The Tax-Cut Stimulus

I know this has already been discussed but I wanted to excerpt a few of these takes on the deal to extend the Bush tax cuts – even those for the wealthiest Americans – for another two years. Ezra Klein says it’s not such a bad deal after all:

It’s a lot better than I would’ve told you the White House was going to get if you’d asked me a week ago. There’s some new stimulus in the form of the payroll-tax cut and the expensing proposals. The older stimulus programs that are getting extended — notably the unemployment insurance and the tax credits — probably would’ve expired outside of this deal. The tax cuts for income over $250,000 are a bad way to spend $100 billion or so, and the estate tax deal is really noxious.

It’s bad news for the deficit, though the White House and Congress are right to make the deficit less of a priority than economic recovery. And speaking of that economic recovery? This isn’t enough, and it’s not well targeted.

Daniel Larison thinks progressives will take this as betrayal regardless of the unemployment benefits and stimulative effects of the tax cuts:

Obama’s cave-in on taxes will alienate more than vocal progressives. It could be far more politically damaging than that. This is not simply a matter of provoking the base with yet another compromise. This is a matter of abandoning a position that is widely and strongly held throughout his party. In some cases, Obama has angered progressives by doing exactly what he promised during the campaign, but in this case he would be openly repudiating one of the most prominent positions he took during the campaign.

This is probably true, but I think David Leonhardt is right that the alternative – expiration of all the Bush tax cuts for every income level – would have been both politically and economically a disaster:

Letting all of the tax cuts expire surely would have an economic effect, and not a positive one. At a time when the economy is weak, when job growth has proven disappointing yet again and when Europe is again struggling with debt crises, the national discussion would be dominated by an across-the-board tax increase. Households would have less money, and everyone would be talking about how households had less money. That situation seems very likely to push back the date when real improvement would begin and push back the date — still a long way off — when the economy would feel healthy again.

One politician, above all, would be hurt by those events: the president.

In a follow-up post, Leohnardt calls the deal a second stimulus:

What actually seems to be happening: Democrats and Republicans agree to extend all the tax cuts and also agree to an extension of unemployment benefits, a cut in the payroll tax and, according to my colleagues, “continuation of a college-tuition tax credit for some families, an expansion of the earned income tax credit and a provision to allow businesses to write off the cost of certain equipment purchases.” The amount of money pumped into the ailing economy: about $900 billion over [two] years.

This was smart politics from Obama even if it does mean he’ll have to fend off attacks from within his own party. Extending the tax cuts for the wealthiest Americans may be a bitter pill to swallow for many progressives, but it’s not that high of a price to pay for a serious shot of stimulus. I would actually like to see more stimulus in the form of direct payments to middle and low income Americans, followed by some long-term structural and tax reforms to shore up the long term deficit. But deficits, while important for our future, are a ways down the list during a recession. First comes economic recovery, then comes whatever necessary cuts and tax reforms necessary to get our fiscal ship in order.






119 replies
  1. 1
    Yutsano says:

    I freely admit I’m not happy about it, but can I live with it? Yes, because there are folks who will be able to eat and have a roof over their heads through the Christmas season. I also agree that we’ll have time to get our financial house in order later. Our interest rates are next to nothing and folks all over the world are STILL buying our debt. We’re not at risk for any sort of default until the debt ceiling becomes an issue later down the road. Again, not happy, but I can deal.

  2. 2
    NR says:

    The problem is that, as was pointed out when Obama loaded up the 2009 stimulus with tax cuts to appease Republicans (who never had any intention of voting for it anyway), tax cuts are crappy stimulus. This won’t do jack squat to help the economy, but it will make the deficit worse so that the Republicans (and perhaps Obama, too) can come in and say that we need big cuts to the social safety net in order to fix it. This is complete fail all around.

  3. 3
    Comrade Luke says:

    Hey everyone, just to pre-empt things a bit, instead of going off on this post I’m just going to keep on hanging out over at “The Deal” thread. If you feel the same way I’ll see you over there.

  4. 4
    BR says:

    Tax cuts are the least stimulative stimulus we have, so it really is a waste. Add to that that the unemployment benefits are what, $18 billion? Versus how many billion for the rich tax giveaway?

    Frankly the best/only bet we have to righting the ship is to invest in things that will help us in the long term (e.g. nationwide high-speed rail, massive solar/wind/etc. farms, etc.) rather than short-term infrastructure stimulus (roads), short-term housing stimulus (misc mortgage programs), or tax cuts.

  5. 5
    Brachiator says:

    This is uninformed nonsense. The Bush tax cuts did nothing for the economy the first time around. Why are they magically supposed to work now. Previous aspects of the Obama stimulus program included expansions of expensing provisions and generous bonus depreciation deductions, but this did not lead to the creation of new businesses. The Making Work Pay credit is nice, but has a trivial impact on the economy.

    That an expiration of the Bush tax cuts would adversely affect every income level is a lazy, stupid lie.

    The Democrats could have, should have done better. If they knew what they were doing.

  6. 6
    E.D. Kain says:

    It really depends on the kind of tax cuts – the Bush tax cuts, at least for the wealthiest Americans, are not terribly stimulative. But the payroll tax cut is, and can inject money directly into the economy very quickly.

  7. 7
    AT says:

    So republicans have compromised, they’ve agreed to not burning down the house and the shed out the back, they’ll just burn the house and leave the shed if you give them your car.

    Nice work, who are the terrorists again?

  8. 8
    E.D. Kain says:

    Payroll tax cuts are also progressive:

    Under the plan, the Social Security payroll tax on individual wages would be lowered to 4.2% in 2011, from the current 6.2% rate.

    A worker earning $70,000 would pocket $1,400 as a result of the tax cut. Social Security taxes apply only to the first $106,800 in wages, so the benefit for high earners tops out around $2,100. The employer share of Social Security taxes would not be affected.

  9. 9
    Corner Stone says:

    @AT: It reminds me of police stories where the burglar breaks in, defecates all over the living room, schmears it all over the walls.
    Then the owners come home, see the shit everywhere and say, “Well, it’s not that bad I guess. Could have been worse.”

  10. 10
    WarMunchkin says:

    Preventing a negative multiplier is not a stimulus. It’s keeping things the same. Stimulus involves extra action by the government. The 900 billion figure is dishonest.

    The stimulative things there are a payroll tax holiday. I’m still not sure whether there is Tier 5 unemployment extension. That would be a meaningful stimulus.

    It’s more accurate to say that the Democrats traded extending existing tax brackets for a tiny stimulus, which will be just enough to prolong current rates of unemployment until next year, when Republican opposition to raising the debt ceiling will force major cuts, spiraling the economy into double-dip and handing them the White House in 2012.

  11. 11
    FlipYrWhig says:

    The only way it’s “smart politics” is because letting all the tax cuts lapse would have been devastatingly bad politics (and, contra Larison, much more directly a repudiation of a campaign promise). Senate Democrats wrecked the somewhat-smart politics of making Republicans stand up for special tax cuts for the rich by not wanting to have that “decoupling” vote before the election. It’s not “smart” on its own. It’s more of a “how can I crash-land this plane and kill as few passengers as possible” decision.

  12. 12
    Jay says:

    When we say “holiday” on paying your payroll tax, we mean that we’re undercutting the funding for Social Security, OR borrowing the money from the Chinese to make sure your SS payments are made. It’s fucking stupid.

    This whole presidency has been an exercise in pathetic capitulation.

  13. 13
    Just Some Fuckhead says:

    Well God Bless Obama for not engaging in devastatingly bad politics now that November 2, 2010 is behind us.

  14. 14
    WarMunchkin says:

    @Jay: It’s a progressive Keynesian policy. Saying we’re borrowing it from the Chinese always struck me as a weird thing to say – they’re not our loan shark, they buy treasury bonds because it’s a secure, low-risk investment, at least right now. A payroll tax holiday was just under extending unemployment benefits in the CBO report on stimulative effects in the economy.

    The greater risk with a payroll tax holiday, IMHO, will be that Republicans will block it from expiring, and then turn it around and use it as evidence that social security is insolvent, asking us to make the “tough sacrifices” and cut it, or something like that.

    Edit: I’m slightly wrong about the payroll tax, but it was unintentional. Here’s the link to the image:

    http://s3.mediamattersaction.o.....cbotax.jpg

  15. 15
    DonkeyKong says:

    But deficits, while important for our future, are a ways down the list during a recession. First comes economic recovery, then comes whatever necessary cuts and tax reforms necessary to get our fiscal ship in order.

    I would agree with this if I lived in a sane country with a sane press but I, we don’t. Nothing in the above statement will matter come january.

  16. 16
    xyzxyzxyz says:

    Can someone (in particular, the author of this post) present a piece of data that demonstrates tax cuts directly result in economic stimulus? Demonstration of job growth, and an increase in the income of the middle class would be great. And no, you can not use data from the Heritage Foundation as proof.

    Seriously, this “tax cuts lead to economic growth” dogma has to be proven, or this is a canard.

  17. 17
    Joey Maloney says:

    It’s not enough. It may have been all we could get, but it’s not enough. The effects of the tax “cuts” plus the unemployment extension won’t be near enough to counteract the recession/depression we’re in. And meanwhile the debt continues to balloon and the clock continues to tick down towards the day where our economy becomes permanently crippled. That’s fine with the Republicans, who want the economy to still be in the shitter in 2012 so they can take power and complete the looting of the Treasury.

    Our institutions are incapable of responding effectively to deliberate economic sabotage by a major political party.

    In other words, the terrorists have won.

  18. 18

    Roy Edroso points out how with this deal, Obama has demonstrated one fact to all who wish to see it: the Republicans do not give a good goddam for the deficit at all.

  19. 19
    Jewish Steel says:

    Anecdotally, I will use the $ I save on the payroll tax cuts to finish up my band’s album. That’s money that will be injected into my little community of artists. Given a choice, I’d prefer the rich be taxed but the money will be appreciated and put to, at least in our estimation, good use.

  20. 20
    Linkmeister says:

    From my place, quoting the NYT:

    It would reduce the 6.2 percent Social Security payroll tax on all wage earners by two percentage points for one year, putting more money in the paychecks of workers.

    And now my own thoughts:

    So the trust fund will be reduced by that amount, thus shortening the number of years before it starts paying out more than it takes in. This is the camel’s nose under the tent. Yes, it should have a stimulative effect on the economy, but it’s terrible precedent. Next year when it comes time to bump the tax rate back up the Republicans will undoubtedly howl that it didn’t hurt anything to cut it, so let’s cut some more because people deserve to keep their own money. And all the people who want to kill Social Security entirely (Pete Peterson and David Walker, I’m talking to you) will be delighted.

  21. 21
    Christin says:

    Daniel Larison thinks progressives will take this as betrayal regardless of the unemployment benefits and stimulative effects of the tax cuts:

    Hold up. WHAT? Progressives will take something the POTUS did as a betrayal regardless? No way. ‘

    Color me shocked and freaked out!

  22. 22
    weichi says:

    I actually don’t understand at all why a deal was agreed to at all. Wouldn’t the Republicans be better off waiting till January, when they will have a stronger hand?

  23. 23
    NR says:

    @Christin: Yeah, it’s funny that people would take the direct breaking of a campaign promise as a betrayal, isn’t it?

  24. 24
    Moses2317 says:

    Delaying the planned Bush tax increases for another two years is a bad idea fiscally and politically for the Democrats, as the tax cuts for the wealthy should be ended now and the middle class tax cuts should have been extended for three years to remove them from the 2012 election.

    That being said, however, it is clear that the votes were not there for the ideal result. As such, compromise here was necessary. And this compromise could have been much worse. Extending unemployment benefits for 13 months was absolutely critical to help protect the only safety net that at least 7 million unemployed Americans have. In addition, the payroll tax holiday should have some stimulative effect and extending the Earned Income Tax Credit was also a good idea. Extending the estate tax at a lower level was not good, but it was probably the best option available given that leaving the issue until next year could have easily allowed the estate tax to be permanently eliminated.

    So, overall not what I would like as a progressive, but I think the President is getting about the best we could get out of our broken Senate right now.

    If you are upset about this deal, focus your outrage against the Republicans who were willing to hold the unemployed hostage in the name of tax cuts for the wealthy elite, not against a President who cut a necessary deal to get some much needed help for the unemployed. And then work to make sure that the political dynamic on these economic and tax issues will be different in 2012 than it was this past year.

    Winning Progressive

  25. 25
    FlipYrWhig says:

    @Joey Maloney:

    It’s not enough. It may have been all we could get, but it’s not enough.

    I think we probably can all agree on that.

    Our institutions are incapable of responding effectively to deliberate economic sabotage by a major political party.

    Nope. They’re all predicated on politicians (1) being “gentlemen” (2) agreeing that the purpose of the government is to advance or protect the common good, with some disagreement about the means, disagreement that can be negotiated. I don’t think the people who wrote the Constitution counted on the emergence to popularity of a party of sadists. Which is a bit surprising, because the actual Marquis de Sade was alive at the time.

  26. 26
    FlipYrWhig says:

    @Moses2317:

    If you are upset about this deal, focus your outrage against the Republicans who were willing to hold the unemployed hostage in the name of tax cuts for the wealthy elite

    Also spare some outrage against Democrats who didn’t have the guts to take on Republicans for holding out for special tax cuts for rich people before the election. Of course, that included some senators who are usually on the side I like, like Boxer and Murray. It’s hard to swallow that they really were worried that they would suffer at the ballot box for a vote on that. I see where they’re coming from, but, damn.

  27. 27
    Comrade Luke says:

    @WarMunchkin:

    The greater risk with a payroll tax holiday, IMHO, will be that Republicans will block it from expiring, and then turn it around and use it as evidence that social security is insolvent, asking us to make the “tough sacrifices” and cut it, or something like that.

    That’s a RISK? No, that’s a CERTAINTY.

    “My concern is that in ten years the Republicans will block the Bush tax cuts from expiring and the Democrats will cave”.

  28. 28
    Christin says:

    @NR:

    Uhhh. If I did not remember you simply as a shit stirrer who posts some ignit fucked up shit every day some of it bordering on the stupid of the hightest order? I would think about giving you a serious answer. Fool me once….fool me…what? Uhh.

    That being said. Must suck to be a progressive, huh? :-)

  29. 29
    Bob Loblaw says:

    This exact same tax package was floated before the election, sans upper 2% income tax cuts, and was met with a resounding shrug by the likes of Ezra Klein. He was right the first time.

    It’s really unlikely that a payroll tax holiday and demand-pull business investment credit can offer much stimulative impact beyond the margins. It’s really a policy choice of last resort, except that we never tried pushing the types of heavy Keynesian options first before getting here.

    It’s a better trade than just getting the UI expansion, but it’s highly cost-ineffective and a rejection of what should have been acquired wisdom after the failure of the original tax-cut stuffed stimulus bill to create a more dynamic and less stagnant recovery.

    Oh, and California, Texas, Arizona, Florida and Illinois are still completely fucked budgetwise. So that’ll help tons.

  30. 30
    Zach says:

    This is probably true, but I think David Leonhardt is right that the alternative – expiration of all the Bush tax cuts for every income level – would have been both politically and economically a disaster…

    If there were 51 Senators who preferred Obama’s plan to extending cuts for everyone, it would never come to this. If the majority only allowed votes on Obama’s plan, the story leading up to Christmas would be: “Filibuster blocks Obama tax plan and unemployment extension; rates to go up January 1.” Obama (and the Congressional majority) are the ones with the plan; the Congressional minority stopped it. The health care bill would’ve been a political disaster if it didn’t pass; the tax plan will be a disaster for those who oppose it if they succeed in doing so, because they will be responsible for what happens 1/1 in the media narrative. “The Democrats didn’t offer a plan that we agreed with so we didn’t vote for it so it’s their fault” is too nuanced an argument to work at all; the news media would rely on the simpler narrative.

    Unfortunately, I think there’s a Congressional majority that truly prefers extending the cuts entirely and dedicating money to protect rich kids to a responsible move on taxes that’s both stimulative and reverses some of the regressive changes in the tax code over the past decade. Some members of this majority stuck with the party and voted for Obama’s plan and Schumer’s millionaire compromise, but only because they knew there was no chance of passage.

  31. 31
    Mac G says:

    I feel there are multiple issues at play.

    Did Obama/Dems get the best deal, considering GOP did not care about putting millions of unemployed people in the street? Maybe. Some pundits agree I guess. I could see where risking the misery of unemployed would have been a loss for Dems because the media never would have framed it correctly. Then again, 4 million 99ers are in the street now but no one in the media or in DC cares about them.

    Should unemployed extensions ever been apart of this tax debate? No Way. Give us tax cuts for billionaires or families will be Fd for the holidays. Shocking that this argument won out.

    Why did this debate shake down this way? Congressional Dems deciding to punt until now and not using it as a campaign issue are big time to blame. Hoyer and his merry band of deficit fraud Blue Dogs and the millionaire club in the US Senate tied Obama’s hands. I understand that he probably can not call these bitches out.

    Does this buy into the narrative that Obama is a shitty deal maker with his adversaries? Absolutely.

    The guy caved on a major campaign promise. There is no way to deny that fact. OFA can spin all they want but the perception Obama is weak at negotiating continues. Insufficient stimulus, Giving Into Offshore Drilling before BP blow up, Health Care Debacle Giveaways and now this tax debate are all examples of this behavior.

    Maybe now he will surprise everyone and make it up to his supporters by ending the war in Afghanistan and bringing the troops home, thus making an economic argument that American can not afford endless wars anymore when our economy is struggling and need to invest in our country. HA!

    This would mean actually taking a powerful interest on when it is so much easier to please them.

    DC Logic: Osama Bin Laden attacked America so we invade Iraq. The Deficit is the worst thing ever and we must do something to get it down but adding to it with unpaid awesome tax cuts is fine.

    This town is nuts.

  32. 32
    Martin says:

    Well, I think anyone here who is arguing that the deal is bad from a deficit standpoint is full of shit. Almost nobody hollered when the plan was a permanent extension of the $2.1T over 10 years middle class tax cuts – something that unquestionably would have had to have been reversed in some part in order to eliminate the deficit. The only reasonably solution from a deficit standpoint was a 2 year temporary extension.

    The House proposal was to eliminate $2100B in revenue in exchange for an increase of $700B over 10 years over current levels. This proposal is to eliminate $540B in revenue over 2 years, presumably (yes, I know what argument you all will insert here) at which point we’ll get an increase of $2.340T in revenue, a net increase of $1.8T over 10 years over current levels, a $1.1T difference. From a deficit standpoint, on the assumption that the economy has recovered in 2 years, this is a no-brainer, unless you’re going to argue that tax levels under Clinton were irresponsibly high.

    From a stimulus perspective, nothing is needed really to move GDP. Demand is returning. Revenues and profits are good. Housing is still marginally fucked. The whole problem is employment, and there’s enough money floating around out there to drive employment if employment would help – but industry is saying they don’t have a use for workers even though they have enough cashflow to hire them. We lost jobs that we should never have afforded providing. We were borrowing to create those jobs and the only way they’re going to come back is to either borrow again which is just irresponsible, or to generate external demand (exports), or to force new markets to happen.

    Sure, we need to bridge people out of work and a payroll holiday will help and extending benefits will help, but we’re going about this entirely wrong. Not that the GOP is willing to help, but the monetary policy should help – crashing the dollar some will help exports and will pinch US companies that have offshored. Regulating some industries into change (green jobs etc), building infrastructure, and so on.

    The things you guys seem to be supporting are all supply side solutions. Either we need to move monetary and trade policy enough to create external demand (Korea should help with this, actually – they aren’t a 3rd world economy like Mexico) or we need to force it to happen internally. Skip the tax credits and shit and build some trains, some wind farms, a national mobile infrastructure, etc.

    Without these things, what do we really think we’re going to hire these people to do?

  33. 33
    Keith G says:

    I would actually like to see more stimulus in the form of direct payments to middle and low income Americans, followed by some long-term structural and tax reforms to shore up the long term deficit.

    First, I agree.

    Secondly, I am concerned that economically (and therefore socially) we have spent no time devising a plan for what’s next. What do we do now that the industrial/manufacturing era fades into the rear view mirror? Until we begin dealing with this, stuff like Monday’s deal is just cleaning the brass on the Titanic.

    And this is not an Obama thing. It is an us thing. We need to stop watching Survivor: Bikini Atoll (or whatever) and figure out how we are going to deal with a society were the great wealth generated by American economic activity is shared by fewer and fewer people.

    The version of American style capitalism that existed for much of the last 100 years and gave us large, stable, and easily accessible middle class no longer exists. So what do we do with this large, diverse and under-educated society that was created to serve and protect our previous economic system?

  34. 34
    NR says:

    @Christin: When it comes to stupid shit, it’s damn hard to top what you said in these comments.

  35. 35
    Zach says:

    @Bob Loblaw:

    It’s really unlikely that a payroll tax holiday and demand-pull business investment credit can offer much stimulative impact beyond the margins.

    Payroll tax cuts are stimulative according to every calculation I’ve seen (multiplier ~1.3). Not as much as direct spending, unemployment benefits, and food stamps, but pretty high up on the too-short list of politically feasible options, much more-so than the AMT patch (10% of the stimulus), and as much as the making-work-pay credit (15% of the stimulus). Probably more-so than the home and car-buying credits, but those were targeted to at-risk industries and can’t really be valued in the same way (they might be minimally stimulative yet protect against a catastrophic failure).

  36. 36
    Comrade Luke says:

    @Martin:

    If only we could hire people to buy shit!

  37. 37
    Martin says:

    @Bob Loblaw: California isn’t so bad. Really. If we do basic prison reform (one of the areas where California doesn’t show hardly any progressive action) and move non-violent offenders to electronic monitoring, that’s 1/3 of our budget gap right there.

    The state is so fucking big that a few not-unreasonable efforts (that the GOP has blocked up until now) should clear it up without too much pain.

    With the legislature finally able to pass budgets on a simple majority, and with a Democratic governor unlikely to veto a reasonably progressive budget, things should go a lot differently. Democrats hold 52 out of 80 seats in the Assembly and likely 25 out of 40 in the Senate (there are two vacancies due to deaths) so even if they lose a decent chunk of their caucus, they should be able to pass vastly different budgets than we’ve seen in the past.

  38. 38
    Comrade Luke says:

    @Martin:

    We’re pretty screwed in Washington: Gregoire is calling a special session to address a $1.1b shortfall.

    They’re trying to come up with enough services to cut, because raising taxes is out of the question.

    I swear, this country is going to revert back to fucking Deadwood at this rate.

  39. 39
    Martin says:

    @Zach:

    Payroll tax cuts are stimulative according to every calculation I’ve seen

    But what are we talking about here. Stimulative to what? Stimulative to GDP, sure. But GDP isn’t the critical problem. We’re less than $1T below where we should have been with no recession and even with dumping nearly $1T in stimulus in and slow but steady GDP growth (just shy of 3%, compared to a more normal rate closer to 4%), we’ve had only modest job growth.

    Boosting GDP isn’t translating to jobs. It’s just translating to profits. My investments have never looked better. Why should companies hire when they’re doing so well without the workers?

  40. 40
    Can't Be Bothered says:

    @Bob Loblaw:

    And precisely WHAT were the REALISTIC alternatives? In what alternate, delusional fucking universe do you live? Heavy Keynesian policies????? Was there a bizarro Senate that existed for the past two years that I’m unaware of? Thanks Captain Hindsight. Do you have anything relevant to add to the discussion? Of all the wailing here, I have yet to see ANYONE answer three basic questions: Are the unemployment and payroll tax holiday good for poor people? Will it stimulate the economy? Could Obama have brokered a better deal? It would be helpful for anyone answering the last question to acknowledge, even in a cursory manner, that Republicans shattered the record for filibusters and just won a landslide election, and that after this lame duck session they control one of the two chambers of congress that actually writes the goddamn laws.

  41. 41
    Comrade Luke says:

    @Martin:

    Not to mention the banks: Why lend to us cretins when you can lend money backed by the full faith government…to the government and make a profit.?

  42. 42
    Bob Loblaw says:

    @Comrade Luke:

    Things are generally improving nationwide at the state and local level. 42-45 states are going to be just fine. Although, the influx of Republican governors doesn’t help in the midwest.

    It’s those 5-8 problem children who need to play catch up. I’m glad Martin is optimistic about California, I suppose they can’t possibly do any worse than 2002-2010.

  43. 43
    Martin says:

    @Comrade Luke: You’ve got a $280B economy. Your budget is off by .4% of GDP. That’s not so bad. CA has a $1.8T economy and we’re off by $25B or about 1.3%. Texas is facing $25B but over 2 years, so $12.5B per year. They have a $1T economy, so they’re about in the same shape as CA – about 1.3%.

    .4% of GDP is painful, but not horrible. You guys can manage. That’s what, a month profit for MS? Tell them to fund WSU for a year, and you’re halfway there.

  44. 44
    FlipYrWhig says:

    @Can’t Be Bothered: The answer you’re going to get (from someone) is that Obama probably _could_ have gotten a better deal, but we’ll never know, because he didn’t try hard enough. How do we know he didn’t try hard enough? Because he didn’t get a better deal, or, because that’s just the kind of guy he is, the kind who doesn’t try hard enough, like that last time. What happened the last time? Well, he _could_ have gotten a better deal, but we’ll never know, because he didn’t try hard enough. What’s the name of the guy on second base?

    Or you’ll be called an apologist or reamed out for making excuses for failure. But the answer to “what would have been better” tends to be either something that _would_ be better but doesn’t seem likely to overcome the by-now-default filibuster, or a bunch of handwaving.

    I think there’s a not-unreasonable longing to see Obama say that there’s something he will not do. I think there’s not a lot of thinking about what would happen if Obama said there was something he would not do, then he didn’t do it, and then life got worse for a significant number of people, who would likely hold Obama responsible for that.

  45. 45
    WarMunchkin says:

    So, my POV just got pwned by Naked Capitalism regarding the payroll tax.

    I’m with them.

    http://www.nakedcapitalism.com.....onomy.html

  46. 46
    Bob Loblaw says:

    @Can’t Be Bothered:

    Do you have anything relevant to add to the discussion?

    This is an intensely ironic question, that’s all I’m going to say.

  47. 47
    Can't Be Bothered says:

    @Bob Loblaw:

    This is an intensely telling response, that’s all I’m going to say.

  48. 48
    Bob Loblaw says:

    @Can’t Be Bothered:

    You’re right. I should have used more ALLCAPS and question marks to really drive the point home. My bad.

  49. 49
    WarMunchkin says:

    @Martin: This is holdover from your argument that the unemployment is cyclical over structural, is it not? Not that I disagree with your infrastructure proposals, but if there were no Republicans, that would have happened. Anyways….

    What evidence, besides your own anecdote, do you have that unemployment, in general, is structural? Admittedly there are probably some people with major problems – there always are. But I think Krugman was arguing that the structural employment is small compared to the cyclical:

    here
    and here also this

  50. 50
    Can't Be Bothered says:

    @Bob Loblaw:

    You’re right. I should have used all fantasy hindsight scenarios and pseudo-intellectual brow beating to drive my point home. Here, I’ve got a brilliant strategy: Democrats should’ve gotten single payer, $2 trillion in stimulus, and instead of this compromise Obama should’ve Fought (c) and gotten two years unemployment, stimulus II, and a useful Fourth Estate. It’s fun being armchair President! Wheeeee!!

  51. 51
    Martin says:

    @Bob Loblaw: No, 2004-2010 were horrible. The formula was pretty simple, though.

    Republican governor with veto power. 2/3 requirement to pass a budget, and a legislature that was 1-2 votes shy of 2/3 Democratic. The last 6 years looked exactly like the US senate for the last 2 years. With every minority party vote counting, they turned into an impassible obstruction. Last year when the GOP minority leader indicated he was willing to compromise on a budget at 10PM, he was voted out by the caucus and replaced by 1AM. Can you imagine the US Senate dumping McConnell and replacing him with DeMint in the middle of the night, simply over the budget?

    But now, we have a simple majority requirement and a governor that matches the majority party in both houses, and those houses each have more Democrats than last year, and we have Democrats in every single state office, both US Senators, and Dems hold 34 of 53 seats in the House.

    Taxes and fees still require a 2/3 vote, so that sucks balls, but we’re used to having ballot initiatives in months that contain vowels, and the public polling seems realistic on the need to increase taxes in some capacity (simple majority needed by voters).

    That last item aside, California hasn’t had the deck stacked this much in favor of Democrats since Jerry was governor last time, 30 fucking years ago, when he was stuck cleaning up after Reagan. And there’s a lot of action in the state right now. One of Arnold’s few redeeming qualities was his commitment to energy policy and transforming our energy economy. That should accelerate with Brown, and it’s bringing jobs and venture capital into the state at a fast rate. Our top corporations are doing well and expanding – Google, Apple, Intel, etc.

    There’s a lot more to be optimistic about now than in some time. The biggest problem is that jobs are seriously in the shitter.

  52. 52
    Can't Be Bothered says:

    @Bob Loblaw:

    And just as a cursory discussion what’s your position on unicorns vs. ponies? I know, I know… It’s really unlikely that a pony can offer much super fun time beyond the margins. It’s really an equine of last resort, except that we’ve never tried getting a unicorn first before getting here (duhh! should’ve gone with the unicorn initially).
    A pony is a better trade than just getting a regular horse, but it’s not super duper fun and a rejection of what should have been acquired wisdom after the failure of the last pony to create more dynamic fun time. Personally, I think we should always demand unicorns and if we’d just fight for it, I’m sure it’s in the cards.

  53. 53
    scarshapedstar says:

    Lol whatever.

    “You call it surrender; we call it… VICTORY.”

  54. 54
    Art Decko says:

    @Martin: Excellent analysis with the exception of the last sentence. MS would fund the UW instead of Wazoo because they need programmers, not animal husbandry majors.

  55. 55
    chaseyourtail says:

    Yes ABL, I see Rovian tactics by the left as well. Number one: The constant, unrelenting “Obama is a coward” swift-boat like drumbeat. According to the left, everything Obama does stems from fear and weakness. Everything! If the president sneezes, he caved to the pollen that flew up his nose. It’s gotten that ridiculous. The left is desperately trying to make this smear stick. That’s why their drumbeat grows louder and louder every day. Unfortunately for the left, their efforts to slime this president will ultimately fail for a number of reasons. One reason is that in order to make a swift-boat smear stick even a little, there needs to be amplification assistance from the corporate media and that ain’t gonna happen.

    Yes, Adam Green is a lying little turd and so are all those jokers on the progressive/professional left. Anthony Weiner’s smarmy little ass couldn’t wait to make the rounds with the “Obama caved” talking point today. What a shameless, opportunistic poser he turned out to be. Then again, they all are.

    Obama did the right thing making this deal. And it took political courage to do it, not cowardice.

  56. 56
    Balconesfault says:

    @Jay: The thing that worries me about the payroll tax cut is that in a couple years it’s going to just be accelerating SS trust fund insolvency, and in short time will lead to more calls for massive cuts in SS benefits.

    There are places you could have provided tax relief without eroding the trust fund. This is essentially more long-game by the super wealthy who hate SS and want it gone.

  57. 57
    Bob Loblaw says:

    @Martin:

    No, 2004-2010 were horrible.

    Isn’t that what I said? Unless 2002-03 were some sort of nirvana, then fine, I apologize for going back eight years instead of six.

    Though I do disagree that California’s problem (and therefore solution) is entirely political. There’s some serious demographic distortion to work through, and a lot of that can’t be exported your way out of. Although the exports will be impressive in the years to come, I’m sure. I probably shouldn’t have listed Cali with the likes of Arizona and Texas, that was too harsh. New Jersey is a better fit with that gang.

    @Can’t Be Bothered:

    You’re flailing about impotently, and I have no idea why.

    All I said in this thread was that the administration never made direct spending projects a focus of its job policies and that tax cuts have historically been both poor job creators and economically inefficient, payroll or not. I’m not taking back either of those opinions.

    I’m not going to praise policy I find un-praiseworthy. And I’m not going to couch it by saying Obama did his best in a bad situation because Republicans are mean…blah blah blah…the Senate…blah blah. I don’t make an effort to repeat that the filibuster exists anymore than I do to repeat that it takes a majority in the House. It’s a given. It’s also irrelevant. Mediocre outcomes are mediocre outcomes. This isn’t tee ball, there’s no prize for trying one’s best.

    If you don’t think I’m constructive enough because I don’t make an effort to keep the troops rallied, that’s fine. I’m not the one trying to get taken seriously while posting about unicorns and ponies…

  58. 58
    chaseyourtail says:

    @chaseyourtail: Oh crap, my rant ended up on the wrong thread again. Sorry for the intrusion.

  59. 59
    JGabriel says:

    E.D. Kain:

    Extending the tax cuts for the wealthiest Americans may be a bitter pill to swallow for many progressives, but it’s not that high of a price to pay for a serious shot of stimulus.

    Paying off the already rich with $100 billion in tax cuts to get about $55 billion in unemployment benefits for the desperate and destitute?

    Of course it’s too a high a price. Maybe it’s the best deal we were likely to get and the best option of a bad lot, but when we have to pay off the the top 1% with two dollars for every dollar we give someone in need, that’s too much.

    Only someone so addled (about 45 % of the country apparently) by the last 30 years of Reagan & Rand worshipping pro-wealth at the expense of all common sense propaganda from the GOP could think otherwise.

    .

  60. 60
    Balconesfault says:

    Is there a reason why the Dems couldn’t extend unemployment benefits simply by pushing this to reconciliation?

    I mean, if the GOP can do it to force tax cuts anytime they want … why couldn’t the Dems rely on reconciliation to do the middle class tax cut and unemployment extension without letting Goldman Sachs execs keep an extra $40K for every million in bonus dollars?

  61. 61
    WarMunchkin says:

    @Balconesfault:
    (1) Reconciliation can only be used once per fiscal year, and

    (2) New rules passed by Democrats make it impossible to use Reconciliation for anything that adds to the budget deficit.

    link

  62. 62
    mclaren says:

    Sorry, Kain, but Obama letting himself get boxed into a lose-lose situation is not “smart politics.”

    It’s what you expect of a naive inexperienced ivory tower yakademic who did stellar work at the Harvard Law Review and expects to be able to make people work together by conciliation and compromise.

    But in Washington D.C. in 2010, conciliation and compromise with the Republicans lets them kneecap you with a nail gun, then rip your head off and sh|t down your neck.

    If you want to know what smart politics would’ve been, here’s a clue: get some Demo in the lame-duck congress to add the goddamn tax cuts for the middle class legislation as a rider to a bill the Repubs absolutely positively cannot vote against. Like, say, funding for the troops in Afghanistan. Or something like that. Then the goddamn far-right motherfvckers are in a lose-lose situation.

    If necessary, you change the rules in the senate. You make procedural changes in the house. You end-run the goddamn Repubs and smash through their minority veto, and if you have to, pass your legislation with a simple majority by reconciliation. If necessary, use a pocket veto.

    Obama could have done a shit-ton of things by bending and twisting the rules Bush-style if he really wanted to, but he has to give up that bipartisanship horseshit. Obama is simply not willing to do that. He’s a naive inexperienced indecisive guy who has risen to a position for which he has neither the experience nor the knife-fighter killer instinct to qualify, at least in this particular time at this particular place. (If Obama had become president in, say, 1960, he probably would’ve worked out great. Back then, the Republicans weren’t batshit insane obstructionists who wanted to see America burn to the ground. But this is 2010, and every time Obama reaches out his hand to the Repubs, they chop it off and try to beat him to death with it.)

    Using the phrase “smart politics” for a pre-emptive surrender that simultaneously emboldens the obstructionist Republican bullies and sickens his Democratic base with revulsion is simply bizarre.

    When you try to placate bullies, they perceive it as a sign of weakness. Darrell Issa and his lynch-mob buddies are going to take Obama’s concession on taxes as a sign of massive weakness and they’re going to ramp up their assault on this presidency to a fever pitch. This very bad decision by Obama just moved impeachment right to the head of the list of “things to do as soon as the house reconvenes in 2011” on the Republicans’ laundry list of planned subversions and sabotages.

    When Obama pre-emptively caves like this, it’s like a swimmer leaking blood into the water when he’s surrounded by sharks. The Republican sharks are going to smell the blood and go into a feeding frenzy.

  63. 63
    JGabriel says:

    Eamon Javers, CNBC via Atrios:

    A significant production problem with new high-tech $100 bills has caused government printers to shut down production of the new notes and to quarantine more than one billion of the bills …

    Why don’t we just give them to the rich instead of giving them a tax cut?

    .

  64. 64
    scarshapedstar says:

    @mclaren:

    If necessary, you change the rules in the senate. You make procedural changes in the house. You end-run the goddamn Repubs and smash through their minority veto, and if you have to, pass your legislation with a simple majority by reconciliation. If necessary, use a pocket veto.
    Obama could have done a shit-ton of things by bending and twisting the rules Bush-style if he really wanted to

    No Obot, but I’m pretty sure “he” has done all of those things.

    Healthcare bill passed by reconciliation. Can only do that once a year and it’s already been done. Ironically, the only reason these tax cuts are set to expire is because they were passed by reconciliation and thus couldn’t impact the long-term deficit.

    Procedural changes in the House – huh? The House is fine. Nancy is the best Democrat in the party. The Senate is where hope goes to die.

    Also, he pocket vetoed the foreclosure bill.

  65. 65
    Can't Be Bothered says:

    @Bob Loblaw:
    B/c you’re an armchair policy wonk that pretends to have factual and moral authority. I’m writing about unicorns vs. ponies because that is exactly how useful your dissection of Obama’s policies is. For the record, direct spending was a huge focus of Obama’s jobs plan, but it was gutted by Democrats and Republicans alike. It’s called the political process. Something that you pretend doesn’t exist, or just needs strong leadership to make disappear. And payroll tax cuts are only marginally less effective than direct spending (something btw that is absolutely 100% not feasible moving forward). You epitomize the demagoguery of the left. Want to have a discussion of what the best policy is? Fine, that’s great (although you play too loose with the facts on which you base your presumptions for even that to be fruitful). But what is gained by applying that fictional discussion to the world we live in? I’m not asking you to praise policies you don’t like. I find it little more than masturbation and shit flinging, however, to use fictional analysis for real world problems. You wave your wand and say “mediocre outcomes are mediocre outcomes” as if context does not matter. What you fail to realize, is that you are measuring the reality of the possible outcomes against your fantasy policy position. It’s the trap of the left and the reason we always, always deconstruct and shoot ourselves. There is a difference between trying for better and bitching about not good enough. But I don’t think many here get that.

  66. 66
    JGabriel says:

    @mclaren:

    … get some Demo in the lame-duck congress to add the goddamn tax cuts for the middle class legislation as a rider to a bill the Repubs absolutely positively cannot vote against. Like, say, funding for the troops in Afghanistan.

    Bwaa-hahaha!

    The Republicans will vote against anything that doesn’t give a tax cut to the rich. That’s their raison d’etre.

    About the only way you could get the GOP to vote against a tax cut for the rich is if it was paired with putting the screws to someone else.

    You want to see Republican heads explode? Pair a 20% increase on the inheritance tax with making abortion illegal*, then, when the GOP refuses to vote for it, campaign on how they won’t give up a tax break to save the little unborn baby Jesus.

    (This is snark. I am pro-choice and NOT advocating a pro-life position. This is merely an example of how to give the GOP a skull-exploding case of cognitive dissonance.)

    .

  67. 67
    mclaren says:

    @JGabriel:

    You know, here’s a perfect example of the kind of hardball in-your-face vicious Bush-style politics Obama could’ve played on the tax cuts for the rich…Obama could’ve cheerfully signed off on the tax cuts for the rich, then when the bill passes, Obama makes a signing statement: “Sorry, this money from the tax cuts for the rich is sequestered on my authority as president. It goes to pay down the deficit. Fuck you, Republican assholes, you lose. If Bush could run signing statements past the congress, I can do it too, and suck my dick, you piece-of-shit punks.”

    That’s what Obama could do. But he’d have to have balls of steel to do it. The Republicans are lying scumbags, but, boy, they’ve got balls, you have to give ’em that. Obama…not so much.

  68. 68
    mclaren says:

    @scarshapedstar:

    Your points are well taken. But how about signing statements? How about sequestering the funds? How about real hardball politics?

    And I really really like JGabriel’s idea of, say, pairing the tax-cuts-for-the-rich legislation with something like a massive estate tax increase on estates over 10 million dollars, or something that makes the goddamn Repub heads explode.

    Seriously. If Obama wants to push it to the wall, he could nail those Republican fuckers hard. He did not have to just sit there and take it.

  69. 69
    Can't Be Bothered says:

    @mclaren:

    Please don’t talk about all the super awesome procedural moves Obama could’ve made when you clearly haven’t the slightest clue about them. None of your suggestions bear a resemblance to anything that could actually be done. Additionally, you do realize that Republicans just won control of the House and take over writing the laws next month right?

  70. 70
    Can't Be Bothered says:

    @mclaren:

    And I really really like JGabriel’s idea of, say, pairing the tax-cuts-for-the-rich legislation with something like a massive estate tax increase on estates over 10 million dollars, or something that makes the goddamn Repub heads explode.

    You filibuster. And then after you take over the House you write the tax cut for the middle class together with the tax cut you want for rich people, so it can’t be vetoed without vetoing everyone’s tax cut. Jesus, no wonder you all are bitching that Obama didn’t go all in on the pot, you think Republicans were holding a pair of two’s…. against every shred of evidence available from the past two years.

  71. 71
    Balconesfault says:

    @mclaren:

    That’s what Obama could do. But he’d have to have balls of steel to do it. The Republicans are lying scumbags, but, boy, they’ve got balls, you have to give ‘em that. Obama…not so much.

    Obama clearly believes in the political process. Unfortunately, these days that’s like entering a cage match and believing in the Marquis of Queensbury rules.

  72. 72
    mclaren says:

    @Can’t Be Bothered:

    Actually, signing statements and sequestering funds are things that were done by both Reagan and Bush. If those two creeps could do those things, Obama can do them.

    You haven’t explained why procedural twists used by Dubya and Reagan can’t be used by Obama.

    You filibuster.

    That’s why Obama needed procedural reform in the senate. But let’s assume Obama can’t get that done. Fine. then…

    And then after [Republicans] take over the House you write the tax cut for the middle class together with the tax cut you want for rich people, so it can’t be vetoed without vetoing everyone’s tax cut.

    You don’t veto it. You add a signing statement that grabs the money that’s supposed to go for the tax cuts to the rich and siphons it off so the rich never get it.

    Don’t tell me this isn’t possible. Reagan and Dubya both added hundreds of signing statements to bills they signed which, in effect, nullified the law by refusing to enforce it. Who do you think will enforce tax policies? The IRS. That’s part of the executive branch, and when Obama adds a signing statement that says “I have directed the IRS to dump all refunds collected from the tax cut for the rich into the budget deficit instead of refunding those monies to the rich people,” the Repubs are stuck, fvcked and outa luck.

    Please explain to me why that’s impossible — especially insofar as Reagan did exactly the same thing, but in regard to refusing to enforce environment laws, etc., and Dubya did the same thing but in regard to refusing to enforce oversight laws, etc.

    Information on signing statements here.

  73. 73
    Bob Loblaw says:

    @Can’t Be Bothered:

    direct spending was a huge focus of Obama’s jobs plan, but it was gutted by Democrats and Republicans alike.

    Which means it wasn’t a huge focus of the jobs plan, as it turns out. Because intent is irrelevant to the outcome itself. It is relevant to understanding the cause of the outcome, but it has no bearing on whether the outcome is sub-optimal compared to known alternatives.

    It’s called the political process.

    I have no use for it. I don’t have enough information to make process judgments. Just outcomes.

    And payroll tax cuts are only marginally less effective than direct spending

    This is untrue. Okun’s law only holds at the macro level. It cannot predict whether the gains will be distributed downwards in the form of domestic job creation. And the recent historical data (last few post-recessions or so) in this country on that front is bleak.

    You wave your wand and say “mediocre outcomes are mediocre outcomes” as if context does not matter.

    Context doesn’t matter. I’m not obligated to make excuses for the system’s inadequacies. I’m not able to effect change, I’m an observer on the internet. And I’m perfectly ok with that.

    is that you are measuring the reality of the possible outcomes against your fantasy policy position.

    Fantasy implies that alternative choices don’t actually exist. Except for the fact that they do. They are knowable and rooted in empirical study. They aren’t necessarily testable except in hindsight, this is true, but this is why I have such little interest in process. Because process is untestable. The informational gatekeepers that are politicians and media deign to tell us what is and isn’t “possible,” but they are self-interested and unreliable. So I merely shrug at their word and weigh their efforts as they come, and see where they fail and look for patterns in their failure.

    You believe in feelings and emotions and maintaining positive momentum. I don’t care about any of that. You believe that you are part of something bigger than yourself and an agent of change. I don’t. I’m just along for the ride. I wish this political shit wasn’t important so I could be done with it entirely, but that would be one of those fantasies you were talking about. Our worldviews are irreconcilable. Live with it, and stop thinking I’m just in it to harsh your mellow.

  74. 74
    Zach says:

    @Martin:

    We’re less than $1T below where we should have been with no recession and even with dumping nearly $1T in stimulus in and slow but steady GDP growth (just shy of 3%, compared to a more normal rate closer to 4%), we’ve had only modest job growth.

    Analyses that don’t simply compare pre-stimulus projections to post-stimulus reality (ie ones that take changes that occurred before any stimulus actually happened) such as the one by Mark Zandi show that the stimulus’s effect on employment (relative to what would’ve happened without it) was fairly well predicted.

  75. 75
    Zach says:

    @JGabriel: The Republicans will vote against anything that doesn’t give a tax cut to the rich. That’s their raison d’etre.

    The GOP has successfully gotten the media to report that they aren’t blocking the extension of unemployment benefits. Rather, they’re speeding up the pace at which the expiration of tax cuts is dealt with. “GOP blocks unemployment benefits extension for X million Americans” should’ve been the headline in a fair world, not “GOP demands tax cut vote before voting on other things.” The recent DADT debate was actually counterproductive here… the stories were largely about the GOP dodging a DADT vote this Congress by demanding a tax cut vote. If DADT had been dealt with earlier or not dealt with at all, there’d be much more damaging stories about the GOP refusing to vote on unemployment extensions.

  76. 76
    E.D. Kain says:

    @Jay: Yes but any stimulus spending would be on borrowed money, right?

  77. 77
    E.D. Kain says:

    @xyzxyzxyz: It’s the same concept as stimulus spending. If any money is pumped into the economy in any way it can lead to job growth. It may be fiscally reckless but it’s still going to lead to job creation – especially when that money is in the pockets of people who plan on spending it quickly – i.e the middle and lower class.

  78. 78
    E.D. Kain says:

    @Keith G: Long term planning is very difficult of course with a politics that requires politicians to constantly become re-elected. So I have no good answers there.

  79. 79
    Alex S. says:

    A bad deal. A bad precedent. Republicans probably think that they can win the presidency and permanently extend the tax cuts. They won’t, but we’ll get exactly the same kind of blackmail again. Let’s see if the deficit peacocks shut up now – they won’t, of course. Republicans also make progress in their fight against social security. It should be one of the top priorities of the Democrats to save social security, but they sold out, including Obama. And unless the Democrats understand how to spread their message, Republicans will take a lot of credit for whatever economic recovery is made in the next year.

    But at least that deal proved to me that drowning the government in a bathtub is only the Republicans’ 2nd priority. Their main priority is a more inequal distribution of wealth.

  80. 80
    Nick says:

    @NR:

    when Obama loaded up the 2009 stimulus with tax cuts to appease Republicans (who never had any intention of voting for it anyway),

    except for the three who did

  81. 81
    Nick says:

    @Alex S.:

    They won’t, but we’ll get exactly the same kind of blackmail again.

    there’s an election between now and then, we could, you know, win it.

  82. 82
    Nick says:

    @Comrade Luke:

    We’re pretty screwed in Washington: Gregoire is calling a special session to address a $1.1b shortfall.

    Didn’t you guys just vote, by a 2-1 margin, NOT to raise taxes on the rich?

  83. 83
    Alex S. says:

    @Nick:

    That’s my point. Obama will get re-elected. But the Dems won’t get a 60-seat-majority in the Senate. Then what?

  84. 84
    Nazgul35 says:

    I qoute ql via Atrios:

    …general revenue will cover the lost revenue to the Social Security Trust Fund.

    Maybe the first year or two, but I think this is just a way to hasten the Social Security shortfall. No one was buying that Social Security was in dire straights 20-30 years down the road. Saying it is going to have a shortfall in 10 years might get people’s attention and their willingness to “save” Social Security”

  85. 85
    geg6 says:

    Leonhardt is an idiot if he thinks that and so are you.

    This is a bad deal, all the way around. The only good thing is the extension of unemployment benefits, but letting the tax cuts expire for everyone would have been better than this piece of complete shit and I, for one, would have had no problem with it. But then, I’m not a libertarian and have no problem with paying my way like they do.

    This is NOT stimulus, no matter how much you wish it was so.

  86. 86
    Keith G says:

    @E.D. Kain: Yeah, I know the impact of reality on my concerns. It seems to me that not unlike the 1840-1850 period, we have a cluster of important issues around an political-economic problem that is festering. Instead of confronting these 21th century issues with new solutions, we are halfheartedly reaching into the bag of tricks developed for the previous era.

    Yup, folks are hurting now and they must be helped. Nonetheless, nothing is going to be solved until we find ways to dealt with a large and fragmented society in an era when labor intensive economic activity is no longer the backbone holding that society together.

  87. 87
    PR says:

    stimulus, whimulus.

  88. 88
    Kennedy says:

    This is the more salient part of the Larison piece imo:

    What a deal on these cuts shows is that Obama won’t hold firm when he still has the advantage of superior numbers in Congress, which tells us that he will probably be even more accommodating when one of the chambers is dominated by the other party. How does he argue that he will let the cuts expire in a few years’ time if he won’t do so now? If the recovery improves after he has capitulated, the GOP will take credit for having forced Obama to abandon his “job-killing” policies, and if it doesn’t Obama will face the same dilemma he does today with less credibility and fewer supporters in the Congress.

  89. 89
    Blue Neponset says:

    ED,

    Thanks for responding in the comments. If I wasn’t so pissed about Obama folding like a lawn chair I would actually try to have a discussion about this.

  90. 90
    madmatt says:

    Fuck barack, by setting the deal up this way he starts DEFUNDING SOCIAL SECURITY which has been a GOP platform plank for DECADES so I guess thats just another progressive victory.

    Fuck barack for not settling this last year when he had a bit of power…but lets be honest he doesn’t give a fuck about anybody but bankers and lobbyists. His “compassion” for the unemployed comes by screwing over senior citizens and the middle class.

  91. 91
    Nick says:

    @Alex S.:

    Obama will get re-elected. But the Dems won’t get a 60-seat-majority in the Senate.

    win won, or support Senate candidates who will get rid of the filibuster.

  92. 92
    Suck It Up! says:

    Careful ED. People already don’t like you here and here you come with a half critique half defense of Obama. :)

  93. 93
    Ronbo says:

    The CIA appreciates your patient cooperation. Thank you for being quiet and cooperative as we fine tune the political system.

  94. 94
    Jman says:

    Extending the tax cuts for the wealthiest Americans may be a bitter pill to swallow for many progressives, but it’s not that high of a price to pay for a serious shot of stimulus.

    But it is not serious stimulus. What it is, is a serious shot at needing to “fix” social security, and a serious set up to cut government programs and further reduce spending. Geez ED, quitting the conservative pov must be harder than quitting tobacco. Keep on trying, don’t give up!

  95. 95
    Judas Escargot says:

    @Can’t Be Bothered:

    I have yet to see ANYONE answer three basic questions: Are the unemployment and payroll tax holiday good for poor people? Will it stimulate the economy? Could Obama have brokered a better deal?

    (1) Probably; (2) Only in the short term, but the additional $700bil/10yr deficit from the Bush tax cuts is now yet another new long-term problem, and the payroll tax holiday is a new poison pill for Social Security; (3) Yes.

    It would be helpful for anyone answering the last question to acknowledge, even in a cursory manner, that Republicans shattered the record for filibusters and just won a landslide election, and that after this lame duck session they control one of the two chambers of congress that actually writes the goddamn laws.

    Here’s your cursory answer: I don’t care.

    The Dems did pretty well in 2006 and 2008: I don’t recall the GOP being very conciliatory after their defeats then. Hell, the GOP got trammeled in 1998 and what did they do with their lame duck session? Oh yeah– they impeached a sitting President.

    Vive la bipartisanship!

    I watched Obama’s speech last night, and I choose to take him at face value: He didn’t want to use the unemployed and low-income folks as political pawns for his own political gain. Ok, fine, but he could have at least insisted on votes on DADT and START before giving the GOP every damned thing they wanted.

  96. 96
    cleek says:

    Extending the tax cuts for the wealthiest Americans may be a bitter pill to swallow for many progressives, but it’s not that high of a price to pay for a serious shot of stimulus.

    actually, this should read “extending the additional tax cuts for the wealthiest Americans …”

    because, you know, that’s how our system actually works.

  97. 97
    Bullsmith says:

    “This was smart politics for Obama”

    Really? That’s not even good concern trolling. This is a bounty of wonderful for the Republicans because they never even had to negotiate. All they said they wanted publicly was to extend the top tax cuts and they got so much more.

    -Lowest Estate Tax rate in history.
    -Unpaid for “tax cut” that’s actually a cut in payments to Social Security, which already targeted for more cuts.

    In return the status quo on Unempoyment stays for a whole year and a month. Half as long as the status quo on taxes! VICTORY!. Nothing about actually creating employment, government can’t create jobs. Uncertainty. Etc.

    To be fair there’s a tax cut to help corporations buy stuff (corps are actually doing the bestest Evah already, at least the big ones) that is actually legitimately stimulative, and thus of course a miniscule fraction of the total package.

    So who’s going to pay the 900 billion dollar bill? Hmmmm. Best get Granny to die faster.

  98. 98
    jcricket says:

    Fine, this may be the best we can get, but that’s not good enough for this country. The Senate is broken, from the holds, to the endless debate, to the filibuster to the attitudes of the obsequious Senators themselves. The House functions fine (even with the Republicans in charge, you get what you expect).

    Until the Senate is reformed all we’ll get consensus about is bullshit nibbling around the edges of any problem.

    Even with majority rule and no-anonymous holds and no-filibuster on debate in the Senate it would still be “non-representative” (Wyoming + California, 2 Senators each) enough that small/red-state fuckwads would get their say.

  99. 99
    jcricket says:

    @cleek: The marginal tax rates are apparently so confusing the press ignores them altogether. And remember all those people saying, “I will deliberately earn less than $250k” – people are effing stupid.

    Increase the income rate up for those lucky duckies 5%. Start the SS taxes again on income above $250k (i.e. donut hole to help SS). Create a millionaires bracket with a 10% higher tax rate. Throw in Medicare buy-in or Medicare as public option and we’d be half-way there. Decrease the corporate tax rate but eliminate all the loopholes (effectively increasing the taxes collected).

    Yes the rich will bitch and moan and whine, but they’re not leaving the country. Even if they do it just means more jobs for the “not rich yet”.

    This shit isn’t complicated. But Dems can’t get together and get it going even under the largest majorities, I have no hope they’ll get it together with an increasingly reactionary Republican caucus and small majorities.

  100. 100
    Brachiator says:

    I have yet to see ANYONE answer three basic questions: Are the unemployment and payroll tax holiday good for poor people? Will it stimulate the economy? Could Obama have brokered a better deal?

    The unemployment extension was not worth the “compromise” and might have been gained anyway if the Democrats had not let themselves be backed into a corner. The payroll tax holiday is meaningless if you don’t have a job and is no substitute for a strong economy with job and wage growth.

    This will not stimulate the economy, because it is a defensive holding action which also undermines the Social Security program.

    Hell yes, Obama could have got a better deal.

    The Democrats are acting as though Bush were still in charge and they have to yield to the GOP. This so-called compromise gives the Republicans everything that they demanded, and the payroll tax holiday is foolishness that John McCain and Hillary Clinton offered during the primary season.

    Meanwhile, Obama has neither rallied the Democrats in Congress, nor offered a coherent, comprehensive tax policy. The Democrats in the Congress are content to go along with anything, betting that a majority of their supporters will accept the typical “we tried, but this was the best that we could get” defense. The worst of the Democrats are as busy selling out to the oligarchs as the most craven Republicans.

    This deal does nothing for poor people and continues the evisceration of the middle class.

  101. 101
    PR says:

    The Bush tax cuts for the rich are now permanent, IMO.

  102. 102
    Brachiator says:

    One more thing: the supposed business tax breaks can’t pump money into the economy if businesses are not actually buying equipment. And strangely enough, businesses still can’t get credit and new small businesses can’t get startup capital.

    And this is all despite a slew of business tax breaks under both Bush and Obama.

    So here we are. The Republicans keep pushing ideas that do not work, and the Democrats have stopped even trying.

  103. 103
    Agoraphobic Kleptomaniac says:

    So, this extension of unemployment benefits, does this mean we’re up to 155 weeks of consecutive unemployment benifits for those out of work?

  104. 104
    Kryptik says:

    @Agoraphobic Kleptomaniac:

    From what I can tell, 99ers are still fucked. This was simply funding benefits for those still under the 99 week mark.

  105. 105
    Agoraphobic Kleptomaniac says:

    @Kryptik: So, we only extended the government funding of existing benefits? This is the compromise we achieved? I’m sooooo impressed.

  106. 106
    BombIranForChrist says:

    I’m a little late to the game, and no one cares what I think, but if Obama can somehow manage to squeak through DADT, all would be forgiven, imho.

    I thought the deal would be a lot worse, personally. I thought Obama would give away the store. I’m pissed, but only mildly. If he could then somehow use this to get DADT passed, i would actually be mildly happy, which would be the first time since 2009.

  107. 107
    Nick says:

    @Brachiator:

    Obama has neither rallied the Democrats in Congress, nor offered a coherent, comprehensive tax policy.

    Oh Jesus Christ dude, he attempted to rally them in September and October. Do you purposely ignore that or do you have the memory of a turnip?

  108. 108
    Jules says:

    @Nick:

    That never ceases to amazes me.
    9 times out of 10 when someone whines that the President should have DONE SOMETHING it is normally something the President did do for months in speeches and his Saturday addresses. The problem is the speaker (nor the press for that matter) have actually been paying attention.

    But I’m an OBOT because I’m going to believe what the President said that he made this deal so the working families and the unemployed in this country were taken care of and not made pawns in a political power struggle.

  109. 109
    Brachiator says:

    Oh Jesus Christ dude, he attempted to rally them in September and October.

    Attempted and gave up. He’s the freaking president of the United States. He could have said, “Bush tax cuts dead. End of issue.”

    And as I noted, there is no coherent tax policy, only a grab bag of old proposals which tilt towards the GOP.

    On the KPCC program Air Talk, Congressman Brad Sherman just claimed that the back room dealers intended all along to wait until December to do a deal on Estate tax relief.

    The other weird thing is that Sherman is pointing out how Obama had a stronger hand than the conventional wisdom goes. What is weird here is that Sherman was nowhere to be found earlier, when his comments might have mattered.

    This whole thing is stinking more and more.

  110. 110
    wengler says:

    You give rich people money and they will commit it toward mergers and acquisitions leading to redundancies leading toward layoffs. It’s pretty pitiful that the entire incentive structure in this country over the last 30 years has been geared toward destroying this country’s economy. A noted lack of competition springing from both lack of capital on the bottom and the stomping boot of an economy of scale at the top.

    Money springs like water at the top of the pyramid and is as rare as pearls at the bottom. The high unemployment rate = profits as the proles spout from the beleaguered mouths “well at least I’ve got a job!” The slogan of slaves everywhere.

  111. 111
    fasteddie9318 says:

    ED, speaking only for myself, the anger about the 2 year extension isn’t about these 2 years themselves, it’s because I know that in 2 years they’ll be extended again. The failure to decouple the upper bracket cuts from the others is the problem, but I’m realistic enough to realize that the Republicans would have cratered the whole ship before they allowed that. I honestly would rather they just extended all of them in perpetuity than to insult my intelligence by pretending that they’re going to get a different result in 2012.

  112. 112
    ThatLeftTurnInABQ says:

    @Keith G:

    Yeah, I know the impact of reality on my concerns. It seems to me that not unlike the 1840-1850 period, we have a cluster of important issues around an political-economic problem that is festering. Instead of confronting these 21th century issues with new solutions, we are halfheartedly reaching into the bag of tricks developed for the previous era.
     
    Yup, folks are hurting now and they must be helped. Nonetheless, nothing is going to be solved until we find ways to dealt with a large and fragmented society in an era when labor intensive economic activity is no longer the backbone holding that society together.

    Right on the money. Our system is gridlocked for both structural and cultural reasons. Normally this might not matter all that much and we could just muddle along but this time appears to be different. Maybe that is just presentism speaking, but our big problems today (global warming, peak oil, an aging population, controlling healthcare costs, debt deflation, income inequality, geopolitical overstretch, security ratchets) feel like the terminal problems of an ancien regime that is dying. And even our best minds can’t seem to get a grip on things.

  113. 113
    Socraticsilence says:

    @Mac G:

    I agree to a certain extent but feel on Healthcare I should note that the alternative would have been keeping his promise and getting no Health Care Bill at all- somehow I don’t see that as better.

  114. 114
    A L says:

    Tax cuts are not stimulative. Not in this economy. Congrats, you’ve all been had.

  115. 115
    Socraticsilence says:

    @Brachiator:

    Oh for gods sakes did you someohow miss that Obama spent the past two months cris-crossing the country at times- giving speeches about how we needed to extend the tax cuts for all income under $250,000 but allow them to expire for all income over that. I think he could have possibly gotten a better deal but again its possible I’m underestimating the GOP- they just don’t give a fuck which makes it really, really hard to negotiate.

  116. 116

    I think David Leonhardt is right that the alternative – expiration of all the Bush tax cuts for every income level – would have been both politically and economically a disaster

    False dichotomy. You are presuming that is the only alternative. Also you are focusing on the short-term. Over the long-term this is both politically and economically a disaster.

    The amount of money pumped into the ailing economy: about $900 billion over [two] years.

    Much of the 2% to the rich goes to savings and does not have a stimulative effect.

    You are focusing on the short-term. Over the long-term, maintaining 2% to the rich will be very destructive.

    Obama should be leading and creating the future political climate. By compromising, he is entrenching the current political environment, which helps the Republicans to do a lot of damage in the future.

  117. 117

    @Bob Loblaw:

    The informational gatekeepers that are politicians and media deign to tell us what is and isn’t “possible,” but they are self-interested and unreliable. So I merely shrug at their word and weigh their efforts as they come, and see where they fail and look for patterns in their failure.

    Exactly. The pattern I discern is:

    1. Republicans create the narrative and political climate.
    2. Democrats compromise.
    3. The Overton Window moves rightwards.
    4. Dem defenders make excuses and claim nothing can be done because of the political climate, yet Dem compromise co-creates the political climate.

  118. 118

    @Judas Escargot:

    About Obama’s speech:

    He didn’t want to use the unemployed and low-income folks as political pawns for his own political gain.

    See, he’s a narcissist. It was never about his own political gain. It’s about creating a Democratic-favourable political climate by drawing a line in the sand and reorienting the debate. It’s about long-term strategy for everyone’s benefit.

    Really, Obama is punching the base again. He is accusing the base of being only interested in symbolic victories. Here’s another quote from Obama:

    “I’m not willing to let working families become collateral damage,” Obama said. “The American people didn’t send us here to fight symbolic battles or win symbolic victories.”

    The fight is over long-term profound victories, not short-term symbolic victories. Obama is the one pushing for short-term symbolic victories.

  119. 119
    Taruna Oils says:

    You can’t even begin truly reducing spending until we end the military empire. It’s the single largest expenditure, it is unnecessary, is comes from the general revenues, and it is the majority of discretionary spending. It is the single greates pork barrel spending from the congress. It has to come to an end or we will go the way of all the great powers – disquietly into the night.

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