Wednesday, December 8, 2010

Of Compromises, Hostage-taking, Ideological "purity" & The Tax Cut Trap


In a hastily convened press conference yesterday President Obama lashed out at liberal critics, enraged that so much had been tossed to the 'always-say NO' Repukes in a last ditch agreement touted as a compromise. The Prez argued:

"I've said before the middle-class tax cuts were being held hostage to the high end cuts. I think it's tempting not to negotiate with hostage -takers, unless the hostage gets harmed"

However, it's in that last phrasing where he's absolutely wrong! The inescapable true fact here is that all Americans- as a percentage of GDP - are shouldering their lowest tax burden in 60 years! Further, we have a mammoth revenue problem which is manifested in deficits now approaching $13.8 trillion, to which Obama and the Repukes now plan to add an additional $900 billion (the total cost of the compromise package - including extending all Bush tax cuts 2 yrs., rejiggering the AMT, lowering the payroll tax by 2% for 2 yrs. and extending unemployment benefits for 13 months (though interestingly, no extension for the "99ers" has been allowed!)

Given that this will create a new deficit of $14.7 trillion, with NO means to pay for it, and most of the money will have to be borrowed from the Chinese, Saudis and Russians - the real harm is to the American nation and economy which simply cannot afford ANY of these tax cuts. Thus, the real "hostage" here is the nation - which will now see nothing whatever done to repair its crumbling infrastructure, and a deficit chasm going unaddressed.

Obama's own Deficit commission has called for $3.8 trillion in draconian measures over nine years to deal with what it calls a "cancer eating away at the nation from within" in terms of the deficit - and now what? Obama and the Repukes want to implant more malignant cells into the mix? How does that work to the benefit of the COUNTRY? (I believe if the deficit is as bad as claimed, it is high time we are beyond political chicanery and games to leverage advantage for 2012. ) Even Obama in his post-mortem mid-term election press conference asserted: "We need to reduce our deficit so we don't leave our children a legacy of debt and we're not racking up the credit for the next generation". REALLY? Then WHY have you just appeased the Repukes while adding a potential $900 billion to that deficit? The words and actions do not add up, Mr. prez. You can't say we can't rack up the national credit card for the next generation then do it!

Once again, rigorous logic asserts one cannot call for reduction of the deficit on the one hand and reduction of taxes on the other! The two propositions are mutually exclusive! If the deficit is real and not make believe, logic demands that first dubs go to fixing it, lowering it - and in the most expedient way possible. This simply cannot be accompished by adding $900 billion TO said deficit. (And according to today's Financial Times Editorial: "The failure to marry long-term deficit control with adequate short term stimulus is the worst of the many failures of U.S. politics." Indeed, especially when the latter is willy-nilly undertaken with zero thought of the consequences to the former!)

Thus, the harm to the nation (as opposed to a subset within it) was never avoided, but rather accepted as a fait accompli, for the sheer purpose of political pandering! This to score brownie points for the election in two years. Even a senior White House advisor confirmed this is the true take, not some "bullshit" avoidance of hostage harm. According to a Tribune Co. wire story by Paul West, this senior advisor - speaking on condition of anonymity- admitted it was done because "we had to get the independent voters back".

Which is hog swill, because 7 of 10 independents are not exercised particularly over the tax cuts issue but what they derisively call "Obamacare"! They want it repealed lock, stock and barrel. THIS is the only thing that will win these ill-informed middlers back - and meanwhile with this tax cut appeasement, Obama stands to lose his base, the only thing keeping him from ending up a one-termer. (Another reason why it's never a bright idea to piss them off or treat them like dummies!)

Obama went on to aver in his press conference:

"People will have the satisfaction of having a purist position and no victories for the American people"

And he went on to compare the criticism here to the complaints on excluding the public option in his health plan. But again, he misses the forest for the trees. The public option wasn't even an original DEM conception but based on an idea Richard Nixon floated in 1972. NIXON, for Christ's sakes! Even Nixon knew then as the HMOs came on the scene you wouldn't be able to control costs with simple "exchanges". It was daft! You needed at least a full-fledged option to keep the insurers honest! The true compromise position on the health plan reform was therefore to leave out SINGLE PAYER but go for public option! The true compromise position on tax cuts is to enable only the middle class cuts (if any) because even with those the average millionaire wil receive a $9,300 cut each year compared to $2,600 for a $70,000/yr. earning couple.

As for demanding an ideological "purist" position, hardly! The true purist position here is neither left nor right but rather an absolute and pro-active response to a mountainous, ruinous deficit! If that deficit is real, NO more must be added to it, no matter what rationalizations pols have! If a man (nation) is drowning in debt or literally drowning, as a life purist you reach out to pull his head up out of the water to save him, you don't push his head a foot back under! THAT is the only "purist" position! (As for the unemployment benefits extension, as Sen. Sherrod Brown observed last night, that would have passed with 8-10 Rs before Xmas, because the alternative would have made them all look like Scrooges. It was just a matter of waiting them out, but like a terrified hot rodder in his first game of 'chicken' - Obama pulled off the road first, 300' before the edge of the canyon!)

If you are a deficit purist here, the only type feasible, you don't push the nation $900 billion back under and increase the need to raise the debt limit higher! Where is the sense, and where is the balancing rhetoric to square all salient facts with reality? Is there an iota of reality left in this nation when politicians can talk out of both sides of their mouths? On the one hand warning us of the mounting deficits, but on the other hand making deals that enlarge those deficits even more? Insanity anyone?

The most interesting comment of all, at which I almost howled with laughter, is when Obama said he will absolutely not, not let any further tax cut extensions come up - say in 2012. You've got to be kidding me! Now, if you can't legitimately make the case to have all simply expire this year and put these infernal, deficit -stoking zombies to rest, how the hell will you do so in two years in an over-heated political climate when your re-election is on the line? And the Repukes are on every bit of media wave band hollering about Obama being "ready to have the biggest tax hike in American history"?

Obviously, if you're too lazy or otherwise incapable of winning the rhetoric war now (even with the polls on your side) you won't win it two years down the line. You will simply "punt on 3rd down" (to use the metaphor of Sen. Sherrod Brown (OH) last night on Maddow) and let in another 2 or more years extension - adding another $800 billion to the deficit.

Which brings us to the nature of the tax cut trap.

Since 1963, both the John Birchers and States' Rights parties sought two elements to "starve the beast" of government and thereby permit a back door attack on entitlements:

1) TAX CUTS

and

2) Military spending.

Tragically, Obama has cooperated a la Reagan in both these fell moves, extending our Afghan involvement at least until 2014 at a cost of over $800 billion, as well as hacking up this fiscal "deal" with Mitch McConnell, John Boner, Eric Can't-er and others to add $900 billion more to the deficit- laying the ground work for a full blown attack in several years on ALL entitlements (since of course, with all the tax cuts and war expense, we can't afford them any more at current rates).

Look for the repukes then to use this meltdown in revenues to argue for the following:

1) Change Medicare immediately to a "voucher" plan - with each qualifying senior receiving a check for $2500 each year for ALL expenses.

2) Cutting Social Security by pegging its cost of living allowance to the CPI (consumer price index) or eliminating the COLA altogether. In which case, most seniors will end up in dire poverty within 5-8 years.

If the Republicans manage to get one of their own elected in '12 it will be even worse, and they may actually try to pass both the preceding into law.

As from 1963, the tax cuts like war-defense spending are a trap by which to lure unwary Democrats into a position of denying the tax revenue life's blood to sustain domestic programs and the allegiance of their own voters. It seems the Repukes have this president too well measured, and are now readying themselves to take the whole enchilada when their tea party renegades arrive in D.C. next month.

Tragic, but true.

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