The Fightin' Dems: "Before going into battle, one must always first prepare a well manicured white flag"

Obama's dangerous debt compromises

By E.J. Dionne Jr.

Thursday, December 2, 2010

As I was passing through security at Boston's Logan International Airport

A hellhole, truly. Why is it that Boston is such a terrible place? Right; one-party Democrat rule in both the city and the state.

on Tuesday night, a TSA worker discovered a penny in one of the bins that had just been screened.

He picked up the coin, turned to a colleague and said with a grim smile: "This is your Obama bonus."

First it was the traveler’s Obama stimulus. That’s trickle-down sarcasm, right there.

Which made me wonder: Is President Obama's strategy of offering preemptive concessions destined to make enemies of his potential friends in the electorate without winning over any of his adversaries?

Why should he treat the Republicans any differently than he treats Iran or North Korea?

The idea of freezing the pay of federal workers could be a sensible part of a larger, long-term deal

Which is to say, Obama needs to keep the most obvious deficit-reducing ideas in his back-pocket to push through the crazy ideologically-driven ones. I get the logic of that argument, but to—in the same breath—accuse Republicans of being mindlessly partisan (wait for it) reeks of hypocrisy.

that would combine spending reductions with tax increases.

Great, so we agree. Republicans want spending reductions. Democrats want tax increases in a recession.

It's an obvious element in any negotiation. But Obama simply threw in the federal workers in exchange for - well, as best I can tell, nothing.

Here’s what he got in exchange [speculation]: Republicans agreed not to demand a 10% reduction in federal workers compensation like they should.

And in the short term, shouldn't jobs and rising incomes be a higher priority than austerity?

Jesus, this isn’t even economics, it’s basic arithmetic. By freezing federal workers pay, budgetary constraints no longer demand lay-offs (or, alternately, allow for increased hiring). The problem that Dionne is, in his wonderous stupidity, skating around is that wage reductions (or, in some cases a decrease in the rate of growth of wages) tends to negatively impact morale, which is why the labor supply tends to be price inelastic. Yes, I do feel bad enough for Dionne to make his own argument for him.

Worse, every signal out of the White House is that it is prepared to cave to Republican demands for a temporary extension of all the Bush tax cuts,

Can I take a few moments to praise the faux-Republicans going along with this laudable measure? Thank you, Olympia Snowe, Susan Collins, and Lisa Murkowski. You’ve given me a reason to believe that you’re not completely hopeless.

including those for millionaires who are in rather less need of additional income than security workers at Logan or nurses at government hospitals.

From each according to his ability, to each according to his need, eh Karl Marx?

The dance toward a capitulation

Also called “The Macarena.”

on the tax cuts was perfectly timed for the release of the fiscal plan put forward by the chairs of the deficit commission, Erskine Bowles and Alan Simpson. Bowles and Simpson are having trouble winning broad commission support for their plan. And in truth, how can anyone take a deficit-reduction proposal seriously when the main order of business in Congress is to make sure we widen the deficit by keeping all of the Bush tax cuts?

People who understand that

1)    Regardless of the highest marginal income tax rate, federal tax revenues have been remarkably consistent at approximately 18.5% of GDP and

2)    Lower taxes markedly reduce the capital financing hurdles to new businesses and business expansions that drive growth and

3)    Economic growth is essential for getting out of this debt.

What we are witnessing here is the political power that comes from the Republican Party's single-minded focus on high-end tax cuts

Well, that and winning massive electoral gains less than a month ago. What was that old Obama mantra? Oh yes. “Elections have consequences.”

and the strategic incoherence of a Democratic Party that is confused and divided - and not getting much help from its president.

Most people are a little dazed just after

Obama seems to have decided that showing how conciliatory he can be is more important than making clear where he stands.

To be fair, this is par for the course for the President. He has made a very successful career out of obfuscating his positions on seemingly simple items. This is largely because whenever he does take a principled stand—Cambridge police, Shirley Sherrod—he ends up with egg on his face. This is largely because his instincts on just about everything are dead wrong.

The administration's strategy is rooted in a fear of what Republicans are willing to do, which only strengthens the GOP's bargaining position.

Is Dionne advocating brinksmanship for the Democrats here, because that’s what it sounds like.

The president figures that congressional Republicans would be quite happy to let taxes on the middle class rise on Jan. 1 if that's the price of continuing to fight for the tax cuts for the rich.

Where is that “rich” line again?

In a game of chicken, Republicans are willing to gamble - even if the economy would take a hit.

So you acknowledge that increased taxes lead to economic stagnation—an surprising revelation from a man advocating increased taxes.

Lacking confidence that Senate Democrats would hold together and force the Republicans to vote to kill the middle-class tax cuts,

Which they wouldn’t, both because they’re too shell-shocked from last month and because they’ve lost the messaging to the Republicans. The American people rightly perceive this skirmish as between those who want to maintain the tax cuts (Republicans) and those who want to increase taxes (Democrats).

Obama is trying to get what he can in exchange for the extension.

He's right to fight for a restoration of unemployment compensation for about 2 million Americans whose benefits have expired,

Malarkey! (Jesus, I’m old.) The reason that we’re hopelessly indebted is because the federal government decided that it was their right and duty—surely as the founders intended—to subsidize moral hazard regardless of the cost. We simply can not continue to pay people to contribute nothing to the economy.

and for other stimulative measures.

Which have proven conclusively to be anything but stimulative.

And, yes, the Senate should ratify the New START treaty with Russia before the end of the year –

Why? Putin can wait for the people who were actually elected to take up this issue.

though what does it say about us as a country when the president has to offer a tax-cut payoff to get a key foreign policy initiative through?

Well, it says to me that E.J. Dionne doesn’t really understand what qualifies as a “key foreign policy initiative.” Is anyone really worried about Russia having a very lot of nuclear weapons versus a lot of nuclear weapons? Plus, Obama has framed this as part of a goal for a nuclear free world, which is just asinine.

As for Bowles and Simpson, they put some good ideas on the table (taxing capital gains at the same rate as other income,

I agree.

for example, and taking a run at cutting military expenditures)

I agree again, but it is telling that the first two things a liberal could come up with that are good ideas to cut the deficit are raising taxes and cutting the military.

and some not-so-good ones (raising the Social Security retirement age,

Sacred Cow #1

capping government expenditures at 21 percent of GDP

Yes, cutting or capping spending by government would be an absolutely batty way to reduce the government’s problem with overspending.

at a time when the population is aging and government will inevitably have to pick up more of our health-care costs).

…To each according to their need.

But the commission now seems a sideshow in a Washington circus where Republicans set the agenda in the main ring.

This is generally to be expected after MASSIVE ELECTORAL LANDSLIDES.

Obama's party is in this end-of-session fix because neither he nor congressional Democrats could agree on what to do about the Bush tax cuts when they held the initiative - and now Democrats have no idea where Obama will go next.

Agreed. The Democrats feared that voting to raise taxes in a massive recession would send voters to the Republican Party in flocks. So they conspired to come up with other ways to send voters to the Republican Party in flocks.

The best gloss on all this is that the president is engaged in a holding action aimed at getting out of this lame-duck period with something to show for his efforts

A “Runner-Up” ribbon?

and a chance to regroup. But he will soon have to decide whether he wants to be a negotiator or a leader.

As though the two are mutually exclusive.

You have to hope

I must do no such thing!

at least that he doesn't want to spend the rest of his term issuing apologies to Mitch McConnell and John Boehner.

As a staunch supporter of drastically limited executive rights, I steadfastly disagree. Anything that diminishes the power of the presidency is okay with me, even if that means bowing to Republican leaders like he does to Saudi Kings or Japanese emperors.