You Go To Class War With The President You Have

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(Another perspective. – promoted by odum)

As Krugman says, “there is a case for the tax cut deal, as the best of a very bad situation.”

I understand that a lot of people are pissed about breaks for the wealthy, as well as the smoke-filled room way of cutting the deal, and the administration's pattern of failing to fight for what's right, then lashing out at us–I'm right there with ya.  I understand Obama's frustration, too, as he has accomplished some good things but seems unable to sell them.

Perhaps all of us should consider our own roles in the problem and how we can best regroup to be more effective going forward.

Regardless, out of the sausage making, which is never pretty, we're getting a better deal than I'd ever hoped for (75% of the benefits go to regular Americans).  Ezra notes:

The GOP got around $95 billion in tax cuts for wealthy Americans and $30 billion in estate tax cuts. Democrats got $120 billion in payroll-tax cuts, $40 billion in refundable tax credits (Earned Income Tax Credit, Child Tax Credit and education tax credits), $56 billion in unemployment insurance, and, depending on how you count it, about $180 billion (two-year cost) or $30 billion (10-year cost) in new tax incentives for businesses to invest…If you're worried about stimulus, joblessness and the working poor, this is probably a better deal than you thought you were going to get.

And that's where I sit, fundamentally concurring with the CBPP.  It's a shit sandwich, but we really need to look at the good things in the deal and build on those foundations.

I don't agree with my Congressional delegation on this, but I get where they're coming from and applaud their sticking to principle and promising to fight this in both the House and Senate.  I'm just a bit more concerned about the millions of unemployed and working class folks who will benefit from the UI extension and the payroll tax holiday, both of which also happen to be quite stimulative.

For most of the last year as the Catfood Commission has been screaming about the deficit, we on the left have been suggesting that it doesn't matter right now, that jobs and the economy are more important, and the vast majority of Americans agree with us.  So the handwringing about the budget busting extension of Bush's tax cuts strikes me as a bit disingenuous.

So many people, right and left, are acting as though this is a complete GOP win and complete Obama capitulation.  If we go along with that frame, yup, we totally lose.

Alternately, we can celebrate the important components that are inherently beneficial to people we're trying to help and to the economy overall, frame that as a victory when it looked like nothing good was going to happen before the GOP takes over the House, and work hard to improve the deal (e.g., eliminating the FICA cap, extending UI for the 99ers).  Oh, when ostensible allies make observations about the deal and suggestions about action, perhaps we can also not cast aspersions on them when they have a different take?

ntodd

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  Posted at 3:17 PM ET, 12/ 7/2010

How the White House cut its deal and lost its base

By Ezra Klein

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If you look at the numbers alone, the tax cut deal looks to have robbed Republicans blind. The GOP got around $95 billion in tax cuts for wealthy Americans and $30 billion in estate tax cuts. Democrats got $120 billion in payroll-tax cuts, $40 billion in refundable tax credits (Earned Income Tax Credit, Child Tax Credit and education tax credits), $56 billion in unemployment insurance, and, depending on how you count it, about $180 billion (two-year cost) or $30 billion (10-year cost) in new tax incentives for businesses to invest.

But that's not how it's being understood. Republicans are treating it as a victory, and liberals as a defeat. Which raises two separate questions: Why did Republicans give Obama so much? And why aren't Democrats happier about it?

Let's start with the Republicans. For one thing, the things they wanted were things they really, really wanted. A number of sources with direct knowledge of the negotiations have fingered the estate tax as the major player in the size of the deal. “Republicans were extremely eager to get benefits for the top tenth of a percent of Americans,” says one senior administration official.

It was the estate tax, in this telling, that secured Republican support for, among other things, the two-year extension of the refundable tax credits and the payroll tax cut. Republicans believe that the two-year extension of the estate tax at Lincoln-Kyl levels will turn into a permanent extension of the estate tax at Lincoln-Kyl levels. So they attached much more importance to it than the price tag might suggest.

And it went beyond the estate tax: Conservatives saw the extension of the tax cuts as an important pivot point in American politics — full stop. As my colleague Jennifer Rubin puts it, Republicans “won the philosophical point (tax hikes impede economic growth) and, candidly, are more than delighted to have a repeat of this debate for the presidential campaign in 2012.” The Obama administration didn't see the tax cuts as a philosophical point, and is similarly convinced that a repeat of this debate in 2012 — when the economy is better and the deficit is worse — will favor their side. So rightly or wrongly, they judged the two-year extension as much less of a loss than the Republicans judged it a win — and that gave the Democrats leverage on the rest of the package.

Meanwhile, the partisan electricity of the past year had obscured a simple fact: Much of what the Obama administration wanted was not that noxious to conservatives. They were tax cuts, many of them for businesses. Indiana Gov. Mitch Daniels had previously proposed both a payroll tax cut for 2011 and the tax breaks for business investment. Republicans have frequently said that they don't even oppose unemployment insurance.

In all these cases, Republicans have argued that it's not the policies they oppose — it's that Democrats aren't paying for them. But perhaps the most important enabler of the deal is that Republicans don't care about paying for them, either. The basic deal was that if the Obama White House would give the Republicans their unpaid-for tax cuts, Republicans would give the Obama White House their unpaid-for tax cuts.

To put this in perspective, consider that last week, all Washington could talk about was the potential for a deal on deficit reduction. This week, it actually got a big deficit deal — but it was a deficit-expansion deal. In the world that politicians claim they live in — where the deficit is the overriding issue — the deal couldn't have worked. But we don't live in that world. In this world, tax cuts, not deficits, are the Republicans' central concern, and stimulus, not deficits, obsesses the Democrats.

Which brings us to the liberals. My conversations with various progressives over the past 24 hours have convinced me that the problem is less the specifics of the deal — though liberals legitimately dislike the tax cuts for the rich, and rightly point out that Obama swore to let them expire — than the way in which it was reached. Put simply, Obama and the Democrats didn't fight for them. There were no veto threats or serious effort to take the case to the public.

Instead, the White House disappeared into a closed room with the Republicans and cut a deal that they'd made no effort to sell to progressives. When the deal was cut, the president took an oblique shot at their preferences, saying “the American people didn’t send us here to wage symbolic battles or win symbolic victories.” And this came a mere week or two after the White House announced a federal pay freeze. The pattern, for progressives, seems clear: The White House uses them during elections, but doesn't listen to, or consult them, while governing. In fact, it insults them, and then tells them to quiet down, they got the best bargain possible, even if it wasn't the one they'd asked for, or been promised.

If you're worried about stimulus, joblessness and the working poor, this is probably a better deal than you thought you were going to get.

29 thoughts on “You Go To Class War With The President You Have”

  1. Last night my spouse pointed out that maybe Obama is playing a bigger game here.  He went out and made a deal with the GOP knowing that this would seriously piss off the Dems, motivating them to kill the entire thing.  By the time the Dems scuttle this raw deal, it’ll be too late – the Bush Tax cuts will expire in their entirety.  Obama can say, “That wasn’t my fault, I made a bi-partisan deal, I can’t control the Congressional Dems, my hands are clean.”

    Interesting thought.

    But I won’t hold my breath, my baby’s diaper is Hoping for some Change and boy is it stinky…

  2. My concern is that the GOP will get what it wants (tax cuts for the top), and then will turn around and say:  the Dems are the ones that are spending us into this whole deficit.  So, they keep their core constituency happy, while helping dig us deeper into debt (neglecting, of course, any sense of the responsibility for the debt  because of the tax cuts, unfunded wars, or the initial TARP).  They can then turn around and use the debt as an excuse for having to cut discretionary spending — including necessary funding to get a reasonable health care alternative up and running so we can save money long term — thus “reducing” the size of government.   When people are unhappy come next election time because their lives haven’t become any better, the repubs will then turn around and blame the dems for the stuff they insisted be included in the bills.

    I’m not very coherent tonight, but this one has me pretty steamed.    I do believe that we can’t borrow against the future forever.  The Clinton years did a great job of cleaning up past fiscal woes and getting us into surplus and then the Bush years just threw it all away.  We do need to do stimulative spending, and offsetting it with increased revenue from the top would have been a nice way to balance this need without driving us into a bigger deficit hole that we will need to get out later on.

  3. My concern is that the GOP will get what it wants (tax cuts for the top), and then will turn around and say:  the Dems are the ones that are spending us into this whole deficit.

    It’s not like this gives them any more rhetorical weapons than what they already wield, facts be damned.  No matter what happens, the GOP will always pivot and frame it as bad for the Dems, good for them (and America).  I think folks are really being too clever by half, trying to look for the 11-dimensional chess moves when what’s really at stake for millions of Americans is much needed money in their pockets that right now is on hold.

  4. But, really, trying to find a silver lining here is a bit like the battered wife declaring that “at least he didn’t beat me with that nice belt I gave him for his birthday.” How wonderful that Obama managed to “negotiate” an extension of crumbs for the poor in return for estate tax cuts and other goodies for the wealthy. But I still can’t for the life of me understand why he couldn’t just have let the Bush tax cuts expire and leave it up to the GOP to argue in favor of extending them. He went out and did all their heavy lifting for them, swapping a perfectly palatable (and marketable) narrative of help for those in most need given in a way that optimally stimulates the economy and have the people who can afford it pay for it, to yet another round of his trademark “oh, who needs the aggrivation — let’s give everyone whatever they want and pass the buck on to our kids.” It’s really not particularly strategic, visionary or 11-dimensional — it comes across as petty, pathetic, puny and impotent.  

  5. I’m not sure what to make of the tax cut deal yet, except that Obama caved in out of a desire to help the most needy that had been held hostage by the party of the aristocrats seeking tax breaks for billionaires.  It really is a disgusting spectacle — it is what this country has become.  I just cannot understand why such a speaker as Obama cannot get his message across and make it resonate with the voters.  They cannot do it.  

  6. They were cuts in 2001.  Now it’s a question of whether we RAISE taxes or not and on whom.  I’m not part of the top 1%, but I don’t think it’s a good idea to raise taxes on anyone during a recession.  

    It’s hard to argue that the top 1% don’t already pay their fair share.  According to Tax Foundation data from 2008, the top 1% of wage earners were earning 20% of the annual gross income but were providing 38.02% of the country’s income taxes.  Furthermore, that gap increased during the Bush Administration.

  7. On the obvious side, we have the poor, poor rich folk, who are paying taxes even when they’re dead because rapacious government steals “their” money from them. This kind of class war is the easy one to focus on. In fact, polls show large majorities in the US think this argument is nonsense. But you have to remember the flip side of the story, the one most people who vote Republican actually resonate to: the people being helped by government programs don’t deserve it.

    How do the Obama victories play into that narrative? First, you have the specter of people collecting “unemployment insurance” for 2 years. I know this is not the case here on this blog, but I think many Americans (not just Republican voters) start to get uncomfortable with 2 years’ worth of unemployment payments. Yes, I can see that it’s no different from the gigantic moral hazards we live with in the financial industry, etc., but it’s much more accessible and thus easier to scorn. Everyone knows somebody who’s milking the unemployment system, even if 95% of people aren’t. Almost no one knows a zillionaire banker. I’m sure you can all see that if you’re struggling to maintain a job at lower pay and benefits than you had 5 years ago you might be resentful at people getting another year’s worth of unemployment. Republicans play on those resentments.

    As to the payroll tax cut, it “proves” that Social Security is not a pension system, it’s just another tax to be cut, cut, cut. Are we really ever going to reinstate the payroll tax percentages? Aren’t we just handing the Republican majority a reason to cut SS to “live within our means”?

    All of these actions — tax cuts for the rich (sorry, I meant “successful”) & extensions of programs aimed at lower income people (read, “handouts for the poor”) — have the combined effect of hammering home the standard Republican narrative: The successful people in this country need protection from do-gooders in the government and the poor are always asking for a handout. If you think I’m exaggerating, Fox “News” people are already asking if SS Benefits should go down in the future because payments into the “fund” are being reduced.

    The compromise is a win-win-win-win for Republicans. It should be filibustered and I hope it doesn’t pass.

  8. Provocative title to this piece.  The problem, as I see it, is thinking the president- any president, any Party- is on the working class side of the class war.  Truth is, you go to the class war against the president you have.  This deal, or any other, are merely crumbs from the rich in return for building their fortunes for them.

  9. Millions of years ago, in an alternate universe, some people believed: From each according to ability; to each according to need.

    In this universe, the new credo is summed up by Walt Kelly’s Pogo (O GOP spelled backwards), “We have met the enemy and he is us.” The Pogo Party rules!

  10. CBPP’s analysis is not an argument for passing the “deal.”   It simply says there are positive aspects, but note those are “positive,” at least in part, because it wasn’t as bad as we thought it might be.

    This is a lousy deal, particularly – as CBPP notes – because of the deep cut in the estate tax.   We not only get very little for what we give away, but it further reinforces the status quo in that the Rs can simply “no” their way to power, with Obama’s willing cooperation.

    And let’s never forget an important point – tax cuts do not, repeat, not, stimulate the economy.  Investment does.   Moody’s reported months ago the private sector is sitting on about $1.8B it will not invest.   Bush and the Dem enablers cut taxes, and we had the worst economic performance in decades, and that was before the recession hit.   Clinton raised taxes, and, bingo!, we had some of the best growth in decades.

    Let the tax cuts expire, create a new structure that closes loopholes – mainly corporate ones that often result in job losses, not job creation – and get back to something at least a little more fair.

  11. Can’t we just give everyone (unemployed and billionaire alike) over 18 years of age $15K/yr and set the tax rate at like 20% with zero deductions and be done with all of this?

    The tax rate for your first $75K of income would be zero and then fairly progressive up to $250K and then flattens out to 20% beyond.

    At $250K of income you pay $50K and get back $15K so your effective tax rate is $35K/$250K = 15%

    At $500K of income you pay $100K and get back $15K so you effective tax rate is $85K/$500K = 17%

    At $1 million of income your effective tax rate is 18.5%

  12. This is a stinking turd of a bill and our congressional delegation is right to oppose it. I hope lots of people hear any part of what Bernie said today its some of the only truth told in that chamber about what is going on in this country with the rich determined to steal every last piece of the pie. Its shocking how many keepers of Dem blogs are afraid to cross our yuppie president who just can’t do enough for Wall st and the banks and can’t punish the poor enough.

    This bill sets the stage for more destruction of Social Security but it looks like the younger generation has drunk the Reagan Kool-aid on this still thinks that the market will save us. That invisible hand of the market is mostly about slapping around the working classes.

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