Paul Krugman wants the president to call the Republicans’ bluff and let all the Bush tax cuts expire, essentially raising taxes on everyone who isn’t living in poverty. Krugman acknowledges that this will complicate the unemployment situation but he thinks it’s worth it to protect the long-term solvency of the country and our Medicare and Social Security benefits. I think I have made similar arguments in the past, but I’m not so sure that high-end tax rates should be our number one concern right now.
If part of the deal involves a year-long extension of unemployment benefits and an extension of the middle class tax cuts in the Stimulus bill, those are some of the most important things that can be done to stimulate the economy right now. If the deal also involves a vote on the Defense Appropriations Bill that contains the repeal of the Don’t Ask, Don’t Tell policy, that would rescue that promise from the ashes of defeat. And if the deal also involves a vote in the New START Treaty in the lame-duck Congress, that would be a major bonus with very big potential upside.
What do you think?
No deal. I’ve wanted them all to expire regardless. We can’t afford them, not even the ones on the “middle class.” Wtf is this definition of $250,000 as middle class anyway? My parents bring in $100,000 or so and I’d say we’re upper-middle class as we live in the suburbs. Money is relative, sure, but $250,000 isn’t middle class.
However, if we DO give them an extension, it should be a four-year extension, not a two-year extension. I say this purely for political reasons. A two-year extension equals a permanent extension, whereas a four-year extension gives us a chance to repeal them.
Huh?
Let’s say we give them a two-year extension. They’re temporary already, why make them temporary again when the Democrats will more than likely lose control of the Senate in two-years? Or just as bad, why live through this political malpractice all over again just to give the GOP more time to whack the Democrats over the head?
So I say let them expire, make them permanent and get it over with, or extend them for four years. The first option is the best overall, the second option is the best politically (for the short-term, anyway), and the third option gives the Democrats a chance at it again when they could reasonably have strong majorities in the Senate and House again to give 2009-2011 another try.
you’re leaving something our seabe.
“the third option gives the Democrats a chance at it again when they could reasonably have strong majorities in the Senate and House again to give 2009-2011 another try.”
Except the democrats WON’T try. they’ll instead spend time arguing that we need 109 votes in the senate, plus Ben Nelson’s dog, to accomplish anything.
Well I mean, I know it’s a slim chance, but if they’re temporarily extended, at least go for the time where they can be rescinded. Two-years equals political malpractice to the nth degree.
That’s why the best option is to just let them expire.
agreed. but unfortunately…
A two-year extension? So that the renewal comes immediately before the 2012 election?
What a good idea. Give the Mighty Repukeliscum Wurlizer a huge issue to boost Republican prospects in 2012.
~seabe
Uh…?
Spoken like someone who has never had to pay a damn bill in his or her life.
Oh hi ignorant-ass. I’ve actually been financially independent for 6 years, paying for everything I own. I don’t even own a car because I can’t afford one, and I have to take a grey-hound bus every time I wish to go back home to visit.
Fuck off.
Moreover:
http://yglesias.thinkprogress.org/2010/12/the-real-tax-cut-sellout/
That is interesting, but lately the source of my stress is watching the trend of average middle class wages (adjusted for inflation) sink even lower. It has been on a flat or sinking trend since 1980 or so. The middle class increasingly cannot carry both the burden of taxes and continued spending that helps to keep the economy going.
Now that the percentage of the nations personal income received by the top 1% is at a high that hasn’t been seen since 1929, we are at a crisis point where recoveries can’t be sustained. Consumer demand is weaker.
The solution isn’t so much about tax brackets in my view. It strikes me that 5% give or take that we’re talking about now is likely temporary anyway. We’ve overdue for a comprehensive overhaul of the tax code and someone is going to change it again soon. (The discussion about more permanent, predictable tax law vs. the wishy washy process now is also a worthy discussion.)
No, the long term health of this country depends on developing good jobs here. Jobs that produce more tax revenue because wages are higher. Jobs that bring a living wage and let the middle class also receive some of the benefits of the increasing productivity of the US economy. Jobs, better wages and growth are the solutions for an authentic recovery, helping to hold down the deficit and maintaining future stability.
IMHO this also is the winning narrative for the Dems in 2012. Robert Reich’s book Aftershock is a must read on this.
http://www.amazon.com/review/R2QMP6U3SLY2DK/ref=cm_cr_dp_perm?ie=UTF8&ASIN=0307592812&nodeID
283155&tag
&linkCode=This is a good post Jeff, except that any ‘comprehensive overhaul’ will leave the middle and lower classes paying more than they do now, and the upper 1% paying less.
That is because the controllers of the overhaul will NOT have middle class interests in mind when they ‘reform’ taxes.
Just look at the make up of the people on the deficit commission. And their results. All middle class ‘sacrifice’.
One of the things we have learned over the last two years is you cannot reform ANY serious issue in America these days without making it worse, and/or without giving corporations a bundle of cash.
‘Reform’ is another way of saying ‘Progress’. The idea of any decent society is that over time the institutions are supposed to improve, get better. That is no longer happening in America. Things are getting decidedly worse.
nalbar
When I mention comprehensive overhaul, what I had specifically in mind is the ridiculousness associated with folks in Congress having to be sure every year to slide that AMT amendment somewhere on a bill to make sure it actually works as intended.
No I don’t expect reform, but sooner or later someone revises it to at least simplify it a little and pretend for awhile that something great was achieved.
My personal tax peeve: I think of the business tax code for which the Repub talking point is about how high it is but the Dems do not often enough point out how obscene it is that over half pay NO corporate tax.
But again, this is about tax code and I think it is the wrong focus. I still believe the primary focus should be on jobs and wages. A side issue on wages: There has been a disturbing rise in incidents of employers not paying law mandated wages for overtime.
I say no deal. But I have long been of the opinion that by far the best policy choice is to just let all the Bush tax cuts expire. We are talking about 4 Trillion worth of revenue over the next 10 years. If the tax cuts are extended, then no progressive policy in any area is possible. Everything else is peanuts compared to this.
The best thing that Obama could possibly do for the country is to veto any extension. Even if it meant losing any possibility of a second term. This is the most important decision of his presidency. Which he is planning to flub, alas.
I agree with you Boo.
Whatever gets the UI extended.
Nothing will pass the Senate unless there is a deal.
Why should those on unemployment suffer because of a point of pride?
It just a matter of pride. Obama does what he thinks is best the rest just want to win.
So I agree with you. If he can get a lot of what we want in the deal so be it. Its governing.
Utried–I have a lot of sympathy for your point of view. BUT, it’s not just a point of pride. There are huge policy implications. Extending the tax cuts means no money for any progressive policy in the future, ever. It means increasing pressure to cut Social Security. It means no money in the future for teachers, for infrastructure, for research, for energy, for housing, for any possibility of having a better UI program. It shapes the whole playing field, basically forever, because you can only get that revenue back by explicitly proposing and passing a tax increase, which is never going to happen.
So, although I agree that extension of UI benefits is important, and it’s shameful that we have to negotiate for it at all, I still think it’s not worth it.
“point of pride” are you intoxicated?
This is really nothing more or less than the survival of the Democratic Party. Either the Party stands for something other than “what the Republicans want, CHOP CHOP” or it is just Repukeliscum lite.
If this passes, you will see a HUGE CHASM of enthusiasm, which will make the “enthusiasm gap” of 2010 look like the height of giddiness. Me, if this passes, I’m re-registering as a Green.
Extension of unemployment insurance by itself is not an adequate tradeoff unless the extension give people as long a relief as the tax cuts for the wealthy and the eligibility for benefits for new people becoming unemployed is extended as long as the tax cuts for the rich are in effect.
If DADT repeal, DREAM Act, and START ratification all are in the deal and the tax cut for the wealthy is 26 weeks or less, it might be a deal.
But whatever, every single Democrat has to vote the same way. And Democrats will judge based on that vote whether the Congressional Democrats are serious about their jobs.
But you don’t get what you want by unilaterally taking expiration off the table or not being credible in your willingness to allow expiration.
In fact, the tax cuts will not stimulate the economy that much and might just fuel a new bubble in the paper economy — current likely investment fad is social media companies.
Agree. Short term UI extension for permanent or long-term tax cuts for the rich is no deal. It is possible to conceive of a deal stacked high enough with goodies to be worthwhile – I am especially anxious to see START ratified. The President currently has the Madwoman in the House to help him negotiate this – “Look, I want to do this deal, but that crazy Pelosi won’t let me. You’ll have to throw something more in.” But given that his negotiating style appears to consist of giving things away for free, preemptively showing an eagerness to fold, compromising the compromise, and then apologizing, I have my doubts.
Oh, and since we already had a deal on START ratification and Republicans reneged, that happens before anything else. Not just the substance, but the mechanism for any deal has to be very carefully put together. Democrats are not negotiating with trustworthy people.
we all know what’s going to happen anyway.
but fwiw, no deal. let the tax cuts expire, then propose a new package of Obama tax cuts and let the GOP oppose them.
not gonna happen though. that would require a strategy beside pre-emptive capitulation.
Has anyone seen Greg Sargent today? Anyone have any thoughts? Anyway, does anyone know what the deal really is? Or are we all just guessing? I’d be willing, how ever reluctantly, to support an extension of the tax cuts as long as UI benefits are extended for the same amount of time plus an up or down vote on DADT plus anything else the Democrats need to vote on(like an overall Gov’t budget).
I have been calling. Remind them that this is against all Democratic “principles” (what, democrats have principles? Not if The Gutless Wonder has anything to give away about that!). Warn them that the Democratic Party faithful, all 21 of us that remain, do not want this to be passed. Tell them that Democratic enthusiasm will COLLAPSE.
If this passes, 2012 will be a firestorm, because the Democrats will have nothing left to run on.
they said that last week, Republicans were calling, but now Democrats are calling.
Call Senators. Stop the tax extensions.
No deal. The only deal should be to decouple. This sets an extremely bad precedent: give the GOP what they want or nothing will ever get done.
Booman I’m sick and tired of all the savvy analysis coming from you, Nate Silver et al that boils down to “crappy results are smart politics for dems because dems suck at politics and the GOP is good at politics.” Why do we suck? How can we suck less?
And when did we start looking at the tax cuts just in terms of stimulus as you and Nate are doing? Its not like the deficit thing has gone away, so now that we’ve settled the tax cut issue (no tax cuts at all for the rich) then as we pivot to the deficit issue, then the only thing to cut is entitlements and other non-defense spending. In simple terms, come 2012, the middle class will be much worse off then they were in 2008- how is that a viable reelection strategy?
Depends on the deal. But given the current dems in the senate – blue dogs and whipped curs – I’m not optimistic that a good deal will be made.
While I think they should let it all expire, that’s not gonna happen. SO what I am afraid of is our negotiator in chief and his minions will totally screw this thing up and we’ll get tax extensions for all and nothing for us, not even UE extensions. If we had a decent negotiating team we could get DADT, UE, and the START treaty done. The thugs REALLY want these tax cut extensions.
Unfortunately we don’t have a decent negotiating team.
“The thugs REALLY want these tax cut extensions.”
Yes, indeed they do.
” “We knew that, politically, once you get it into law, it becomes almost impossible to remove it,” says Dan Bartlett, Bush’s former communications director. “That’s not a bad legacy. The fact that we were able to lay the trap does feel pretty good, to tell you the truth.” […]
“[Democrats] are definitely on the defensive,” Card says. “The fact that the 10-year clock ran out now had a big impact on the election.”
http://thinkprogress.org/2010/12/03/bushies-celebrates-taxes/
That’s not stimulus. That’s damage control. There is an important difference, especially in the impact on voters’ perceptions. Continued damage control is not something you get credit for. Stimulus is additional, stimulative (read:effectively targeted) spending, which you then need to effectively communicate the effect of in order to get credit for.
This might be worth it, if only to argue that the President did what he had to to make the world a safer place for all American citizens.
The real problem with any of this is that it involves communications. The WH hasn’t effectively communicated much since winning in ’08. Both continuing the economic relief measures and passing START are the right thing to do on the merits, but getting any credit for it is another thing entirely.
Any extension on upper class cuts will end up being permanent. That is because the Democrats are at their HIGHEST level of influence (for about 10 years I would say, and that includes the last two years) right now if the extension passes.
But notice I said ‘upper class cuts’, because three years from now rates on the MIDDLE class will be raised. Because ‘all’ must ‘sacrifice’.
All this will happen because it is what Democrats WANT to happen. On taxes (in fact, most things) they believe what Republicans believe. There is no space between most of them on ‘progressive issues’.
What I find interesting is that if you go all over the progressive internet you read horrible signs of the decline of America. From the wikileaks evisceration, the destruction of the legal system via foraged foreclosure documents, the destruction of ACORN, etc, etc, you see a pattern of removal of checks and balances against the worst American impulses.
Yet not many want to see the pattern. People say ‘The republicans cannot govern, so why would anyone vote for them?’. Well, the democrats cannot govern either, why would anyone vote for them?
The battle is lost. In many ways Obama is a fraud, but in all ways he does not have the strength of character to stem the tide of decline (assuming he wants to, it’s far more likely he agrees with the ‘policies of decline’). Like Bush, he is an empty suit. He will sell everyone out.
nalbar
“Complicate”? And what does that mean? Risk the well being of people surviving at the poverty line for a political fight? If so, he has taken liberal arrogance to a whole new level!
Whatever the merit (or lack there of) of the GOP argument that the economy is too fragile to sustain tax increases on anyone, and that we shouldn’t tax job creators, it’s a convincing argument to most Americans. Most Americans (99,9999%) including me don’t understand complex economic issues. Democrats have over complicated it, as always, and Reputlicans have over simplified it, as always. If Democrats push this with the end result being highter taxes for everyone and no unemployment beneifts, especially at Christmas, who do you think the public will blame? Democrats will look like they put political gamesmanship before the interests of the country. Democrats may be right on policy but they are terrible at politics. Take your loss on this one and move the fuck on.
“it’s a convincing argument to most Americans”
Possibly – are there any surveys? But only because they are the ones ignorant about and blind to how the economy works. For many Republicans it’s the simplistic line meant to sound like street smarts in a way but turns out to be just plain stupid: “I’ve never been hired by a poor person.”
Maybe those particular Americans should use a little common sense, take a deep breath and read a little before they go off demanding “reforms” based on ignorance.
Rich individuals aren’t job creators. Jobs aren’t created out of thin air ONLY because some individual has money. There has to be demand or anticipated demand for a good or service. (And while Keynes has sometimes gone out of style, at times of high unemployment, his ideas work pretty well.)
Like it or not the economy is a complex fabric of interrelated exchanges of goods/services for money. Job creators are consumers who buy products and services that keep pressure on companies to produce more. Job creators are also companies that make investments to expand.
And the ultimate control of a company is not Mr. Big in the Corner Office who has been raking in obscenely high salaries in the last 20 years. The ultimate control of the companies are their investors (think here also the little old lady who has $100,000 in her teachers pension which is invested by her pension officials)
Reading recommendations:
Robert Reich Aftershock
Nouriel Roubini Crisis Economics
Moshe Adler Economics for the Rest of Us
Eh, why would the GOP ever give in? They’re lying. It’s not going to happen. Let them all expire.
I’m not sure I care as long as people who are hurting get something significant for it. In a way, this strikes me as a temporary fix anyway. See my comment above about jobs and growth for leading our way out of the deficit.
Stupid question: If I’m hearing the Repubs correctly (and I don’t listen to them often 😉 ), some are saying the unemployment extensions are not offset and that is why they don’t go along. So why not carve out some wasteful defense program that is recommended for cutting by the deficit commission and recommended for cancellation by the DOD, pair the cancelation of that program with unemployment extension for 1 year and then watch the Repubs squirm.
I’ve reluctantly come around to the position that it might be worth a deal (depending on what was in it of course); continuing unemployment insurance and the other things you listed are terribly important in the short term. Yes it’s unpleasant having to compromise with a completely irrational faction, but that’s the way politics works. I do feel this should have been worked out months ago, rather than waiting for the lame duck session, where it seems we have much less bargaining power.
GOP wont allow a vote on DADT, or Start or Dream act. They wont raise the debt level. Obama is going to get nothing but UI extended for a year and a some stimulus tax cuts.
Meanwhile, the meme that Obama caves and does not negotiate well will be embolden among his supporters and the media, the GOP will get to claim the saved every American from Dems raising their taxes, and then when these tax cuts blow a hole in the deficit, the GOP will blame the Dems and the President for putting so much debt on.
Maybe some Congress Dems can punt this “deal.” I doubt it. They roll over easier than Obama, especially the liberal ones.
GOP wont allow a vote on DADT, or Start or Dream act. They wont raise the debt level. Obama is going to get nothing but UI extended for a year and a some stimulus tax cuts.
Meanwhile, the meme that Obama caves and does not negotiate well will be embolden among his supporters and the media, the GOP will get to claim the saved every American from Dems raising their taxes, and then when these tax cuts blow a hole in the deficit, the GOP will blame the Dems and the President for putting so much debt on.
Maybe some Congress Dems can punt this “deal.” I doubt it. They roll over easier than Obama, especially the liberal ones.
I actually hope this all falls apart and they don’t extend ANYTHING, but the only way I’ll be able to justifying Obama and the Dems cutting a deal and extending these cuts is if it gets them EVERYTHING ELSE on the agenda.
-DADT repealed.
-DREAM enacted.
-START ratified.
-Unemployment extended.
-A f**king partridge in a pear tree.
Anything I’m forgetting?
The Democrats need to demand votes on all of this. The tax vote can come first, but Obama signs everything at the same time. If the GOP fails to come through on the other votes, then Obama lets the tax cuts expire with a pocket veto.
Damn should of read the main story before comment on Forgiven’s diary.
Deal is done. Unemployment extended benefits over period of 13 months. Tax cut extensions for two years.
As Huffington Post says: 1 year for workers; 2 years for bosses.
We just heard the news, Obama folded. Two more years of tax cuts for the wealthy. The downside?
“I’m not voting for this guy, again.” That was me. My wife? “Neither am I.”
The only hope left is the Senate, but with those lousy conservative Democrats voting for this co-called “compromise”, there’s not a chance.
Delaying the planned Bush tax increases for another two years is a bad idea fiscally and politically for the Democrats, as the tax cuts for the wealthy should be ended now and the middle class tax cuts should have been extended for three years to remove them from the 2012 election.
That being said, however, it is clear that the votes were not there for the ideal result. As such, compromise here was necessary. And this compromise, while not good, could have been much worse. 13 months of unemployment benefits is great, the payroll tax holiday should have some stimulative effect, and the extending the estate tax even at a lower rate is acceptable given that the option of leaving the issue until next year could have easily allowed the estate tax to be permanently eliminated.
So, overall not what I would like as a progressive, but I think the President is getting about the best we could get out of our broken Senate.
Now, let’s ramp up those calls on DADT, DREAM, and START to get those done during the lame duck session.
And then we progressives need to fight to change the dynamic on economic issues so that two years from now we can win this fight, rather than having to accept a not so good compromise.
http://www.winningprogressive.org
No Deal. Unless he gets the Public Option, full funding now for so called Obamacare and no opportunity for defunding, Immigration Reform, and repeal of Don’t Ask..Don’t tell.
How much are the Republicans willing to bargain away to get their tax breaks. But the reality is that 2% of the Population Control the Republican party.
Are you leaving any parties out when you say, “2% of the Population Control the Republican party”?
The top 2%, wage earners, control the Republican Party, no.
So they don’t control the Democratic Party, but still get a Democratic President who campaigned on ending these cuts to sign onto this pissant compromise?
wow,I must be stupid. I thought the Congress voted against extending the tax cuts for the top 2% of income earners. What did you hear?
No deal.
Immediate arrest, prosecution, conviction, and execution of the entire GOP Senate delegation for conspiracy and domestic economic terrorism.
From DKOS:
Now this is only worth so much. You can find three people (I assume) that would have the opposite feeling. But it shows that even people who worked for Obama who invested a lot in him are disillusioned.
I’m done with the spineless turd. He is a pussy, a eunuch. He has no manhood.