Obama Tax Deal Debate Is a Classic Beltway Christmas Story
Republicans play Scrooge while progressive Democrats air their grievances Festivus-style
Washington has over the last few weeks played out its very own holiday story. One almost expects MSNBC or Fox News Channel to tout its coverage with a "Very Beltway Christmas" logo.
If you've been visiting the North Pole and haven't followed the news, the not-paid-for tax cuts for the rich vs. not-paid-for unemployment benefits extension debate produced a Christmas miracle. There was room under the National Christmas Tree for both. Hark! The herald pundits have had much to sing about.
Consider the cast of characters. At center stage is the president. Depending on your viewpoint, he's Obama Claus, who makes a list of who's naughty and who's nice, but gives them all presents anyway. Or he's Frosty the Snowman: very cool, with an unhappy tendency to melt. Or he's like a certain reindeer guiding the nation through the foggy night of hyperpartisan political dysfunction.
The Republicans are in their traditional holiday miser role. GOP tax elves have been singing that a recession is not the time to raise any taxes. This is clever messaging, defining populism up with a "we're all in this together" theme that neatly deflects attention from those doing best by invoking solidarity from the less well-off. And it might have more credibility if any prominent GOPer, since George H. W. Bush (the ghost of tax deals past) 20 years ago, had acknowledged that there was a good time to raise taxes: not during a recession and not during a recovery. During a war? Judging by the last decade, the answer is no. Perhaps raising taxes to fund a "global war" would have been tantamount to letting the terrorists win.
And while the GOP was decking the halls of the wealthy, they were content to let tax cuts for the middle and lower classes slide off the books. Specifically, tax cuts that were part of the stimulus plan were all set to expire at year's end. And they weren't part of the Republican tax-extension push (though some are in the deal that the White House cut with Republican leaders this week). So by the Republicans' own logic -- they said that if President Obama wasn't actively working to extend the Bush tax cuts, then he was actively working to raise taxes -- the GOP has been actively working to raise taxes on middle- and working-class Americans.
Of course, GOP orthodoxy holds that cutting taxes for the rich is of paramount importance because they will then distribute wealth to the rest of the economy. It's like suggesting that Santa gives the best toys to wealthy children on the theory that they'll pass some of their other toys on to the poorer children.
But what Obama understands, and what is at the crux of the budget deal, is that if the aim is to actually help the economy, tax cuts and government spending are best aimed at the middle, not the upper, echelons. "Increases in disposable income are likely to boost purchases more for lower-income than for higher-income households," the nonpartisan Congressional Budget Office noted last month. Bob Cratchit is more likely to spend the extra money, in other words, than Ebenezer Scrooge. Unemployment benefits, especially, "help drive the economy because the unemployed tend to spend every dollar they get, pumping cash into businesses," the Associated Press reported this month in an article headlined "End of unemployment benefits would hurt the economy."
The CBO estimated in January that for every dollar spent on increasing aid to the unemployed, as much as $1.90 more is added to the economy. This is easily the best return on investment among 11 economic-growth policies the budgeteers examined. The best case for reducing income taxes, by contrast, was a 40-cent return on the taxpayer's dollar.
But when it comes to unemployment benefits, Republicans take on a Grinchian mien. Suddenly, 'tis the season to fret about the nation's fiscal health. Perhaps it's because the tax brackets of the unemployed are, like the Grinch's heart, two sizes too small. Or maybe it's just a question of scale. The $60 billion cost of extending unemployment benefits is far more manageable than the nearly $4 trillion price tag for making the Bush tax cuts permanent. The Republican position is like dickering over whether a specific ornament clashes with the decor while trying to squeeze a 30-foot Christmas tree into a 10-foot-high living room.
This is the same perverse worldview that wistfully regrets not letting the auto industry and the global financial system fail when we had the chance. Apparently raising taxes on the wealthy during a recession is bad because it might hurt the economy. But actually hurting the economy during a recession (a recent study by the Center for Automotive Research suggested that an auto-industry crash would have cost 1.14 million jobs) is OK because, well, there's really no arguing with the free market's list of who's naughty and who's nice. Joy to the world indeed.
Then there are the activist left and House Democrats who, characteristically, are reading off an entirely different script. Rather than Christmas, they have a Festivus theme. They're airing grievances because Obama wouldn't engage in feats of strength by standing firm against the Bush tax cuts, even if it would have meant coal in voters' stockings in the form of tax increases and no unemployment extension. They say he could blame the GOP for taking the nation on a sleigh ride off an economic cliff. They forget that in modern politics the president rarely gets to share blame.
So Obama is right on the merits, but his aides should find a way to handle the left with a bit more holiday cheer. They can't let the freeze in relations become so deep that a thaw would require another Christmas miracle.
Available at Amazon.com:
Read the latest political news.
- Our Government has Become Greedy
- When Will Obama Go 'Gangster'
- Transcending Progressive Discord
- John Boehner's Curious Tears
- A Tractable and Pragmatic President
- The President's Tax Deal Is Just More Trickle-Down Economics
- President Obama: A Decent Deal, a Weak Sales Job
- Questions for Democrats
- The American Jobs Emergency Requires Action
- Why Not Soak the Rich?
- President Obama Takes on the Liberal Democrats
- President Obama's Surrender
- Reigniting the Spirit of 2008
- Learning the Constitution Is Essential for Americans
- Obama-Clinton's Tag Team Show
- Behind Bill Clinton's Smile
- Obama Tax Deal Debate Is a Classic Beltway Christmas Story
- Voters Say Obama Has No Clear Narrative
- When Words Fail
- 10 Senate Democrats Targeted for Defeat in 2012
- Senators Amass Campaign War Chests Ahead of 2012
- Redefining the Global Warming Debate
- The Need to Protect Our Aging Workforce
- First They Came for My Twinkie ...
- More Nixon Wisdom
- Politics Without Labels? What a Silly Concept
- No Backslide for House Ethics
- Obamacare in Critical Condition
- The Death of Health Care Reform
- Sarah Palin's Economy
- In a Giving Mood But Only Toward Rich
- Congress Must Help Struggling Families Not Millionaires
- Will Obama Fight or Fold on Tax Cuts?
- Obama, Democrats Must Worry About the Center, Not the Left
- Selling the Economic Recovery
- Democrats Lost Because They Didn't Fight for Popular Progressive Policies
- Next Tea Party Target: Corporate America
- A Modest (Book) Proposal for George W. Bush
- Bipartisanship? Waste of Time!
- 2012 Presidential Hopefuls Pour Cash Into Iowa
- New GOP Members Praise John Boehner's Style
- Abraham Lincoln and the Election of 1860
- The Religious Ties of the Republican Party
- GOP Pushes for Healthcare Reform Repeal
- Redistricting Likely to Help GOP
- A 'Never Mind' Energy Policy
- Adventures in Polspeak, Or: Barack Obama Talks the Talk
- When Washington Regulated Wall Street
- Danger of a Global Double Dip Recession Is Real
- The Bashing of American Exceptionalism
- Coercive Diplomacy That Went Wrong
- Dubya's Worst Moment
- The Party of Organized Money
- Time to Decide What Congress Is For
- Throw Nancy Pelosi Overboard!
- Obama's Blind Side
- Comparisons Between Obama and Dictators Horribly Misguided
- Democratic Finger-Pointing and Obama's 2012 Comeback
- 10 Reasons Obama Is Floundering
- Trouble Ahead for Obama's Presidency
- Obama Cannot Play Center
- America's Love Affair With Obama Is Over
- Both Parties Need to Wise Up
- 2010 Elections: After the Fall
- Political Reporters Look Ahead to 2012 Presidential Election
- Is Sarah Palin's Alaska a 2012 Campaign Ad?
- Support for Sarah Palin Declines
- Groups Prep for Pricey 2012 Presidential Campaign
- The George W. Bush Fixation
- Bush Tax Cuts: How Washington is Making the Rich Richer
- Flood of Campaign Spending Was Good for 2010 Elections
- 4 Billion in Election Spending a Drop in the Bucket
- America Checks Into Rehab
- Jefferson and Madison's Constitution and Modern Gridlock
- GOP Stars to Take Over Congressional Committees
- Obama's First Stand
- Using the Lame Duck Session
- The Right Way to Reform Healthcare
- The Coming 'Monstrosity' Battle
- The Politics of Budget-Cutting
- Michele Bachmann's Plan to Fix the Economy
- Time Machine
- Battle Over Earmarks: Much Ado About Nothing
- Achieve Balanced Federal Budget Through Spending Restraint
- Unemployment Trumps the Budget Deficit
- America's Two Economies: Why One Is Recovering and the Other Isn't
Obama Tax Deal Debate Is a Classic Beltway Christmas Story | Politics
(c) 2010 U.S. News & World Report