will see their benefits expire during the holidays.
The White House had pressed to include an extension of the expiring "Making Work Pay" tax credit, given to 95% of taxpayers in 2009 and 2010 as part of the economic stimulus bill. The tax break provided up to $400 a year to working singles who made $75,000 or less, and up to $800 to couples earning $150,000 or less. Democrats argue that allowing it to expire would amount to a tax hike on middle-income Americans.
Republicans have been cool to extending the tax credits, after having almost unanimously opposed the stimulus act 2009. The GOP wanted a lower estate tax.
By Monday, the White House had dropped its insistence on the Making Work Pay tax break in favor of the 2% payroll tax holiday, which is expected to cost $120 billion.
The White House also agreed to a Republican-led proposal on the estate tax, which would exempt estates valued at $5 million for singles and $10 million for couples from a 35% tax — a particularly difficult concession for Democrats who had pressed for a lower exemption and higher tax rate.
Over the weekend, House Democrats told Biden that the administration may lose votes from congressional Democrats if any compromise is not paired with other middle-class enhancements.
"Assuming House Democrats will sign off on a deal the White House cuts with [Republicans] is incorrect," said the Democratic aide.
As Democrats convened at the White House on Monday, they were told this was the best deal they would be able to get in the face of Republican intransigence.
Senate Democrats also have indicated displeasure with being forced to compromise on an issue many believe is a signature difference between Democrats and Republicans.
"I'm just hoping that the president sticks to what he said in Iowa in the campaign … that he was drawing the line at $250,000," Sen. Tom Harkin (D-Iowa) said late last week. "The president ought to stick to what he said and stick to his guns."
In the political calculations of the White House, Democrats will be able to more effectively campaign against tax breaks for the wealthy in 2012, when the president is up for reelection.
"We expect this will be a central piece of the debate," a senior administration official said. "It's a debate that we had in 2008 and won, and it's a debate we think the American people should have."
lisa.mascaro@latimes.com
cparsons@latimes.com
Peter Nicholas of the Washington Bureau contributed to this report.
December 5, 2010
Bush Tax-Cut Deal With Jobless Aid Said to Be Near By DAVID M. HERSZENHORN and CARL HULSE New York Times
WASHINGTON — White House officials and Congressional Republicans said Sunday they were closing in on a deal to temporarily continue the Bush-era tax cuts at all income levels, while bitterly frustrated Democratic Congressional leaders began exploring whether they would have the votes for such a package.
A day after the Senate rejected President Obama’s preferred tax plan, officials said the broad contours of a compromise were in focus.
Rather than extending the tax rates only on income described by Democrats as middle class — up to $250,000 a year for couples and $200,000 for individuals — the deal would also keep the rates for higher earners, probably for two years. In return, Republicans said they would probably agree to extend jobless aid for the long-term unemployed.
Senior Democrats on Sunday said that they were resigned to defeat in the highly charged tax debate, and they voiced dismay.
“We’re moving in that direction,” Senator Richard J. Durbin of Illinois, the No. 2 Democrat said dejectedly when Bob Schieffer, host of “Face the Nation” on CBS, asked him if the 2001 and 2003 tax rates would be extended even for the wealthy. “And we’re only moving there against my judgment,” Mr. Durbin added.
In meetings with administration officials after the Senate votes, the House speaker, Nancy Pelosi, and many other House and Senate Democrats voiced deep unhappiness at the prospect of extending all the tax cuts and also expressed their belief that the White House did not appear to be getting enough for such a big concession, officials said.
That sort of anger raised the likelihood that Republicans would have to generate large numbers of votes to advance any deal in Congress, much as they did to help approve the big financial system bailout at President George W. Bush’s request in 2008.
White House officials, meanwhile, expressed hope of sealing a deal swiftly, perhaps by midweek, and clearing the Congressional calendar for a long list of other priorities that they aim to accomplish by the end of the year, including ratification of the New Start arms treaty with Russia and the repeal of the “don’t ask, don’t tell” policy for gay service members as part of a wider Pentagon policy bill.
Administration officials said the negotiations were focused on the question of extending the tax rates for one or two years, with a three-year extension highly unlikely, even though that time frame would probably eliminate the tax fight as an urgent issue in the 2012 elections.
Many Republicans say they want a permanent extension of the rates, or as long an extension as possible. Democrats say they would not mind the issue coming up during Mr. Obama’s re-election bid, because they see it as politically helpful to them in painting Republicans as defenders of the rich. The debate, of course, could cut the other way, with Republicans again portraying Democrats as seeking to raise taxes.
Some Congressional Democrats have suggested a willingness to let the tax rates expire for everyone at the end of the year, and to press the fight into next year. At the same time, some prominent economists have counseled that it would be wise not to substantially raise taxes or cut spending at the moment given the risk of further hindering an already precarious economic recovery.
In an interview on “60 Minutes” on Sunday night, the chairman of the Federal Reserve, Ben S. Bernanke, said policy makers should be careful to protect the recovery in what could be interpreted as a warning to Democrats not to raise taxes and to Republicans not to cut government spending. “We don’t want to take actions this year that will affect this year’s spending and this year’s taxes in a way that will hurt the recovery,” Mr. Bernanke said. “That’s important.”
But Mr. Bernanke also warned about the dangers of the nation’s fast-growing debt, which will be increased by $4 trillion or more over 10 years as a result of the tax deal being worked out by Republicans and the White House, and said policy makers must start thinking now about the “long-term structural deficit.”
After the failed votes in the Senate on Saturday, top Democratic Congressional leaders met at the White House with Mr. Obama, who told them he would not agree to any deal unless it included the extension of jobless aid, which has begun to run out, and also the extension of a number of tax breaks for middle- and lower-income Americans that were included in last year’s economic stimulus plan.
In a twist on the Republicans’ argument that letting the Bush-era tax cuts expire would amount to a tax increase in a weak economy, Mr. Obama said allowing the stimulus provisions to expire would result in a similar tax increase on working-class Americans who could afford it even less than the high-income people who would benefit from the Republicans’ plan.
The Democratic Congressional leaders attended another strategy session at the residence of Vice President Joseph R. Biden Jr., who has taken a personal hand in the negotiations with Senate Republicans, with whom he has personal relationships from his long tenure as a senator.
Other participants included the Treasury secretary, Timothy F. Geithner, and the budget director, Jacob Lew, who are attending the formal negotiations with Congress on behalf of the White House; the House majority leader, Steny H. Hoyer of Maryland; and Representative Chris Van Hollen of Maryland, who is representing House Democrats in the official talks.
The Senate Republican leader, Mitch McConnell, has made it clear that from the Republican perspective, there is little left to discuss about the tax rates. “Look, this argument is over,” Mr. McConnell said in an appearance on “Meet the Press” on NBC. “The Senate voted yesterday. Every Republican and five Democrats said we’re not raising taxes on anybody in the middle of a recession.” The outcome of those votes was such a foregone conclusion, he said, “It’s almost laughable that we were in session yesterday.”
Still, Mr. McConnell said Republicans were negotiating on several fronts. He said that he understood Mr. Obama would not agree to a permanent extension of the Bush-era tax rates. “Obviously, the president won’t sign a permanent extension,” he said. “So we’re going to have some kind of extension. I’d like one as long as possible.”
And Mr. McConnell acknowledged that there would be a continuation of jobless aid for the long-term unemployed, though he reiterated the Republican contention that the cost should be offset with reductions in spending elsewhere.
“I think we will extend unemployment compensation,” he said. “We’ve had some very vigorous debates in the Senate. Not about whether to do it but whether to pay for it as opposed to adding it to the deficit. All of those discussions are still under way.”
Many Democrats are enraged that Republicans have so far blocked the effort to extend jobless aid, and are insisting on offsetting the cost even as they refuse to offset the lost revenue from the tax cuts.
“They’ve said, ‘No, we are willing to hold that hostage so that we can give the wealthiest people in the country a bonus tax cut,’ ” said Senator John Kerry, Democrat of Massachusetts.
Frank Rich knows and understands what we all know and understand: If you allow your enemies to push you around and call you out of your name and make you look like a scared and spineless victim nothing good can possibly come of it either now or later--the bullies will only turn up the pressure and increasingly demand the malicious dismissal or annihilation of every single thing you are or say you are. Even an unfairly harassed 8 year old schoolkid cowering from surly assholes trying to take his lunch money understands this fact very clearly for what it is. Sometimes in politics as in life you just got to hit a muthafucka in the mouth as hard as you possibly can and fiercely defend what remains of your dignity, your humanity, and your self respect. But if you're a coward and won't fight back all you will get is one vicious beatdown after another...And by the way, you'll never have any money to purchase lunch...
Knowhamsayin' brothers and sisters?
I mean DAMN! Get a clue Mr. President...
Kofi
OP-ED COLUMNIST
All the President’s Captors By FRANK RICH December 4, 2010 New York Times
THOSE desperate to decipher the baffling Obama presidency could do worse than consult an article titled “Understanding Stockholm Syndrome” in the online archive of The F.B.I. Law Enforcement Bulletin. It explains that hostage takers are most successful at winning a victim’s loyalty if they temper their brutality with a bogus show of kindness. Soon enough, the hostage will start concentrating on his captors’ “good side” and develop psychological characteristics to please them — “dependency; lack of initiative; and an inability to act, decide or think.”
This dynamic was acted out — yet again — in President Obama’s latest and perhaps most humiliating attempt to placate his Republican captors in Washington. No sooner did he invite the G.O.P.’s Congressional leaders to a post-election White House summit meeting than they countered his hospitality with a slap — postponing the date for two weeks because of “scheduling conflicts.” But they were kind enough to reschedule, and that was enough to get Obama to concentrate once more on his captors’ “good side.”
And so, as the big bipartisan event finally arrived last week, he handed them an unexpected gift, a freeze on federal salaries. Then he made a hostage video hailing the White House meeting as “a sincere effort on the part of everybody involved to actually commit to work together.” Hardly had this staged effusion of happy talk been disseminated than we learned of Mitch McConnell’s letter vowing to hold not just the president but the entire government hostage by blocking all legislation until the Bush-era tax cuts were extended for the top 2 percent of American households.
The captors will win this battle, if they haven’t already by the time you read this, because Obama has seemingly surrendered his once-considerable abilities to act, decide or think. That pay freeze made as little sense intellectually as it did politically. It will save the government a scant $5 billion over two years and will actually cost the recovery at least as much, since much of that $5 billion would have been spent on goods and services by federal workers with an average yearly income of $75,000. By contrast, the extension of the Bush tax cuts to the $250,000-plus income bracket will add $80 billion to the deficit in two years, much of which will just be banked by the wealthier beneficiaries.
Obama didn’t even point out this discrepancy — as he might have, had he chosen to make a stirring call for shared sacrifice rather than just hand the Republicans a fiscal olive branch that they could then use as a stick to beat him. He was too busy tending to his other announcement of the week: dispatching Timothy Geithner to lead “negotiations” with the Republicans on the tax cuts. This presidency has been one long blur of such “negotiations” — starting with the not-on-C-Span horse-trading that allowed corporate players to blunt health care and financial regulatory reform. Next up is a “negotiation” with the United States Chamber of Commerce, which has spent well over $100 million trying to shoot down Obama’s policies over the last two years. It’s enough to arouse nostalgia for the “beer summit” with Henry Louis Gates Jr. and the Cambridge cop, which at least was transparent and did no damage to the public interest.
The cliché criticisms of Obama are (from the left) that he is a naïve centrist, not the audacious liberal that Democrats thought they were getting, and (from the right) that he is a socialist out to impose government on every corner of American life. But the real problem is that he’s so indistinct no one across the entire political spectrum knows who he is. A chief executive who repeatedly presents himself as a conciliator, forever searching for the “good side” of all adversaries and convening summits, in the end comes across as weightless, if not AWOL. A Rorschach test may make for a fine presidential candidate — when everyone projects their hopes on the guy. But it doesn’t work in the Oval Office: These days everyone is projecting their fears on Obama instead.
I don’t agree with almost anything Chris Christie, the new Republican governor of New Jersey, has to say. But the popularity of his leadership right now is instructive. New Jersey has voted Democratic in every presidential election since 1992, with Obama carrying the state by a landslide margin of almost 15 percentage points. Yet Christie now has a higher approval number (51 percent) in the latest Quinnipiac state poll than either Obama or New Jersey’s two senators, both Democrats.
Christie’s popularity among national right-wing activists and bloggers has been stoked by a viral YouTube video where he dresses down a constituent in a manner that recalls Ralph Kramden sending Alice “to the moon.” But the core of Christie’s appeal at home is that he explains passionately held views in concrete, plain-spoken detail. Voters know what he stands for and sometimes respect him for his forthrightness even when they reject the stands themselves. This extends to his signature issue — his fiscal and rhetorical blows against public education. He’s New Jersey’s most popular statewide politician despite the fact that a 59 percent majority in the state thinks public schools deserve more taxpayer money, not less.
G.O.P. propagandists notwithstanding, Christie’s appeal does not prove that New Jersey (and therefore the country) has “turned to the right.” It does prove that people want a leader with a strong voice, even if only to argue with it.
No one expects Obama to imitate Christie’s in-your-face, bull-in-the-china-shop shtick. But they have waited in vain for him to stand firm on what matters to him and to the country rather than forever attempting to turn non-argumentative reasonableness into its own virtuous reward. It’s clear now the shellacking was not the hoped-for wake-up call. For starters, Obama might have robustly challenged the election story line pushed by the G.O.P. both before and after Nov. 2 — that deficit eradication and tax cuts for all are voters’ No. 1 priority. Repeating it constantly — as McConnell and John Boehner do, brilliantly — does not make it true. But the myth becomes reality if there’s no leader to trumpet the counternarrative.
In the summer before the election, the NBC News/Wall Street Journal poll (of June 21) found that only 15 percent of respondents thought the deficit should be the government’s top priority (behind jobs and economic growth, at 33 percent); the Washington Post/ABC News survey just a week before Election Day found that only 7 percent chose the deficit as the most important issue influencing their vote (again well behind the economy, at 37 percent). After constant G.O.P. fear-mongering about the budget — some of it echoed, rather than countered, by Obama — deficit reduction did jump to first place in Nov. 2 exit polls as voters’ highest priority for the next Congress. The disciplined Republican message had turned the deficit into a catchall synonym for America’s entire economic health. But at 40 percent, deficit reduction still was neck and neck with “spending to create jobs” (37 percent). Cutting taxes was chosen by only 18 percent.
We’re now at the brink of a new economic disaster that will eventually yank a chicken out of every pot. The Center on Budget and Policy Priorities calculates that the extended Bush-era tax cuts will contribute by far the largest share to the next decade’s deficits — ahead of the recession’s drain on tax revenues, Iraq and Afghanistan war spending, TARP and Obama’s stimulus. The new Congress’s plan to block any governmental intervention on behalf of 15 million-plus jobless Americans guarantees that the unemployment rate, back up to 9.8 percent as of Friday, will remain intractable too.
Obama should have pounded home the case against profligate tax cuts for the wealthiest before the Democrats lost the Senate. Even now Warren Buffett — not a socialist, by the way — is making the case with a Christie-esque directness that usually eludes the president. “The rich are always going to say that, you know, just give us more money and we’ll all go out and spend more, and then it will trickle down to the rest of you,” he told Christiane Amanpour on “This Week” last Sunday. “But that has not worked the last 10 years, and I hope the American public is catching on.”
Everyone will have caught on by 2012, but that will be too late for many jobless Americans, let alone for Obama. As the economics commentator Jeff Madrick wrote in The Huffington Post, the unemployment rate has been above 7 percent only four times in a presidential election year since World War II — and in three of the four the incumbent lost (Ford, Carter, the first Bush). Reagan did win in 1984 with an unemployment rate of 7.2 percent, but the rate was falling rapidly (from a high of 10.8 two years earlier), and Reagan was as clear-cut in his leadership as Christie (only nicer).
But as Madrick adds, there has never been a sitting president over that period who has had to run with an unemployment rate as high as 8 percent — which is precisely where the Fed’s most recent forecasts predict the rate could be mired when Obama faces the voters again in 2012. You’d think he’d be one Stockholm Syndrome victim with every incentive to break out.
As I've said a thousand times: More than anything else it takes genuine courage and conviction to be a real leader and the consummate test of strength and independence for any real leader is whether he or she is capable of standing on and for principle under the most difficult, dire, and challenging circumstances. The bottomline here is that Paul Krugman understands that fundamental and essential fact and President Obama doesn't...
Kofi
OP-ED COLUMNIST Let’s Not Make a Deal By PAUL KRUGMAN December 5, 2010 New York Times
Back in 2001, former President George W. Bush pulled a fast one. He wanted to enact an irresponsible tax cut, largely for the benefit of the wealthiest Americans. But there were Senate rules in place designed to prevent that kind of irresponsibility. So Mr. Bush evaded the rules by making the tax cut temporary, with the whole thing scheduled to expire on the last day of 2010.
The plan, of course, was to come back later and make the thing permanent, never mind the impact on the deficit. But that never happened. And so here we are, with 2010 almost over and nothing resolved.
Democrats have tried to push a compromise: let tax cuts for the wealthy expire, but extend tax cuts for the middle class. Republicans, however, are having none of it. They have been filibustering Democratic attempts to separate tax cuts that mainly benefit a tiny group of wealthy Americans from those that mainly help the middle class. It’s all or nothing, they say: all the Bush tax cuts must be extended. What should Democrats do?
The answer is that they should just say no. If G.O.P. intransigence means that taxes rise at the end of this month, so be it.
Think about the logic of the situation. Right now, the Republicans see themselves as successful blackmailers, holding a clear upper hand. President Obama, they believe, wouldn’t dare preside over a broad tax increase while the economy is depressed. And they therefore believe that he will give in to their demands.
But while raising taxes when unemployment is high is a bad thing, there are worse things. And a cold, hard look at the consequences of giving in to the G.O.P. now suggests that saying no, and letting the Bush tax cuts expire on schedule, is the lesser of two evils.
Bear in mind that Republicans want to make those tax cuts permanent. They might agree to a two- or three-year extension — but only because they believe that this would set up the conditions for a permanent extension later. And they may well be right: if tax-cut blackmail works now, why shouldn’t it work again later?
America, however, cannot afford to make those cuts permanent. We’re talking about almost $4 trillion in lost revenue just over the next decade; over the next 75 years, the revenue loss would be more than three times the entire projected Social Security shortfall. So giving in to Republican demands would mean risking a major fiscal crisis — a crisis that could be resolved only by making savage cuts in federal spending.
And we’re not talking about government programs nobody cares about: the only way to cut spending enough to pay for the Bush tax cuts in the long run would be to dismantle large parts of Social Security and Medicare.
So the potential cost of giving in to Republican demands is high. What about the costs of letting the tax cuts expire? To be sure, letting taxes rise in a depressed economy would do damage — but not as much as many people seem to think.
A few months ago, the Congressional Budget Office released a report on the impact of various tax options. A two-year extension of the Bush tax cuts, it estimated, would lower the unemployment rate next year by between 0.1 and 0.3 percentage points compared with what it would be if the tax cuts were allowed to expire; the effect would be about twice as large in 2012. Those are significant numbers, but not huge — certainly not enough to justify the apocalyptic rhetoric one often hears about what will happen if the tax cuts are allowed to end on schedule.
Oh, and what about confidence? I’ve been skeptical about claims that budget deficits hurt the economy even in the short run, because they undermine confidence in the government’s long-run solvency. Advanced countries, I’ve argued, have a lot of fiscal leeway. But anything that makes permanent extension of obviously irresponsible tax cuts more likely also sends a strong signal to investors: it says, “Hey, we aren’t really an advanced country; we’re a banana republic!” And that can’t be good for the economy.
Last but not least: if Democrats give in to the blackmailers now, they’ll just face more demands in the future. As long as Republicans believe that Mr. Obama will do anything to avoid short-term pain, they’ll have every incentive to keep taking hostages. If the president will endanger America’s fiscal future to avoid a tax increase, what will he give to avoid a government shutdown?
So Mr. Obama should draw a line in the sand, right here, right now. If Republicans hold out, and taxes go up, he should tell the nation the truth, and denounce the blackmail attempt for what it is.
Yes, letting taxes go up would be politically risky. But giving in would be risky, too — especially for a president whom voters are starting to write off as a man too timid to take a stand. Now is the time for him to prove them wrong.
