I would rather not do this post. From reading the comments at the news sites and blogs most people have made up their minds one way or another. One observation is despite talk of the base – by which analysts mean progressives – being uniformly against Obama’s compromise or his savvy political jujitsu, the base seems split. Let’s remember that regardless of what one thought was best there is always the reality of votes. In the short time left in the lame duck session there was the real possibility of letting keeping the middle-class tax cuts and letting the upper bracket cuts expire. There was no real chance in the Senate with two or more Democratic defectors. That was the reality all along. Obama could have forced the issue with a veto threat and let all the cuts expire. Would America have gotten a better deal at that point considering all the pieces in play – tax cuts, DADT, the START treaty and unemployment benefits? Put aide feelings, hopes and ideals for a minute and play president for a day. You play the hand you’re dealt not the one you wish you had. After the first of the year, with the tax cuts expired, would there have been a net gain for most Americans considering the scorched earth attitude of conservative leadership, who have sworn to do anything necessary to sabotage Democrats, America and the Obama presidency. How the White House cut its deal and lost its base
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?
Some liberals are happy about it or at least accepting of the real possibility Obama got the best of Republicans and the best deal on the table. American Progress has never been ones to shrink from their progressive credentials and they like it,
Progressives need to be clear and honest about what just happened on taxes and the economy. Since the midterm election, it has been clear that the Congressional Republican Leadership was perfectly prepared to see middle and working class tax cuts expire and extended unemployment insurance end unless millionaire tax cuts were extended. All the talk about decoupling and extending middle class tax cuts from the cuts for millionaires was wishful thinking at best and just political talk at worst and no strategy could have produced it during the lame duck.
So President Obama was faced with a choice: he could trade a few more years of unnecessary and wasteful tax breaks for the rich in exchange for assistance to the unemployed, additional targeted tax relief for working families through the refundable earned income tax credit and child credit, and keeping tax rates low for 98 percent of Americans; alternatively he could allow taxes to rise on everyone starting in January. At the end of the day, President Obama decided he couldn’t abandon the millions of Americans who are struggling to keep their families afloat, who are diligently searching for work, and who simply cannot afford higher taxes right now, even though the Congressional Republican Leadership was more than happy to do so if we wouldn’t pay their ransom.
It was a steep price, but this deal will mean about 2 million jobs saved or created over the next two years. On balance, I think the President was right to choose helping working Americans over a December conflagration. But the question hanging over Washington and the country today is how will he avoid repeating the same scenario being played out again and again for the next two years? That’s a question that is keeping me awake at night.
John D. Podesta is President and Chief Executive Officer of the Center for American Progress
This may dark humor for the disappointed – myself included – but think about it this way. In 2012 Republicans are going to be arguing for an extension of the Obama tax cuts and attached at the hip to that argument, conservatives, as they did this time, will be arguing for continued large deficits. Mental Midget Grover Norquist is already showing conservative’s hand – slash government spending. Whether it is Main St tea nut conservatives or Republican leadership in Congress they have no real plan to make up the tax cuts with spending cuts.
This is the part of the Obama plan which is unacceptable. A back door attack on Social Security – Obama’s “Tax Holiday”: A Poison Pill For Social Security
Extending this 2% cut would gut Social Security’s finances forever. But whatever happens, look at what Social Security’s enemies will have accomplished:
* The “lockbox” principle between Social Security and the overall budget will have been erased forever. A relatively small infusion of cash into the trust fund will be the poison pill that erases the “trust fund” principle. Once the program has contributed to the deficit, it’s no longer separately funded.
* The enemies of Social Security will have painted a bull’s eye on its only source of funding. People will see it as a “new tax” — in a year when the economy’s not expected to have fully recovered.
* They’ll be in a position to argue, once again, that “America can’t afford” to provide financial security for middle-class seniors.
What’s more, would-be cutters like Maya McGuineas and Alan Simpson have made it clear that they’d love to get their hands on the $2.6 trillion in Social Security’s Trust Fund to use it for other purposes (like covering the debt that was run up by tax cuts for the wealthy and a couple of wars). This will give them their chance.
As far as getting the most economic bang for the buck on a relatively small stimulus shot, a temporary break in payroll taxes for business would have been more effective as a hiring motivator. It is still on the table and worth fighting for. I regularly check economic stats over at The Center on Budget and Policy Priorities. They have never been shy about holding Democrat;s feet to the fire over economic issues. Robert Greenstein looks at the positives and negatives, Statement: Robert Greenstein, Executive Director, on the Tax Cut-Unemployment Insurance Deal
The Positives in the Package
The package continues for two years all of the 2009 Recovery Act improvements in the Earned Income Tax Credit, the American Opportunity Tax Credit (which helps students from low- and middle-income families afford college), and the refundable component of the Child Tax Credit. These measures are simultaneously effective stimulus policy, desirable social policy, and admirable anti-poverty policy. They encourage work over welfare and help more Americans obtain a college education; they provide sound stimulus by putting money in the hands of hard-pressed working families that will spend it; and they substantially reduce child poverty.
[ ]…The Negatives
The package’s biggest disappointment is a provision that would shrink the estate tax well below its 2009 level for the next two years.
President Obama sought to reinstate the already-generous 2009 estate tax rules, under which the estates of 99.75 percent of people who die would be entirely tax free, according to the Tax Policy Center. Under the 2009 rules, the first $3.5 million of an estate ($7 million for couples) would be exempt from the tax, and the maximum tax rate on the taxable portion of estates would be 45 percent; the average effective tax rate on taxable estates would be below 20 percent.
There is more at the link. Why or how Republicans get worked up on making sure rich kids get as much unearned income as possible and not have to do an honest day’s work their entire lives is another conservative fetish which defies explanation – Please do not put anything back into the economic infrastructure which made your wealth possible.