Expanded Thoughts On Why This Tax 'Deal' Is Bad Medicine

I usually tend towards the lengthy and expository on this blog, because although the blog community tends to be catholic in its tastes (birds of a feather often flocking together, I mean), I’m always aware that you never know who might be reading any given post, or what their level of understanding of background issues is.

This week, however, I am in the midst of scrambling around trying to get our family ready to go out to the west coast this Saturday to spend the Christmas holidays with family. That’s unfortunate, because the current lame-duck congressional session has been much more full of activity and strife than anyone expected. And none of the issues has caused more of that strife than the current tax bill/compromise/capitulation being rushed through congress so the Bush tax cuts won’t expire on Dec. 31 at midnight.

Let me be blunt: this deal is SO bad, I would be remiss if I did not post my strenuous opposition to it. I’m going to try to be brief and leave out backstory and explanation. But let me repeat: simply put, this tax deal is awful. Terrible. I mean worse than doing nothing. Join me after the fold, and I’ll explain why.

Because although extending unemployment benefits to the ONE IN TEN Americans currently without work is unquestionably a priority, this deal bargains away so much more, both today and down the road in the form of time-bombs designed to screw a future Democratic congress and/or the American people. The most-obvious item that Obama bargained away in exchange for extending unemployment insurance is one of the main-plank issues of his platform: opposing tax breaks for income above 250K/yr. During the health care debate, many an Obama apologist snarkily suggested that liberals who were upset about the lack of a public option (or at least the lack of apparent willingness to fight for one) should remember that Obama never campaigned on various items on the liberal wish list. Despite the fact that this was never true to begin with, this time around, there is so much video, audio and written evidence that Obama did, in fact, staunchly oppose tax breaks for “millionaires and billionaires” that not even the most die-hard OFA supporter is trying to claim Obama never said that.

Yet even giving in on the tax cuts for the richest 1-2% isn’t the worst of this deal. The worst of the deal is twofold: one, the GOP has already voted many times in the recent past to extend unemployment benefits during times of crisis. There’s no reason to think they wouldn’t have done so this time, as well…if the Democrats and President Obama had had the political insight and strength to call their bluff. I mean it: extending unemployment benefits during a time of recession (which this certainly qualifies as) is as un-controversial as breathing. It’s been done under Republican Presidents, Democratic Presidents, and all shades of congressional control. There is no WAY the GOP would have wanted to be on the hook as being the political Grinch who (literally) stole Christmas. None. But, because a vertebrate Democrat is about as common a find as a hen’s tooth these days, the GOP realized there was no political price to be paid in using unemployment benefits as a bargaining chip to get what they really wanted, once they figured out that Obama and the Democrats’ main operating philosophy was running scared of the fight…over anything.

But wait. It gets worse. The real poison pill (and apparently the thing the GOP is truly patting themselves on the back about) is the “temporary” reduction in the payroll tax rate. I say “temporary” because in the current climate of “austerity”-mania and opposition to all government spending, however necessary or beneficial, I can’t imagine that a tax, once cut, wouldn’t be demagogued by the GOP as a “tax increase” when it comes time for the cut to expire and return to its former level. And arguments that things are “just returning to previous levels” will be about as well-received as current arguments that allowing taxes to return to their Clinton-era levels is sensible. It’s political suicide, and the GOP knows it – even though Obama and the Democrats appear to still not grasp that fact.

Worse still, this is the first time in the history of this country that this specific tax rate has been cut. There’s a good reason for that: because the payroll tax is what directly funds social security. The GOP has spent uncounted millions of Koch-Murdoch-Scaife-Anschutz dollars trying to convince the public that social security is in trouble. George Bush famously went on a “privatize social security” tour of America…which not only failed miserably, but was a part of keeping his approval numbers in near-subterranean levels for the last two years of his Preznitcy. Simply put: Social Security is a WILDLY popular program, because people can see that it works. The trust fund is NOT in trouble; prior to this tax proposal, every credible economist who looked at the program agreed that it was solvent at 100% benefit level for the next 30 years or so…and that even with no changes whatsoever, it would be functional at something like 78% benefit payout into the indefinite future. Yet Barack Obama – in a masterstroke of cluelessness – agreed to one of the Republicans’ most-wanted wish-list items of the last fifty years. By reducing the tax revenue from the payroll tax, social security now WILL likely face a crisis which didn’t exist previously. One of the reasons it has remained popular despite the GOP/Luntz onslaught of horseshit is that people can see for themselves that Social Security works. It keeps many old people from living in poverty; it allows them a measure of dignity in their final years. Now, if this tax compromise/capitulation passes, that may no longer be the case. And it happened under a (putatively) DEMOCRATIC President. If I were John Boehner or Mitch McConnell, I would be jumping for joy over this deal. They gave away things they didn’t want anyway (opposition to extending unemployment insurance benefits), and in return, got gifts beyond their wildest dreams.

Need proof that this deal is crap? Take a look at who is trying to convince you (and me) that it’s really chicken salad instead of chicken shit. Aside from the usual suspects of faux-liberal columnists and pundits, it’s instructive to note that the right wing?s propaganda machine is not only telling us that the deal itself is good, but that Obama is a brilliant liberal ninja warrior for having achieved it. Here’s Charles Kraphammer Krauthammer in the Washington Post last Friday:

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??…

Obama is no fool. While getting Republicans to boost his own reelection chances, he gets them to make a mockery of their newfound, second-chance, post-Bush, Tea-Party, this-time-we?re-serious persona of debt-averse fiscal responsibility.

And he gets all this in return for what? For a mere two-year postponement of a mere 4.6-point increase in marginal tax rates for upper incomes. And an estate tax rate of 35 percent – it jumps insanely from zero to 55 percent on Jan. 1 – that is somewhat lower than what the Democrats wanted. (emphasis mine)

Kraphammer Krauthammer’s no fool, either – though he doesn’t appear to be a very good poker player. His use of the word “mere” in the above paragraph is a tell; it reminds one of those six tiny pomegranate seeds that were offered to Persephone and described as insignificant, hardly-worth-mentioning trifles by someone who knew exactly what he was doing, also. That’s not Kraphammer Krauthammer’s worst tell, either. Further down, he gives his whole game away when he refers to “the prevailing (and correct) perception that [Obama] is a man of the left.” (emphasis mine again)

A man of the left? Hands up, anyone who still thinks Obama is functionally a “man of the left” anymore. To be fair, reasonable people might disagree about exactly how “lefty” Obama is…but what can’t be argued is that social security is literally one of the very rocks upon which the modern concept of American liberalism was built. When FDR managed to pass this, it was the beginning of a burst in growth of the American middle class, of prosperity and security, and that’s why no Democratic President has even seriously considered touching it, and why even GOP Presidents have had to bow to its effectiveness, as Dwight Eisenhower pointed out in 1954:

Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are [a] few other Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.

Yep. They are. But they are cunning, and they’ve figured out that if they can either get a majority of people to oppose their own interest, or create a genuine crisis in a previously well-functioning program (indeed, a shining example of government effectiveness in bettering people’s lives), they can achieve by going in through the window what they could never have achieved by storming the front gates. And it’s important to remember who has handed – or at least tried to hand – the Republicans the tools they need to accomplish this dismantling of the beating heart of the American social safety net.

Crap. I didn’t achieve brevity AGAIN, did I? ;o) For extra credit, see “sensible Repubican” David Brooks echoing the Kraphammer Krauthammer line in the New York Times. And then ask yourself seriously: if you usually find the ideas of Brooks and especially Kraphammer Krauthammer wrongheaded or even odious, but this one time, your outlook aligns with theirs just because they’re pretending they’re bummed about Obama having “had a good week,”…are you sure you’re still actually a liberal?

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