The deal looks set, all the insiders say so at least. All of the Bush tax cuts will be extended for 2 years and in return, unemployment benefits will be extended and the payroll tax will be reduced for one year. Obama and the Republican leaders are in agreement.
Normally I leave pure political analysis alone, because it’s conjecture. However I’m giving in this once, because this is fucking insanity.
Why this doesn’t make sense for Obama
He will get no credit for this. Obama’s great compromise keeps the status quo and in return, what does he get? A small temporary payroll tax deduction the Republicans would have supported anyway, and an extension of unemployment insurance. Will Obama get credit for this? Will it switch any political alliances? No, because the people who think Obama is taxing them higher than Bush are ignorant morons and do not know that the federal tax levels are at their lowest levels in decades. A payroll tax decrease isn’t going to give Obama any support from doubters.
Nor is the extension of unemployment insurance a win-win. Republicans would have lost support among the almost 10% of the population that is unemployed if they were shown to be against unemployment insurance. Republicans forced their cessation on December 1st, but the effects wouldn’t have been felt until the end of the month.
Basically, Republicans blocked renewing unemployment insurance without owning its ramifications politically, only to offer it as the negotiation tool that got Obama to sign off on extending Bush’s tax cuts for the richest 2%.
There is No Ownership of Bad Governance and The Deal Promotes Bad Governance
Obama’s strategy won’t let Republicans own their terrible policies
All Obama gets for his compromise is to cover the asses of Republicans for their disinterest in the unemployed. Republicans are posturing with positions of bad governance, to get deals that weaken Obama and promote Republican ideas during economic and budgetary disasters.
Two million Americans would have lost unemployment insurance at the end of the month. Another 7 million would have lost their’s by the end of 2011. Obama could have shown that large American population how the Republicans would govern, but instead he was too worried he would be blamed for it. On an altruistic level, Obama is saving the livelihoods of two million people from Republican mismanagement, but no one will experience Republican mismanagement. There is no contrast between current Republican policies and Obama’s policies and the status quo economic projections are goddamn bleak.
Extending the tax cuts for two years may help in the short-term, but anyone who’s left paying taxes by 2020 (and just living in the USA), will feel the effects of the extension depressing the economy
According to a recent CBO report, you know the nonpartisan agency we use to judge the budgetary effects of bills, any form of extension for Bush’s tax cuts will hurt the economy by 2020, because we’ll have to start paying for it.
Extending all the tax cuts for two years will cost the US taxpayers $900 billion dollars! So we all have to pay the $900 billion more dollars because Republicans want to protect the wealthiest and best off 2% for two years!
And raising taxes on the wealthiest could actually spur growth by allowing more spending on the middle class
What Should Happen
Better to let them all expire, and have Republicans explain how keeping the temporary tax cuts for the 98% of Americans and raising them on the 2% of the wealthiest in a time of skyrocketing debt was SO objectionable, and how choosing the option that maximizes the debt increase was the better option.
Multi-millionaires have bounced back by 15% in numbers since 2008 and are having a great Great Recession. So the rest of us should suck it up and enjoy it. The Republicans are.