Current Compromise on Tax Cuts

[NorthSideSox72]

In his press conference today, a clearly frustrated Obama defended himself against a final question about how this would be viewed by folks on the left.

 

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That speech was really interesting, and I actually recommend anyone - supporter or hater - watch it. It to me, was a perfect microcosm of both his strengths and weaknesses thus far as a President.

 

In the strength column, he's been good so far at doing what a very good executive should do - compromise to get things done. And its tough for people to see the success in that because a significant portion of the public wants absolutes, so he's trying to illustrate why that doesn't work. He is also showing off his intellect, and his ability to see the big picture, and his patience as well - all things he does far better than his predecessor.

 

But then there are the weaknesses. The stammering for one thing, that's just annoying. But more seriously, under his banner of reasonableness, he's struggling to find a theme that the American people can believe in. Directly felt results and emotional charge - those are what is missing, and he's not getting those. Part of that is the fault of some poor policy decisions (Congress AND the Prez), part is the s***ty economy he was handed, but part is also his inability to hone in on some individual items and really get them done AND show the people how and why it was done in a way they can understand. He comes off as too elitest, and I hate to say it, but too intellectual for his own good.

 

 

In the weakness column, well first, there is the stammering. But more importantly,

[Balta1701]

I forgot, how was it the Soviet Union collapsed again? Wasn't it something about spending themselves into oblivion and not having the cashflow to support it?

Tex, I'm having difficulty figuring out if you're just going for Kaperbole here or if you're actually forcing yourself to ignore challenges to the slogans. If it's the former it's not worth me continuing to reply to these.

[Texsox]

Tex, I'm having difficulty figuring out if you're just going for Kaperbole here or if you're actually forcing yourself to ignore challenges to the slogans. If it's the former it's not worth me continuing to reply to these.

 

 

Debt will destroy this country. I have consistently said that for years. Cut income, increase spending, year after year. What does it say when we have to borrow so much to maintain this country? Why not borrow an extra few trillion and give every voter a nice gift?

[HuskyCaucasian]

In his press conference today, a clearly frustrated Obama defended himself against a final question about how this would be viewed by folks on the left.

 

Visit msnbc.com for breaking news, world news, and news about the economy

He really whacked the Reps in the beginning there. Basically said "ok, you just added $700b to the deficit, now what major, very popular, programs are you going to cut? You've just become part of the problem you are fighting against."

 

On thing I have liked form Obama from the beginning is he is willing to compromise.

[Jenksismyhero]

He really whacked the Reps in the beginning there. Basically said "ok, you just added $700b to the deficit, now what major, very popular, programs are you going to cut? You've just become part of the problem you are fighting against."

 

On thing I have liked form Obama from the beginning is he is willing to compromise.

 

What I don't understand is why he caved in here. I'm against 90% of what Obama wants to do, but there's a point where this Republican party is just retarded. Case in point is the idea that rich people paying a slightly higher tax is going to make things worse. That's a joke. They can afford a little more.

 

He had all the cards in this fight. Worst case nothing gets done. Unemployment benefits end and the tax cuts end too. You know who people get mad at? The GOP. 95% of the voting public just got their taxes increased because the Republicans were protecting a small minority. Benefits got lost because of the GOP. The people who are hurt by that move aren't the rich. Even for the moronic democratic party, this would have been an EASY message to communicate.

 

Best case, Obama gets what he wants - unemployment benefits remain and tax cuts are extended for everyone not making a middle class living. The government doesn't take another deficit hit. Win-win-win.

 

Instead, he's a coward with no principles he's willing to stick with. This is my biggest issue with Obama. I'd have more respect for the guy if he told the idiots in Washington (both sides) to shove it. The best leaders don't care who they piss off, they do what they think is right. And yeah, that video is nice to show that he can say it, but let's actually see him DO it.

Edited December 8, 2010 by Jenksismybitch

[Balta1701]

What I don't understand is why he caved in here. I'm against 90% of what Obama wants to do, but there's a point where this Republican party is just retarded. Case in point is the idea that rich people paying a slightly higher tax is going to make things worse. That's a joke. They can afford a little more.

 

He had all the cards in this fight. Worst case nothing gets done. Unemployment benefits end and the tax cuts end too. You know who people get mad at? The GOP. 95% of the voting public just got their taxes increased because the Republicans were protecting a small minority. Benefits got lost because of the GOP. The people who are hurt by that move aren't the rich. Even for the moronic democratic party, this would have been an EASY message to communicate.

 

Best case, Obama gets what he wants - unemployment benefits remain and tax cuts are extended for everyone not making a middle class living. The government doesn't take another deficit hit. Win-win-win.

 

Instead, he's a coward with no principles he's willing to stick with. This is my biggest issue with Obama. I'd have more respect for the guy if he told the idiots in Washington (both sides) to shove it. The best leaders don't care who they piss off, they do what they think is right. And yeah, that video is nice to show that he can say it, but let's actually see him DO it.

The other way to look at this deal is...it's about $450 billion in stimulus dollars that weren't there last year. This is, by conservative estimates, on the order of 1.8-2 million jobs worth of spending, and it's going to push hard away from the deflation risk that was becoming more and more creepingly obvious.

 

That's why, if I were in Congress, I'd be inclined to vote for this package. I'd definitely try to extract my pound of flesh, focusing on the estate tax most likely, but the difference between passing this package and not passing this package could easily be his re-election, through the stimulus properties.

 

Getting that stimulus right now is probably worth tolerating wasting a couple hundred billion on Republican tax cuts.

[Jenksismyhero]

The other way to look at this deal is...it's about $450 billion in stimulus dollars that weren't there last year. This is, by conservative estimates, on the order of 1.8-2 million jobs worth of spending, and it's going to push hard away from the deflation risk that was becoming more and more creepingly obvious.

 

That's why, if I were in Congress, I'd be inclined to vote for this package. I'd definitely try to extract my pound of flesh, focusing on the estate tax most likely, but the difference between passing this package and not passing this package could easily be his re-election, through the stimulus properties.

 

Getting that stimulus right now is probably worth tolerating wasting a couple hundred billion on Republican tax cuts.

 

 

Wait, what? 1.8-2 million jobs? How do you figure? Or is this one of those "if we spend 15 trillion we can save a million jobs, which if you think about it, IS creating jobs" arguments?

[Balta1701]

Wait, what? 1.8-2 million jobs? How do you figure? Or is this one of those "if we spend 15 trillion we can save a million jobs, which if you think about it, IS creating jobs" arguments?

This is one of those jobs saved by stimulus arguments, yes. The CBO estimate formula says that roughly 1% GDP growth = 1 million new jobs. The US GDP is currently just over $14 trillion, so 1% growth = $150 billion or so. The $308 billion in payroll tax cuts and lower/middle class tax cuts over the first 2 years year produces approximately 2 million jobs/year using the simplified formula and the Moody's estimated multiplier for lower/middle class tax cuts of 1.03. The upper class tax cuts and business credits produce a small additional increase, but the multiplier for those is much lower, especially now since they're already flush with cash. The payroll tax break has a stronger effect than the extension of the normal tax cuts because of how regressive the payroll tax is, and unemployment benefits have a huge multiplier because, as 2k5 noted, they're 100% certain to be spent. Within reason, that pushes to ~ 2 million jobs this year.

[NorthSideSox72]

What I don't understand is why he caved in here. I'm against 90% of what Obama wants to do, but there's a point where this Republican party is just retarded. Case in point is the idea that rich people paying a slightly higher tax is going to make things worse. That's a joke. They can afford a little more.

 

He had all the cards in this fight. Worst case nothing gets done. Unemployment benefits end and the tax cuts end too. You know who people get mad at? The GOP. 95% of the voting public just got their taxes increased because the Republicans were protecting a small minority. Benefits got lost because of the GOP. The people who are hurt by that move aren't the rich. Even for the moronic democratic party, this would have been an EASY message to communicate.

 

Best case, Obama gets what he wants - unemployment benefits remain and tax cuts are extended for everyone not making a middle class living. The government doesn't take another deficit hit. Win-win-win.

 

Instead, he's a coward with no principles he's willing to stick with. This is my biggest issue with Obama. I'd have more respect for the guy if he told the idiots in Washington (both sides) to shove it. The best leaders don't care who they piss off, they do what they think is right. And yeah, that video is nice to show that he can say it, but let's actually see him DO it.

 

 

I sort of agree, but it should be noted, he's doing a bit of what you are asking for by compromising - he's going against the right AND left, to try to get something, anything, done. I think a substantial part of the problems his administration has had thus far has been Congress, not him. Same can be said to a certain extent of Bush as well. Congress is the common problem here.

 

What he said in the video is pretty much exactly what he's done and is doing.

 

As far as Obama's own self-made mistakes, there are plenty of course. The biggest so far, IMO, are three things: deciding this economy was the time to re-vamp health care, targeting the stimulus far too short term (only partially him), and not following up TARP with massive executive changes to regulatory agencies.

 

[Balta1701]

deciding this economy was the time to re-vamp health care

I hate to be the one to derail the thread, but I have to. This reminds me a ton of the classic "Obama should have focused more on the economy and not on health care" line that we kept hearing before the election. What else should he have done instead? I can give you procedural quibbles with how it happened, but what else could he have gotten done instead? Getting more "stimulus" out of Congress certainly seems to me to have been darn near impossible. Leaving the health care system as-is was a horrible move.

[NorthSideSox72]

I hate to be the one to derail the thread, but I have to. This reminds me a ton of the classic "Obama should have focused more on the economy and not on health care" line that we kept hearing before the election. What else should he have done instead? I can give you procedural quibbles with how it happened, but what else could he have gotten done instead? Getting more "stimulus" out of Congress certainly seems to me to have been darn near impossible. Leaving the health care system as-is was a horrible move.

I don't disagree that the health care system needed help - I just contend that the economy needed other measures more AND that the health care system could have been fixed better for far less money.

 

[Balta1701]

I don't disagree that the health care system needed help - I just contend that the economy needed other measures more AND that the health care system could have been fixed better for far less money.

I can agree with you that the economy could have used other measures...but how many of them would have gotten past the Senate?

 

If you want to argue where the mistake was, it was in ignoring the advice of some people to shoot for the moon in the Stimulus package and start off by asking for $1.3 trillion, so that it was $1.1 trillion or $1 trillion when Snowe and Collins pared it back. Once they spent their chance, that was it, and you know that. We've gotten "stimulus" type items through the Senate since then...a couple short unemployment extensions and the small business bill, and those had to be paid for by cutting food stamps.

[Jenksismyhero]

I can agree with you that the economy could have used other measures...but how many of them would have gotten past the Senate?

 

If you want to argue where the mistake was, it was in ignoring the advice of some people to shoot for the moon in the Stimulus package and start off by asking for $1.3 trillion, so that it was $1.1 trillion or $1 trillion when Snowe and Collins pared it back. Once they spent their chance, that was it, and you know that. We've gotten "stimulus" type items through the Senate since then...a couple short unemployment extensions and the small business bill, and those had to be paid for by cutting food stamps.

 

Shocker that a liberal thinks the answer is throwing more money at the problem. We should have just given the 15 million unemployed in this country a 40k a year salary. That would have solved the unemployment problem.

[StrangeSox]

Shocker that a liberal thinks the answer is throwing more money at the problem. We should have just given the 15 million unemployed in this country a 40k a year salary. That would have solved the unemployment problem.

 

Giving money to the wealthy via tax cuts so they can be ever so generous by creating jobs to fill non-existent demand isn't a solution, but that's been GOP policy for decades now.

[Jenksismyhero]

Giving money to the wealthy via tax cuts so they can be ever so generous by creating jobs to fill non-existent demand isn't a solution, but that's been GOP policy for decades now.

 

Yap. And I've said that's a pretty stupid position too.

[StrangeSox]

Tax cuts don't work, spending doesn't work.

 

So, what, we just sit and wait until the free market gets around to creating enough jobs so people don't starve and lose their houses?

[Balta1701]

Shocker that a liberal thinks the answer is throwing more money at the problem. We should have just given the 15 million unemployed in this country a 40k a year salary. That would have solved the unemployment problem.

Actually, it kinda would have. Can't do it forever, but you're guaranteed that money will be spent.

[Jenksismyhero]

Tax cuts don't work, spending doesn't work.

 

So, what, we just sit and wait until the free market gets around to creating enough jobs so people don't starve and lose their houses?

 

A bit much no?

 

Tax cuts, when used properly (i.e., not for minimal income tax increases), DO work. Spending, on the right things (i.e., not wasting 50 billion on stupid infrastructure projects that DO NOTHING TO CREATE JOBS), DOES work.

 

The problem is this idiot in charge and the idiots in Congress don't care if it works. They care about the headline that they can get.

[Jenksismyhero]

Actually, it kinda would have. Can't do it forever, but you're guaranteed that money will be spent.

 

Of course it would have! Like I said, lets spend 10 trillion and just pay everyone a salary. Unemployment solved! We didn't FIX any of the economic problems we have, but we sure created jobs didn't we?

[Balta1701]

Of course it would have! Like I said, lets spend 10 trillion and just pay everyone a salary. Unemployment solved! We didn't FIX any of the economic problems we have, but we sure created jobs didn't we?

No, the output gap is not $10 trillion in scale, it's still a couple trillion in scale.

 

And considering we went from losing hundreds of thousands of jobs per month to at least steady, yeah, I'd say we fixed a good chunk of the economic problems.

[Balta1701]

Why the Democrats in Congress don't like this deal in 1 graph:

 

 

In case you can't read the caption; the balls represent the size of the tax cut given to each income level; low incomes at the top, high incomes at the bottom. The 3 columns are: Democratic plan, Republican plan, Obama compromise.

[NorthSideSox72]

Why the Democrats in Congress don't like this deal in 1 graph:

 

 

In case you can't read the caption; the balls represent the size of the tax cut given to each income level; low incomes at the top, high incomes at the bottom. The 3 columns are: Democratic plan, Republican plan, Obama compromise.

The Obama compromise is actually a bigger tax break to everyone below 200k than either of the others. But above that, its actually just a bloated version of the GOP plan.

 

[NorthSideSox72]

Dems show their ferociously cute balls off by rejecting the Obama tax compromise via voice vote in the house - preventing it from going to the floor as-is.

 

[Rex Kickass]

Dems show their ferociously cute balls off by rejecting the Obama tax compromise via voice vote in the house - preventing it from going to the floor as-is.

 

Here's something Obama should have learned from previous administrations. You can't assume that the Democrats will fall in line lockstep to anything its leadership asks. Especially if you decide to try to force through a "compromise" without inviting Democratic Congressional leadership. In the eyes of the Dem house caucus it is utterly disrespectful, especially given all the heavy lifting they've done over the past two years to Obama's legislative agenda. They feel punished for doing everything Obama has asked of them in the last two years, and if I was in the house leadership, I could see why I would want to do this too.

 

This will pass, but the House Dems need their fingerprints on some of this too.

[Balta1701]

This will pass, but the House Dems need their fingerprints on some of this too.

The problem is, they're rapidly running into recess deadlines. They need to bring along a large portion of their caucus within a week, without losing the Senate Republicans.