If It’s Difficult, Then Let’s Just Not Do It?

Filed Under (U.S. Fiscal Policy) by Don Fullerton on Dec 17, 2010

Last week, when President Obama announced his compromise with Republicans over the Bush era tax cuts, the general perception throughout the media left one feeling like the Democrats just had their milk money stolen.  All the talk of being taken hostage by the Republicans did little to ease that feeling.  After working through all the talking points, politicking, and pandering, however, this much is clear: the debate has no obvious winners and losers.  Both sides are getting watered down versions of what they really wanted. The basic premise of the deal is as follows:

  1. The Bush era tax cuts are extended for everyone for the next two years. 
  2. Unemployment benefits are extended for 13 months. 
  3. The estate tax is back, in modified form. 
  4. Social Security taxes are cut for one year.

 The tax cut at the top may help the rich more than desired by Democrats, but then the extra Social  Security tax cut will help low-income families, and ALL those cuts will help stimulate the moribund economy.

The crux of the Republicans argument is that we are in danger of a double dip recession if the tax cuts expire, a talking point the White House has not been shy about echoing in recent days.  Interesting to note is a perceived contradiction by Republicans whereby they refuse to approve anything that might add to the national debt, such as the 9/11 Emergency Responders bill.  Yet, extending the tax cuts implies 3.9 trillion dollars in lost revenue over the next ten years.  The GOP counters that since the cuts are currently in effect, it’s not technically adding to the deficit. 

 What is missing from the equation here is any viable long term plan agreed upon by both parties.  Yes, we get to do it all again, in just two years!   The long term deficit can still be cut, but any meaningful cuts will have to include Medicaid, Social Security, and the military.  God speed the politician brave enough to raise those issues.  Our elected officials are really doing little more than pushing these problems off for the next 24 months, as one party attempts to out-politic the other.  It’s a Ponzi Scheme, as pointed out in my earlier blog!

 If the American Congress could tackle as many issues every month as they are through the month of December, American politics would look a lot different.  We have seen critical votes attempting to resolve critical issues ranging from the 9/11 Responders health care, Don’t Ask, Don’t Tell, and now the Bush era tax cuts, the estate tax, unemployment benefits extension, and more, all rolled into one.  If only Congress could exist as a permanent lame duck!

For a moment, I thought Washington DC might just be functional …

Filed Under (U.S. Fiscal Policy) by Nolan Miller on Dec 9, 2010

… but then I blinked and it was gone.  Like it or hate it, the recent deal between President Obama and the Republicans to extend the Bush-era tax cuts was a watershed moment in recent political history.  Although we’re deep into winter here, bipartisanship seemed to be busting out all over like the first flowers of May.  First, there was the food safety bill.  Then, the debt panel vote.  Then, after kicking the ball down the road 5 times in the last year, the House approved a bipartisan bill that would stop Medicare rates from dropping 25% in 2011.

Now, I’ve grown accustomed over the past few years to the Washington DC where Republicans and Democrats would rather stick their thumbs in the eyes of their rivals than work together for the good of the American people.  After the recent flood of functional bipartisanship, I didn’t know what to think.  Up was down, left was right.  Dogs and cats, living together.  Mass hysteria!

The compromise on extending the Bush-era tax cuts came at the end of long negotiations between President Obama and Republican leaders. The deal has something for everyone to hate.  Obama, who has advocated allowing the cuts to lapse for families earning over $250,000, let that go.  Republicans, who wanted to extend the tax cuts permanently, had to be satisfied with a two-year extension.  Those with the most to hate, however, were liberal Democrats, who object to extending the tax cuts to high-earners and the reduction in the inheritance tax.  While the deal included provisions that should be attractive to liberal Democrats, such as extending unemployment benefits and a one-year reduction in payroll taxes, these have done little to satisfy them.

Which brings us to the return of the kind of obstructionism that I’ve come to expect from Washington in recent years.  In the midst of my preparation to flee from this world that I no longer understand, I came across this story in the Wall Street Journal, and breathed a sigh of relief.  Not only is partisanship back, but irony as well.  It seems that House Democrats are preparing to block the compromise from coming to the House floor for a vote.   That’s right – after a year of complaining about Republican obstructionism on health reform and other Democrat agenda items, the shoe is on the other foot.  At least the practice should help the Democrats as they transition into the House’s minority party next month.

Then, just not to be outdone, Republicans in the Senate decided to block a bill aimed at providing medical care to 9/11 rescue workers on the grounds that the $7.4 billion plan was too expensive.  Too bad about the lost revenue from the tax cuts deal.  That really might have helped.

Then, the cherry on top of the crazy-sundae, a story in the New York Daily News entitled  “[Tea Party poster-woman] Christine O’Donnell compares Obama tax cut deal to Pearl Harbor attack and Elizabeth Edwards’ death,” featuring the quote from O’Donnell (that I’m not making up) “Tragedy comes in threes.  Pearl Harbor, Elizabeth Edwards’s passing and Barack Obama’s announcement of extending the tax cuts, which is good, but also extending the unemployment benefits.”  I’m not even going to comment on that except to say that if you read more of the article, you won’t be disappointed, and Elizabeth Edwards’ passing really is a tragedy and my heart goes out to her family.

It’s all completely insane, sure.  But at least it is the brand of insanity I’ve come to expect from our elected leaders.