President Obama had a choice, STAND on his belief that the top 2% of wage earners should not have the decrease to their top marginal tax rates extended, or DELIVER a package of benefits to the low and middle class including a 2% payroll tax decrease in 2011, a 13 month extension of extended unemployment payments, the extension of college tuition tax credits and a business investment depreciation waiver that would highly incent businesses to spend money now. Obama chose the later.
For the first time in his presidency, Barack Obama is hearing the combination of praise from the Right and outrage from the Left. Today, House Democrats passed a resolution saying they reject the deal brokered by Obama and House Republicans saying they will not bring it to the floor for a vote. I kind of doubt that. Maybe the House Dems will negotiate some small changes and bring that up for a vote, but one of the first things a good negotiator does is understand who has leverage and how much. In a few weeks, the 112th Congress will be seated and the Republicans, not the Dems, will be in the majority. They are most certainly going to bring the extension of the Bush Tax Cuts for all up for a vote and it will pass. There is also no reason to believe they will be as generous in also providing the above-mentioned tax benefits for the middle class. That is called leverage. The Dems know it or at least should know it. Everything else has just been grandstanding for their constituents.
If Nancy Pelosi believes she can get a modified plan agreeable to the Republicans that doesn't include Bush Tax Cut extensions for taxable family incomes over $250,000, by all means have at it. If she thinks she can get the Republicans to agree to modifying the Estate Tax proposal from a $5Million waiver and 35% tax on amounts above that level, go for it. (I think the level should be somewhere between $3-$5Million, but feel strongly that that Estate Tax should not be higher than the highest marginal income tax rate, so I am good with 35% right now.)
Despite all the sturm and drang from Dems on the Obama Compromise/Capitulation on taxes, this is the very best deal the Dems could have dreamed to get in the last month of their majority in the House. In fact, Charles Krauthammer, who I so rarely agree with you would think one of us is intentionally choosing an opinion that is directly opposite that held by the other, is calling this Obama Tax Compromise the Swindle of the Year. I agree with him so much, that for what undoubtedly will be the only time in history, I will show the opening lines of his recent editorial in the Washington Post:
Barack Obama won the great tax-cut showdown of 2010 - and House Democrats don't have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years - which just happen to be the two years of the run-up to the next presidential election. This is a defeat?
Krauthammer maintains and I certainly agree that "...the package will add as much as 1 percent to GDP and lower the unemployment rate by about 1.5 percentage points. That could easily be the difference between victory and defeat in 2012." I could quote more to reinforce my points, but please go to the article and read for yourself.
So the Republicans, led by Tea Party supporters, swept into the House and Senate with a big push for lowering the deficit. Of all the outrage I am hearing and reading about, strangely, very little is coming from the Right on the deficit increase. Democrats, long the sponsors of taking care of the middle class have before them perhaps the largest stimulus legislation ever affecting the middle class and they are complaining that high wage earners are getting to keep an additional 3-4% of their taxable wages above $250K for another 2 years.
It does appear that we are cursed to be living in interesting times.
Posts
No comments:
Post a Comment