Why Barack Obama Compromised On Tax Cuts

[babylonsister]

Why Barack Obama Compromised On Tax Cuts
Posted by Michael Scherer Monday, December 6, 2010 at 7:59 pm


Long before the midterm ballots had been counted, White House aides had begun to mull the coming agony of divided government. As the Obama team worked out its options, one priority kept coming to the top: However, the next two years shook out, they told themselves, Barack Obama needed to convince the great middle of the American electorate once again that he was fighting for them.

On Monday night, just in time for most nightly news casts, Barack Obama stood behind a podium to announce his first major gambit in this new quest, a costly compromise “framework” on tax cuts that gave Republicans a major prize, Democrats several minor prizes, and a chance for the president position himself as a man above the Washington fray, doing what needs to be done for the American people. “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.”


Read more: http://swampland.blogs.time.com/2010/12/06/why-barack-obama-compromised-on-tax-cuts/#ixzz17UOU3Es0

snip//


In exchange, Obama said he had secured an extension of unemployment benefits for 13 months and a number of tax cuts, for education expenses, families with children and the low income from the 2009 Recovery Act that were set to expire. One of those tax cuts, which had long been criticized by Republicans, the Making Work Pay Tax Credit, would be traded for a similarly generous 2 percent decrease in the payroll tax for workers. There was also a deal to extend certain business incentives.

snip//

But at the White House, where there is much anxiety about the staggering performance of the economy, this is considered a victory. In crafting the compromise, Obama may be able to effectively able to sneak another stimulus bill through Congress, by capitalizing on the Republican habit of refusing to acknowledge the deficit impact of tax cuts.

Moody's economist Mark Zandi, who advises both political parties, estimates that every dollar of federal spending on unemployment benefits would give a $1.60 jolt to the economy. Every dollar spent on a payroll tax holiday would give a $1.24 jolt. And every dollar spent on extending the Bush tax cuts would result in a much smaller, 34 cent jolt to the economy, in part because much of that money is likely to be saved. “In the current environment, emergency unemployment insurance is much more efficacious that tax cuts for upper income groups,” said Zandi, in an email to TIME. “Given the fragility of the recovery, however, I would do both.”

more...

http://swampland.blogs.time.com/2010/12/06/why-barack-obama-compromised-on-tax-cuts/#more-36507

[msongs]

1. bullies know a willing victim when they see one nt

[grumgrum]

33. Marionette owners are the same too

[niceypoo]

2. It was a $500 billion dollar ransom payment

[babylonsister]

5. Were you collecting unemployment insurance? nt

[niceypoo]

12. ?

[Davis_X_Machina]

3. Between $250 and $300 billion...

...of direct fiscal stimulus, using Zandi's multipliers.

Of course, as a good DU'er, I'd rather have the issue, and no stimulus, than the stimulus, and no issue. And if UI doesn't get extended, I'm sure that those affected understand how important that is.

What's the French for "Let them eat improved messaging."?

[babylonsister]

7. I hear you. This place is full of suckage. nt

[Davis_X_Machina]

10. It's Public Option 2.0.

We'd rather have the issue than the legislation. Or TARP 2.0. We'd have had nothing coming out of our ATM's, but by god we sent a powerful message sent about capitalism and consumerism.

Mirror image of McConnell and Co.

[Mimosa]

21. We FAILED HIM, he did not fail us, right? n/t

[babylonsister]

22. This has everything to do with those folks who might have been

living in their car vs. buying them time. Spin it however you want it; I'm getting used to that here.

[Davis_X_Machina]

24. Greg IP, whose grasp of econ far exceeds mine...

...reckons the stimulus effect of the deal at twice my numbers:

The package comes in two parts. The first is an extension of all of George Bush’s tax cuts for the next two years. Mr Obama acquiesced to an extension for the upper 2%, bowing to the reality that he did not have 60 votes in the Senate to extend only the cuts for the lower 98%. Tax credits for child care, education and for low-income wage earners are also extended for an additional year. The second part is an injection of short-term fiscal steroids: a two-percentage point cut in the Social Security payroll tax for workers for one year, worth $120 billion (that’s double what Mr Obama’s “making work pay” credit was worth), one year of complete expensing of business equipment, worth $200 billion, and a 13-month extension of emergency unemployment insurance benefits.... While the stimulative boost next year is probably worth some $800 billion, or roughly 5% of GDP, the 10-year cost is lower largely because tax deferred by accelerated business investment expensing will eventually be paid....

[rhiannon55]

34. I hardly recognize DU these days

Did they forget how horrible it was under Bush?

[thelordofhell]

38. Yes, they did

:popcorn:

[hulka38]

4. better get a bucket...

:puke:

[gateley]

6. "But at the White House, where there is much anxiety about the staggering

performance of the economy, this is considered a victory."

Kind of taken out of context, but I think this is where a big disconnect exists in many instances. The WH feels as though they've 'won', we feel they've sold us down the river. I recall reading somewhere that they were stunned that so many people didn't see HCR as a major victory. They viewed it as accomplishing something that had been attempted and failed for years, while many of us felt they could have done more. :shrug:

[LonePirate]

8. He's once again fighting for the middle? When is he going to start fighting for his base?

We are the people who voted for him and worked hard to get him elected. In two years, he has thrown only the tiniest of scraps to his base, not to mention truckloads of broken promises. If I wanted a President who embraced right wing ideology, I would have voted for Palin\McCain back in 2008.

[Davis_X_Machina]

15. His base...

...is African Americans, people of color generally, union families, women, poor people, and people with very little or lots and lots of education.

There aren't enough blog posters and forum subscribers out there to even show up on the electoral radar.

[babylonsister]

27. Maybe you need to get a correct definition of something.

Lots of 'middles' voted for him, too. You ain't the lone ranger. And if all he did was throw buckets to his base, he'd never have been elected in the first place. And let's not forget the pile of shit he was handed when he took over.

So sad you are so disillusioned; that's politics.

[LiberalFighter]

9. How long will those on unemployment remember that Obama got it for them?

How many will remember the payroll tax holiday?

How many don't know that they have been paying lower taxes since Obama was elected?

[Davis_X_Machina]

13. If they can eat, and pay rent, and clothe their kids.

...I don't care if they think the ghost of Eugene Debs, or the Stimulus Fairy, or Undead Everett Dirksen got it for them.

[niceypoo]

14. Any deal is good?

If he gets temporary this or that? Really?

[Davis_X_Machina]

18. Yes. Any deal that feeds people who would...

...otherwise go hungry is a good deal.

Our first obligation to our fellow citizens is to first do them no harm, and to not use people as means to our ends, even if those ends -- like a more just tax code -- are very important.

[alcibiades_mystery]

20. Well said

:thumbsup:

[niceypoo]

23. Just defer the ransom payments to your offspring

Out of sight, out of mind.

[Davis_X_Machina]

25. Yes. Because I have students...

...who are hungry now. Who are sleeping in cars now. In Maine. In the winter.

[niceypoo]

30. That only guarentees that it happens again in 13 months

What will the ransom be in 13 months? Another half trillion?

The republicans are playing Obama for a tool.

[Davis_X_Machina]

31. I don't care.

For thirteen months they eat.

You have them go hungry, for a principle. Come tell them how much you appreciate their sacrifice.

[zbdent]

44. another guarantee ...

2012 Republican campaign slogans will reflect that Obama will be "killing the recovery" by "raising the taxes" which were structured to expire in the PRESIDENTIAL CAMPAIGN SEASON ...

[catgirl]

42. Tea partiers talk ilke that

We're talking about people's lives here. So we have a deficit. BFD. Obama averted a depression and now he
is helping the unemployed. Are you heartless?

[avaistheone1]

32. That must be the reason Obama turned his back on single payer.

Had he really considered and pushed for it 22,000 people would not needlessly die each year for lack of access to health care.

I guess that doesn't fall into the "do them no harm" meme.

What a crock of rubbish.

[alcibiades_mystery]

19. No

But your concern was about "credit" for this deal, which is a really piddling concern relative to the fact that 2 million people and their families were going to be without any income at all this time a week from Friday.

[alcibiades_mystery]

16. Who fucking cares

They can eat, pay the rent, and turn on the fucking heat.

Remember what all this is about, please. Human beings.

[young but wise]

11. This is why I voted for him.

[Clio the Leo]

26. me too nt

[rhiannon55]

35. I love having a President who cares about people

It's quite refreshing after all these years.

[jwirr]

17. Thank you sister. This is truly a devil and the deep blue sea issue.

Damned if you do and damned if you don't. This is why most of us would never want to become the president of the USA.

[elocs]

28. Once again Republicans are allowed to define the debate and link 2 issues

that should not have been tied together. Yes, the unemployed needed their benefits and mainly it is only those with jobs who argue against it, but what do you tell your family when you are out of work and desperately need that unemployment money to survive. It's just too bad that our side allowed themselves to be painted into a corner on this by the Republicans.

[angee_is_mad]

29. now you know ppl don't want to hear that

please allow us to continue to be angry at the POTUS instead of the seven senators who voted nay on Saturday.

[akbacchus_BC]

36. BSis, you know they do not want to hear you. You persevere. A far

as they are concerned, the President is here to take away their bells and whistles! I have no idea how President Obama is able to withstand all the racism and animosity, I hope they primary him so that the GOP get back in control and finish America! Would be a wonderful America under Palin!.

America does not deserve President Obama!

[Stargleamer]

37. "Obama may be able to. . ."

sneak another stimulus bill through Congress"

What shit is this writer smoking??

[donheld]

39. Stimulus for who? Wall-street.

[lamp_shade]

40. This IS the change I voted for.

[Life Long Dem]

41. The Republicans are not blocking everything.

And there's no permanent tax cut for the wealthy in this deal. Obama did differentiate between temporary and permanent tax cuts leading up to this deal. So I can't fault him on his word for this as well.

[BeyondGeography]

43. Obama calls this a "symbolic" fight, which is bullshit

And getting us back to something resembling a sane tax structure would not have been a "symbolic" victory.

I can live with his overall rationale, but calling this whole matter of raising the top rate back to Clinton-era levels, restoring some fairness to the tax code and getting the finances of this country back on firmer footing "symbolic" is absurd.

An unfortunate choice of words designed to justify his decision not to have that fight at all.