White House Blogger Call on Tax Deal

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    I just got off a White House blogger conference call on the tax cut/unemployment insurance deal announced a little while ago by President Obama.  A few key points:

    *There’s stuff to like and to dislike in this deal.

    *The #1 priority is jobs and not seeing taxes go up on working Americans, especially during tough economic times.

    *The White House is very happy on the 13-month full extension in unemployment insurance.

    *The White House is also very happy with the 2% payroll tax cut for workers.

    *Combined, these offer the most potent “bang for the buck” in terms of jobs and growth you can get, will create more than 600,000 jobs next year, offer $120 billion in “tax relief”.

    *The White House strongly objects/does not like extending the Bush Tax cuts for the wealthiest Americans (top 2% or so), also does NOT like the regressive adjustment to the estate tax.

    *There are also other good things in there, such as a $1,000 child tax credit, business tax cuts to encourage investment and R&D, etc.

    *The bottom line is that this was a compromise, neither side got everything it wanted, but it’s all about jobs and preventing a tax increase on the working and middle class in the midst of a fragile economic recovery.

    *Also, the President believes this was a “very good deal” for jobs and for growing the economy. He feels that he got as much at this time as was possible, given the political realities. This was URGENT, we couldn’t wait and risk the economic recovery.

    So, what do you all think?  Have at it in the comments section…

    • If I actually thought there was any faith in a government estimate on how many jobs it would create, I probably wouldn’t be quite so pessimistic.  But let’s face it — that’s been about as dismal forecasting as could be had the past four years.  (And this is a non-partisan comment — both sides seem to think the only way to win over the American people is to keep telling them that everything is fine and getting better.)

      I’m already on the record as saying I wasn’t thrilled with the idea of taking money out of anyone’s pockets, although I would have liked to have used the leverage of giving money to the wealthiest to get something more generous in return.

      Also, I would have liked to have seen a deal where in exchange for the tax cuts, we get something like passage of DADT.  Why?  Because it was pretty clear that we were going to cave on tax cuts, but passing DADT in exchange for their beloved tax cuts would have pitted the establishment/business Republicans against activist/social conservative Republicans.  It would have been interesting to see who won — not only in the immediate vote, but in the election cycles to come.  If you can’t get a real win for your own party, after all, why not get something that weakens the other side?  (Yes, that’s cynical.)

      And while I’m not, at this one and only one moment in time, less concerned about the deficit than I ever have been (and I’m usually pretty concerned) — how on earth does this shrink the government or pay down the debt????????????????

    • libra

      The unemployment benefits extension is for 13 months; tax cuts for the super rich extension is fr 24 months. That leaves a 9 months hole, where Obama won’t have anything left to bargain with, once the unemployment expires. OTOH, Repubs will come back for permanent extension and use the “taxes are about to go up!!!” as an election time hammer.

      All of it (including the cave in on the estate taxes) will cost boatloads of money, giving the Repubs an ostensible reason to become “fiscally responsible” again. Repubs being Repubs, it’ll translate into ever more cuts of every program which helps the poor and the middle class, beginning January. And now that they got most of what they wanted (and more than they ought to have had a chance of getting), they’ll be quite insistent, with nothing to lose.

      We should have let all the tax cuts expire and called their bluff on the benefits.

    • . . . President Obama needs to announce he’s not running in 2012 so we can start the search for a real Democrat and send his capitulating ass back to Hawaii.

      And, no, it’s not the tax deal.  It’s EVERY GODDAM THING.  The Republicans have beat him like a borrowed mule.  His backbone looks like a pretzel.  He has caved on EVERY SINGLE ISSUE.

      I’m 66.  When my Granddaddy prayed, I couldn’t tell if he was praying to Jesus or to FDR.  I’m a lifelong Democrat.  Donated money to Obama that I didn’t have.  And this is what I get?  Shit, I miss George Bush.  At least with him you knew he was going to screw us.

    • KathyinBlacksburg

      The GOP played him, again!  And they got everything they wanted. He sold us into more debt so the rich can get ridiculously richer.  And his payroll tax cut will (like the last one) never be noticed.  So O will get no credit.  We will sink deeper into deficit territory.  The cave on inheritance tax is obscene.  And the GOP will win next time.

    • blue bronc

      Repubs got all they wanted again.

      And, with the reduction of SS payroll income the Repubs will use that as an excuse to destroy Social Security. “See there is not enough coming in to sustain it. Time to kill grandma by taking away Medicare and make grandpa work until he dies on the job.”

    • Quizzical

      There was an article on Huffington Post today about how the Wall Street banks and investment firms were planning whether to pay their bonuses early to avoid the risk that the tax rates would go up.  Sheesh.  The government paid out, literally, trillions of dollars to bail out Wall Street and big corporations, and now when they are raking in money again, the government will not raise their taxes even a little.  How can we be happy with that?

      The 13 months authorization of UI was just throwing a bone to Obama to let him save face.  It’s spin.  They would have re-authorized it anyway.  

      Does anyone think that the UI and the 2% payroll tax cut are enough stimulus to get us out of this economic slump?  I don’t.  Good luck in getting anything more from a Republican House after the New Year.  

    • that the Repubs wanted but that they didn’t get, and one thing that they got that they didn’t want.  Except for the extension of unemployment, of course.  But other than that, this was not a compromise.  It was a battering ram.  

      The next worst part is, we’re still not going to get START or DADT or anything else done.  

      If the Dems had simply stood up and said, “we’re not going to stop, we’re going to fight for the American middle class,” and the tax cuts were to have expired, then the Dems would win.  Enough Repubs would’ve caved as long as we kept repeating that they don’t give a damn about you and me, they only care about the billionaires.

      There is no way that anyone could truthfully say this was the best deal Obama could get.  The only way that would be true would be if the Repubs had some devastating secret information about Obama that they threatened to reveal unless he caved.

    • cvllelaw

      The cut in payroll taxes is being sold as a way to encourage employers to hire more.  But the cut is to the FICA tax paid by employees, not employers.  It will not encourage any employer to hire any additional worker.  Not one.  (Believe me — if it was on the employer’s side, this employer would be jumping for joy, if only because of my own short-term interests…)

      If you want to talk about the FICA tax cut as a stimulus that increases consumption, that is at least economically valid.  But don’t try to sell it as inducing employers to hire more, because it won’t do that.

      Actually, this bill moves along two long-term Republican objectives while giving Democrats only some temporary boosts.

      The two long-term objectives are to defund Social Security (leading to more calls for privatization) and to eliminate or substantially reduce the estate tax.  The Social Security privatization effort gets comfort when the Social Security Trust Fund is inadequately funded, because it is then easier for the right-wing whackos to say, “See?  Social Security will never be able to fulfill its promise.”  This bill, if passed, will reduce by 15% the funds going into Social Security (right now FICA is 12.4%, between employer and employee shares, and to cut that by 2% amounts to about a 15% reduction in the amount that will fund Social Security).  

      And for the estate tax?  In 2009, only estates of a value of greater than $3.5 million were subject to federal estate tax, with a top rate of 45%.  Now, the limit will be $5 million, with a top rate of 35%.  And as I understand the proposal, that will NOT be a temporary tax cut, but a permanent one.  (Even if it is not being formulated as a temporary tax cut, you know that the limit will never be cut, and it is highly unlikely that the marginal rate will ever return to 45% either.)

      If I were in the Senate, I’d be joining Bernie Sanders in his filibuster, for one reason — it is unconscionable for the President to have made this deal without consulting the Democratic Members of Congress and Senators.  I’d vote against it if only to say to President Obama, “Stop taking us for granted.”  

      And remember, it is estimated that by 2016, or perhaps 2017, Social Security payouts will exceed FICA revenues.

    • Jim Webb Dem

      the last week or so of hand wringing & Dem-bashing practiced at this website … whether that be Brian Moran, Creigh Deeds,  Jim Webb … or MY President…

      It’s pretty clear … Democrats … Progressive Dems … Good People …

      THEY ARE THEIR OWN WORST ENEMIES. They divide amongst themselves and hence are more easily conquered by the barbarians on the other side.

      After reviewing this Presidential announcement, I couldn’t be happier that Barrack Obama is my President since his heart is in the right place. He compromised … so what!?!  It was the right thing to do at this moment.

      What I detect (perhaps it’s my clinging to HOPE) … is that Barrack Obama is through with this Bi-Partisan …. mamby-pamby crap …. and is focusing on results… both practical & political.

      As appropriate the Battle lines and agenda will be drawn in January at the State or the Union address …. I expect Obama will come out swinging… it will be the beginning of the 2012 campaign(s),

      My message to the Blue Virginia crowd is ….. quit bitching and take some comfort in the fact that we have a thoughtful pragmatist at the helm of this struggling country ..

      How soon we have forgetten about the good old Dubya-days…. where bashing the Great Decider was such easy sport.

    • robsmithiii

      That calls for him to be primaried in 2012 are squeamish and that it actually occurring successfully means one thing: President Palin.  In the immediate timespan, compromise gets results.  The sad thing is that it will still lead to Brutus-style backstabbing from both sides of the aisle when the dust settles.  Business as usual in Washington, DC.   Ideological differences aside, it’s embarrassing that divergent needs aren’t compromised on and instead we have these rhetoric spats at each other via the media channels that we indict for those very squabbles.  And as a reference, I’m now hearing calls for the subsidization of state-run media/journalism to even the balance of bias.  How’s that for responsibility?

      I applaud the President for the guts to take the blame upon his shoulders so that we can at least have some progress instead of tax increases for all castes and a loss of the safety net.  What a thankless position to be in.  Next time anyone wants to call him a sellout, consider that.

      We have a lot of problems to fix in this country…and we aren’t fixing them.  At least the President is able to hold his breath and make the decision that will benefit us whether we acknowledge it or not.

    • Steve Vaughan

      I understand why Obama needed to make a deal. Otherwise Democrats were going to take it on the chin for what Republicans would call and the media would parrot as, a “huge tax increase” in the middle of the recession.

      However, at the very least, he should have gotten a deal that decoupled the middle class tax cuts, making them permanent, from the upper class tax cut, which could have been renewed for 2  years. I can’t believe that with some tough negotiating, you couldn’t have gotten this out of the Republicans.

    • MorrisMeyer

      There has been a complete lack of framing on the Bush tax cut extension – which are roughly equivalent to the ARRA. (4 trillion over ten years / $800B over two years = cost of the recovery act)

      To spend that money as tax cuts rather than stimulus should have been the compromise if the Obama administration had the sense to start off negotiations on our side of the field.

      The Republicans want to make the national debate on tax cuts and deficits – and we have the choice – should we ever wish to change the messaging (bully pulpit) to jobs.

      We could start out by saying that a jobs program (namely ARRA) has been responsible for saving or creating 3 million jobs.  The unemployment extension by the way is about 700,000 jobs per economists today.  And based on that starting point – if we have to give in to a middle class tax break that becomes a position to compromise to.

      We are in this “do something now” trap with the expiration in the Lame Duck Session by our own doing.  The Obama administration and the Democrats chose to defer the debate until after the election – knowing that the tax cut and unemployment expirations debate would happen after a shellacking that everybody saw coming from months away.

      The President doesn’t need a primary, but he needs to have the good sense to be clear about his convictions, set the framing (different than tone) of the debate to our advantage and be tough enough with the Republicans that the independents can clearly see him standing for something.

      He is falling back into the trap of the last two years of not animating policy.  Closed door meetings with the GOP and a two minute “here’s what we came up with” does NOTHING to set the framing of the debate with the American public.  We don’t need 11-dimensional chess – we need a President who can be clear and square with the American people.  

    • I appreciated Greg Sargeant’s comments in the WaPo. In many ways, it isn’t (for me) the deal that is so disappointing as the continual feeling that Obama cannot negotiate without giving away the store.

      Other than my comments above, I’m withholding final judgement until I see what happens with START and the repeal of DADT. Passing those in the next two weeks would do wonders for my mood.  If this “compromise” results in more absolute partisanship from Republicans, then…..well…..

      Well, it’s good to live in VA where our next big election runs are all very local.