Tuesday, December 7, 2010

Obama's Compromise Victories? Tax Cuts.

I'll start out by saying that I am disgusted with the "compromise" plan put forth by the President yesterday. I haven't really wanted to post in the last few days, because I am tired of coming on here and just expressing how upset I am with the lack of leadership. As I've made clear, I think tax cuts are absolutely the wrong thing for our country and our economy... they're a lot of the reason we have the deficit we have now* and economists are almost universal in decrying their "stimulative" power.

So you can imagine my disappointment as I looked into the compromise that the President made, and discovered that in order to "temporarily" extend the Bush-Era tax cuts ($380B/year in the deficit) the President has received the following "concessions" from the Republicans.

1. Extension of the Federal unemployment benefits. This is the only real "concession" that I can see, in that this is something that needed to be done for the country. However, there's NO WAY that the Republicans wouldn't have ended up voting for an extension of these benefits by the end of the year. If the Democrats had been able to hold their ground in congress, the Republicans would have given in on the extension, just as they have done time and time again over the last few years.

2. A freeze for the alternative minimum tax. Yes, a tax cut that will affect some middle-class taxpayers, as well as wealthier taxpayers. This is something that needs to be reformed, for sure, but it's not a pressing issue. It's just another tax cut... and considering a tax cut to be a concession from the Republicans is ridiculous.

3. A huge reduction of the Estate Tax. In 2011, the Estate Tax was slated to affect estates of over $1,000,000 in value. Yes, if you left over a million dollars to your heirs, they would have to pay 35% in taxes to the government. The Repulicans were generous enough, however, to allow the President a tax cut for the wealthy on this as well, with the new Estate Tax affecting only estates of $5M or more. WOW! How crafty of President Obama to work another tax cut out of those Republicans.**

4. Additional tax cuts, from college tuition credits to child care credits. Even better, these "tax cuts" were the same tax cuts put into the weakened stimulus package to entice Republican support. That's right, the Republicans conceded and allowed Obama to continue giving them the tax cuts he gave them back in 2008. How very generous of them!

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I've read a number of "democrats" defending the President's position on this compromise, some even calling the $300 billion in additional tax cuts "stimulus." As I've said, they are the same relatively worthless tax cuts from the stimulus package of 2008, but I tend to trust economists when it comes to economic stimulation more than I do the name attached to some paperwork.

Today the President said he's "ready to fight" and that the Republicans can expect him to fight in the future. I'm pretty sure he's said that before. Like, several times. I seem to remember he promised to fight for the Public Option. That never materialized, of course, as he made a deal with the insurance industry and gave us a wishy-washy industry-friendly bill. Hilariously enough, today he compared this compromise to the health care compromise as he was chastising liberals.

I guess he does get it. I guess we liberals are the fools hoping for someone who isn't a corporatist capitulator... apparently the President feels that is what the country needs. Well, that and more tax cuts.***

I had some hopes that we'd eke out a few minor victories in the lame duck congress. I suppose that is still possible, but unfortunately the President will continue fighting against real change and economic improvement.

* In addition to Iraq and Afghanistan, as well as the housing bubble... but they're still a large portion of our deficit.

** This $5M cap isn't enough for some Republicans who are still complaining about the existence of any estate tax at all. These complaints are somehow supposed to justify the "compromise" as they're the example of the right being upset about the tax bill.

*** Is it just me, or does all this tax cutting sound like a tea party agenda? It's like the President has adopted their point of view, but left all the personal anti-Obama rhetoric aside.


  1. You can either prioritize the deficit/debt or prioritize massive tax cuts. You can't do both coherently. We've fallen into a collective insanity in which people bleat for tax cuts and then turn around and whine about government debt.

    I, for one, care a lot more about reviving the economy than about either tax cuts or deficits. I don't give a crap about government deficits -- that's not an acute problem. The staggering economy is an acute problem and it needs addressing. There is no good evidence that cutting taxes is the best way to fix things. It's not as though taxes are the thing keeping the economy from picking up.

    I *hate* that Obama has picked up this line straight out of Foxnews talking points: tax cuts forever, and at the same time, deficits/debts are a huge worry.

  2. Here here. I believe we need to address the debt/deficit (our interest payments are quickly becoming a large portion of our deficit) but in this economy the primary goal should be creating jobs and bringing things back in line. Spending money on valuable job-creating programs trumps reducing the deficit, the $800B that the President just gave away to the right should be spent on infrastructure and providing for those who are without an income. Get them ready to work again, and support an economy that will provide them a job!

    What really frustrates me is that the President knows these things... he did a great job of explaining the benefits of real stimulus (and the fallacy of tax cuts) in '08, but he seems to have abandoned it all in his hopes that the right will finally decide he's good enough.