It seems our president has a knack for giving something to everyone while pissing off everyone in the process. I don't think President Obama had wrapped up his speech this afternoon before the left was calling for a primary challenge and the right was saying, "oh, hell no."
And from the political middle, where most Americans reside? Crickets as usual. (At least until the next Pew poll comes out in a few days and shows they are definately "meh" on the whole thing.)
Let's cool the vitriol for a minute and consider the politics behind all of this.
I think the main reason we are all so surprised by the "great Obama cave" is that we are so unfamiliar with compromise. That's not a knock on anyone's intelligence. It's an astounding lack of experience with political compromise in the past two decades or so. And yes, I blame Republicans.
Consider this: When was the last time you remember the Republicans compromising on anything of substance? Before the Clinton impeachment? Before the 1994 midterms? I honestly can't remember. We have all just adjusted to the reality that Republicans simply do not compromise. On anything. Ever. For any reason.
My political history books tell me that -- once upon a time -- the final policy was the preference of the 51st vote in the Senate and the 218th vote in the House. Of course our new political reality that involves filibuster abuse shifts the Senate policy to the 60th vote.
These days, Congress is more polarized than ever. According to the link cited, two-thirds of the polarization is explained by the replacement of moderates with extremists of both parties in Congress. I blame the non-participation of moderates in primaries -- whether that is structural (closed primaries, fund raising advantages of incumbents) or psychological (apathy, frustration with politics in general).
Now let's look at some of the provisions of The Compromise and some possible outcomes.
The DEATH Tax
This is an issue where the Democrats lost the messaging war years ago. I remember Republicans talking about this in the late 1990s when they were covering their own rich asses. Never once did I hear a Democrat point out that the estate tax only benefits the super-rich or even push back on the Death Tax lie. Instead, the Republicans sold the public on the myth that it would mean farmers and business owners would have to turn everything over to the evil government rather than pass that along to the kids.
Interestingly, the original 13 colonies had primogeniture laws that allowed eldest sons to inherit vast properties. That hero of the right, Thomas Jefferson, argued for the abolition of such laws:
In 1776 he succeeded in obtaining the abolition of entail; his proposal to abolish primogeniture became law in 1785. Jefferson proudly noted that "these laws, drawn by myself, laid the ax to the foot of pseudoaristocracy."
The modern inheritance tax is a way to keep the American aristocracy somewhat at bay. IMHO, though, the problem is that the inheritance tax only serves to protect the largest of the large estates that can take the tax hit and still make millionaires out of teenagers.
Anyway, here's the reality as explained by Ezra Klein. There actually was essentially no estate tax this year, but it was originally scheduled to return in 2011. Under the original sunset, the estate tax excludes the first $1 million from any taxes and levies a top rate of 55 percent. The Compromise exempts the first $5 million and sets a tax rate of 35 percent. Klein notes that the difference amounts to a difference in revenue of $10 billion. Here's the Estate Tax wiki, FWIW.
So if you want to scream about something, scream about that.
I'm going to go ahead and argue that this is the most important concession to come out of The Compromise. If this thing passes intact, federal unemployment benefits would be extended 13 months. As Senator Sherrod Brown reminds us, every dollar in unemployment benefits generates $1.60 in economic activity.
The flip side of this argument is that this will cost $56 billion and the government will have to do a whole lot of taxing to recoup that.
Tax cuts for the wealthy
The real thing that the left is screaming about is the bonus tax cuts for the wealthy. Does anyone here remember the 1980 Republican primary, because I sure don't. But the point is that George Bush Sr. (the saner one) called supply side economics "Voodoo Economics." Well Bush got beat and became vice president, the economy eventually recovered -- due in no small part to FDR-like massive defense spending increases -- under Reagan, and thus the theory of supply-side was validated in the public imagination if not among economists with degrees and stuff.
I tend to support economics-based tax cuts for the rich and business on one condition: they prove that they created jobs. I recommend tax credits for the wealthy and businesses. That places the benefits at the back end and serve as a reward for actually creating the jobs. An upfront tax cuts is an invitation to take the money and run.
When I covered economic development in Pennsylvania in the late 1990s and early 2000s (we had Republican Tom Ridge and Democrat Ed Rendell as governors), there was a lot of corporate welfare tossed around. However, businesses did not get the benefits without jumping through a lot of hoops intended to ensure that the tax money was really creating jobs. Maybe this is too simple to actually, you know, work.
But the real question we should be asking is whether we care about these bonus tax cuts for the rich because of the deficit or because we would like to fight back in the class war for a change.
CBO and OMB
One thing that seems to be missing from all of this is a score from the Congressional Budget Office (CBO) or any sort of analysis by the Office of Management and Budget (OMB). To refresh, CBO is a group of really smart economists who work for Congress. They do economic forecasts on all sorts of legislative proposals except (maybe) naming post offices. The OMB does similar work for the White House. This analysis doesn't happen overnight (usually). The media are tossing around a lot of figures, but I want to see what CBO has to say before making any conclusions.
A Game of Chicken
Now let's look at some politics of all of this.
Short run. It is very possible that this goes nowhere. The aforementioned CBO score might show some really grim numbers. It might show that it will be a huge budget buster that does very little for the economy. In fact, that's what I'm sort of predicting. This might make even the moderates in Congress shy away and do nothing this year.
That said, regardless of what the CBO says, I'm also predicting that The Compromise goes nowhere. For example, the bug-fuck crazy Michele Bachmann hates the unemployed so much that she just might vote down the sweetheart deal for the wealthy if it is tied to unemployment benefits. We also know that liberals are not particularly enamored with the deal. Nancy Pelosi might -- just might -- find the votes for this, but I doubt Harry Reid will find 60 votes. Hell, Bernie Sanders might filibuster the thing and he's the only Senator who has the guts to do an actual talk-fest filibuster right through New Years.
Medium term. Now let's assume that it does pass. There are three possible outcomes: The economy improves, remains status quo, or gets worse. Considering the costs, only the first outcome can be considered desirable. We already know that the economy is improving, but not very quickly. Deficits and debts aside, we can assume that The Compromise won't hurt much and will probably help some.
In that case, President Obama will look like a hero this time next year.
Of course, there is every possibility that the economy will actually get worse regardless of The Compromise. Considering the wave of debt crises hitting the European Union, that is not outside the realm of possibilities, especially if our foreign creditors like China suddenly call in our foreign debts. Maybe we can give them Alaska in exchange for canceling the debts.
In this case, the Democratic message had better be that the Republican demands in The Compromise are to blame. And unlike a lot of Republican messaging, we will probably be telling the truth.
Long Term. The real problem with stimulus spending and tax cuts is that it does indeed create debts. This has been a problem since the New Deal and World War II. In fact, we are still paying off that war. In the 1950s and 1960s and even into the 1970s, the United States diligently used budget surpluses to pay off a relatively modest debt.
Today, that doesn't happen. Keynian Economics says to spend your way out of a recession and then step back. Okay. But ever since Reagan started running up the debt, the country has made absolutely no plans to pay off the debt after recession spending. Sure, we pay the interest, but none of the principal. No one wants to accept that we will have to raise taxes to pay off the debt -- spending that will not provide tangible benefits. The theory, of course, is that spending grows the economy, but we never have any plans to recover enough government revenue to repay all of that spending. Hence the $14 trillion debt.
Good gods. Some days I wonder if President Obama can take a piss without someone saying 1) you're doing it wrong and 2) primary him. What the fringes of both parties seem to forget is that presidential races are still won in the middle. If this whole thing works -- and like I said above, I doubt it will pass and I doubt it will work if it does -- then Obama is going to get the credit and we will, at long last, see some Democrats ride his coattails into office. If it doesn't work, then sure. Let's consider a primary challenge.
But until we see how this whole thing shakes out, any cries for a primary look silly at best and are premature and dangerous at worst. And we will not see even the beginnings of the effects until at least late next year.
Why silly? Do you honestly expect Bernie Sanders, Sherrod Brown, Russ Feingold, Anthony Weiner, Alan Grayson or Dennis Kucinich to read some diary and say, "mounting a primary challenge against a sitting president with a reasonable amount of support and awesome fund-raising seems like a wonderful idea"? No. There is a lot more that goes into such a decision and I wouldn't vote for someone who does make that choice based on that reason. (Strike that last candidate, by the way. Kucinich will probably run anyway.)
Why dangerous? If the vitriol continues at this level, the middle might very well sit out the primaries. On the other side, even the insane right couldn't nominate Huckabee or Trancredo. They got McCain, who was spun in the popular media as something of a center-right guy. I would suggest getting used to President McConnell or President Romney. If you like that, sit it out. I have a feeling that OFA is already accounting for the pissed off far left who won't turn out over issue X, Y or Z.
Am I disappointed with Obama? Not really. I operate under no delusions that he will "change the way Washington works." Actually, strike that. If a significant number of Congressional Republicans actually support this thing, then Obama will have taken one step toward repairing how Washington works. Politics used to be about the art of compromise. The Republicans took a "my way or the highway" approach in 1995 and never quit, no matter how many seats they lost.
Much of the anger over the ill-fated compromises, most notably on the health care bill, is born from this frustration. How many times have the Republicans promised their support for bill X if it had compromise Y and voted against it anyway?
More justified anger can be directed at people like Ben Nelson, who might as well be a Republican, and Bart Stupak, who was a pretty reasonable Democrat until he decided that a bullshit abortion amendment was more important than getting health coverage for most Americans.
I have a feeling that so many Blue Dogs lost in 2010 because the voters decided to actually elect a Republican if their congress critter was going to act like one.
Besides, Democrats have a big tent by default. The Republicans hounded the moderates and a lot of center rights out of the party and the Democratic Party is the only alternative. Therefore, our numbers are artificially inflated. Sorry to break it to you.
Finally, I always saw Obama as a center-left guy. Campaign promise are the starting point of negotiations. We just have to accept that reality.
I read a lot about Obama's alleged lack of leadership. My challenge: define presidential leadership. Is it behind the scenes deal-making and log-rolling? Publicly berating congressional Democrats for not falling in line? Personally change the rules of the Senate? Take up residence in Sherwood Forest and rob from the rich to give to the poor? Change his political view to somewhere to the left of Chairman Mao? Coming over with a six pack and mowing my lawn?
I will admit that the Democrats (not just Obama) should have been a lot more vocal during the August of the Town Hall. How soon we all forget about the address to the joint session of Congress on Sept. 9, 2009. (Let me refresh: "You Lie.")
The alleged "lack of leadership" is largely a result of the modern media. When was the last time you saw one of the networks show a full speech by the president and then offer honest, thoughtful analysis? Honest question. If you have an example from CNN, MSNBC or Fox (lol, I know) I would like to hear about it.
The bottom line is that President Obama and the Congressional Democrats (and Republicans, for that matter) will be judged by the political middle based on their perception of the economic benefits of The Compromise. I'm not saying STFU, but I am saying that we need to have an honest discussion about this without the knee-jerk calls for a primary every single time the President practices that forgotten art of compromise.