Bad Deal; Wrong Direction
December 7, 2010 - 9:23am ET
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So now we have the deal.
In a society of extreme inequality, the rich – well represented by a unified Republican claque – will make out like bandits: An average tax cut of $25,000 a year for the top two percent (with much of it in six figure numbers for the wealthiest of the wealthy). A stunning giveaway to the biggest estates – exempting estates under $10 million for couples from taxation and limiting the top tax to 35%. Dissolute heirs to the wealthy can rest easy in troubled America. And of course, an adjustment of the alternative minimum tax which benefits almost entirely the affluent.
In a period of mass unemployment, the result of failed conservative economics, we get in return a largely conservative recovery package built around tax cuts. No public investment to create jobs. No aid to states and localities to save the jobs of teachers and police. No investment in new energy to keep us from defaulting in the race to capture a slot in the green industrial revolution.
Instead, a 100% write off of all business investment over the next year, the vast bulk of which will go to investment that would have been made anyway, adding nothing to the economy. (And worse, a significant percentage in investments that move jobs abroad, not build new plants at home). A 2% payroll tax cut that will put small amounts of money in worker’s pockets each month, which will unlikely to be noticed and surely to be spent – so among the most efficient of these measures. A continuation of child tax and tuition credits that are sensible and relatively progressive measures. And most important, the extension of unemployment insurance for the long-term unemployed, the most effective boost to the economy in the package.
It’s a lousy deal, but ironically, a better one than most liberals feared would come out of the White House. That may be a better measure of liberal dismay at the White House, than of the merits of the deal.
The White House defends the deal as “strategery.” In their calculation, it is better for the president to be “reasonable” and get things done, than to fight and draw lines.
The President claimed higher ground:
Sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do,” he said. “The American people didn’t send us here to wage symbolic battles or win symbolic victories.”
Really? Then why freeze federal pay for two years, an utterly symbolic gesture, meant to sound the call to retreat? (The message is that austerity starts now, which is inane with unemployment at mass levels, that federal employees are overpaid, which is simply wrong, and that workers must sacrifice, when in fact workers have been losing ground for decades.)
The question is what comes next? With people suffering across the country, the president convened a deficit commission, not a jobs commission. After bowing to Republican demands for lucre for the richest 2% of Americans, in a package that costs about $700 billion over the next decade (not counting extending the Bush tax cuts for the bottom 98%), will the president now tell Americans in his State of the Union address that Social Security benefits must be cut, the retirement age hiked, Medicare cut, core investments in education and environment slashed in order to address deficits run up by foolish wars abroad and irresponsible tax cuts at home? Will he follow that by announcing that the Afghanistan review has determined that we’ll be there until 2014 at the very least?
The president is right – this isn’t about symbolic victories or symbolic fights. It is about the direction of the country. This president was elected to correct for thirty years of conservative failures. His job is to begin to challenge unsustainable inequality, and create the conditions for broadly shared prosperity. He has to end costly and unaffordable adventures abroad to focus on rebuilding America from the inside out. He has to hasten the transition to renewable energy. He must correct the unsustainable excesses of finance capturing 40% of corporate profits, the wealthiest 1% capturing 40% of the benefits of economic growth, the nation borrowing $2 billion a day to pay for its corporate trade follies.
If his compromises end up reinforcing the current extremes rather than correcting them, then he is doing more than offending liberals aching for some sign of backbone. He is failing the mandate that history has given him.
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