interesting analysis of tax compromise

[MBS]

http://www.nytimes.com/2010/12/08/business/economy/08leonhardt.html?hp

A year ago, President Obama and the Democrats made the mistake of assuming that an economic recovery was under way. This week’s deal to extend the Bush tax cuts shows that the White House’s top priority is avoiding the same mistake again — even if it has to upset many fellow Democrats in the process.

Mr. Obama effectively traded tax cuts for the affluent, which Republicans were demanding, for a second stimulus bill that seemed improbable a few weeks ago. . . .For the White House, the deal represents a clear shift in policy focus. Mr. Obama and Democrats spent much of the last year pursuing long-term goals like a health care overhaul and financial regulation, while hoping the economic recovery would continue. But with the recovery faltering and Republicans retaking the House, the administration is turning back to short-term job creation.

Congressional Democrats have reacted with a mix of wariness and anger, and some said Mr. Obama should have put up a fight on the high-end tax cuts. Yet once the Democrats bungled this issue — failing to deal with it before the midterm elections — their choices were extremely limited. If they stood firm on the high-end tax cuts and Republicans stood firm as well, all of the Bush tax cuts, not just those on income above $250,000, would have expired Dec. 31. The economy would surely have suffered as a result, and a bad economy is rarely good for the party that holds the White House.
. . . .

. . . The problem is that raising the deficit — be it through high-end tax cuts or a new stimulus program — is a lot easier than cutting it. Strange as it may sound, some of the only fiscal conservatives in Washington this week have been liberals who would be willing to let everyone’s taxes rise. And they seem unlikely to win on this issue.

[trotsky]

1. "The economy would surely have suffered as a result"

It would have? Do we know this? The economy seemed to do pretty well under those tax rates while Clinton was president. Seems like everybody buys into the propaganda that taxes always hurt the economy.

[MBS]

4. For the record, I am furious about extending tax cuts for the wealthy

My anger had become so PHYSICAL earlier last week that I had to take a very, very long walk to try to (not completely successfully) calm down. I've never been angrier about a political situation in my life. Needless to say, I am beyond livid at the Republicans, whose behavior I consider unspeakable and deeply anti-patriotic: in placing their partisan whims so shamelessly above the good of the country, they have displayed their colors as never before. And I am frustrated beyond belief that the Dems did not/could not (whatever) stop this.

I posted the editorial (which, by the way, was in the business section, which should tell you something about where the author is coming from) because it offered an interesting perspective, and because it also highlighted something else which I consider to be true:
-namely, that the Dems (House? Senate? White House? all of the above?) made a huge strategic mistake in not bringing the tax cut issue to a vote before the Nov elections (which, to my mind, would have helped their electoral chances had they done so).
-and, given the fact of the vote delay -and no matter where the fault lies for that vote delay-- and the political and economic context of the current situation, Obama really is trapped in terms of his options NOW.

While he was far from lovable at his press conference (a Talking Head --Jonathan Alter???_noted that, in addition to his unfortunate defensiveness and testiness about us fellow Dems -- already discussed ad nauseam on DU -- it was also a shame that humor was completely lacking. Alter (?) said, "He needed to be bigger"), I have to say that Pres. Obama's analysis was right on the facts of the situation. THIS CURRENT situation. Right now.

Obama was right in noting that it's unfair to make the hostages (the struggling middle class and especially the unemployed) pay for the hostage situation. As someone who is currently unemployed, believe me,a denial of benefits at this point would really finish me off.

I will even go so far as to suggest that Obama's maneuver was even shrewd. Given THIS situation. Right now. And, given THIS situation, chances for Dems (including Obama) in 2012 will ultimately be helped by this latest chess-maneuver.
one account of political effects (yes, Andrew Sullivan is more conservative than me, but I was reassured by his analysis-- hopefully apt Roadrunner cartoon at the url, to)
http://andrewsullivan.theatlantic.com/the_daily_dish/2010/12/obama-president-mcconnell-sucker.html

Krugman has gone from "Let's Not Make A Deal" to "better than what I expected." The response from the far-right has also been illuminating. Drudge rushed to declare Obama's payroll tax cut as a Republican idea. Hinderaker below insists "Obama has admitted that the Republicans were right all along." Notice something about all of this? They all now realize that Obama has been a little shrewder than they took him to be.

. . . .
And notice that Obama has secured - with Republican backing - a big new stimulus that will almost certainly goose growth and lower unemployment as he moves toward re-election. If growth accelerates, none of the current political jockeying and Halperin-style hyper-ventilation will matter. Obama will benefit - thanks, in part, to Republican dogma. So here's something the liberal base can chew on if they need some grist: how cool is it that Mitch McConnell just made Barack Obama's re-election more likely? Bet you didn't see that one coming, did you?

The mix of policies is also shrewd from a strategic point of view.

At some point, I suspect, the Congress will have to decide between extending the payroll tax holiday or keeping the Bush tax cuts for millionaires - the double-track of the current Keynesian deal. I think Obama wins on that one, and has set up the kind of future choice the GOP really doesn't want to make. What he has done, in other words, is avoid an all-out fight over short-term taxes and spending now in the wake of a big GOP victory in order to set up the real debate about long-term taxes and spending over the next two years, leading into a pivotal 2012 election that could set the fiscal and political direction of this country for decades, an election in which he may well have much more of an advantage than he does now.

This is the difference between tactics and strategy. The GOP has won again on tactics, but keeps losing on strategy. More broadly, as this sinks in, Obama's ownership of this deal will help restore the sense that he is in command of events. . .

[RandomThoughts]

2. The argument on taxes is a surface argument.

The real argument is deeper then that.

The discussion for the top brackets is based on it being their money. A surface level discussion. If you go deeper on that discussion, and ask them to defend why it is their money they can't.

So basically people are discussing things on a conscious level without knowing why they do it. They don't know why they don't like taxes, nor why they really argue that taxation is taking from them.

First level if you have money it is yours.
Next level how can a person that has more then they could have earned claim to have that money.

If you stay on the outer level you can easily say that taxation is theft.
If you think about it, you can see taxation is a correction to theft.



So the concept of not being a part of something you think is wrong could be applied to government (against taxation), or could be applied to those that pay to keep as much as they can for themselves(for taxation).

So which is correct, how would you know, you have to think and feel on it?

I do agree the ways government spends money should be transparent and done to represent the people, and there are issues there also, but if the few billionaires were correcting things, why would people be kicked out of their houses, and made to work three jobs at minimum wage.


They are playing the movie Taps on TV, great movie, however they changed the coloring to make 'red' look 'orange' I find that humorous. There are errors in that movie, but in metaphor it is a really good movie, however what if the school is where you actually are, and they are actually trying to defend you? See how it changes based on perspective.

[Tunkamerica]

3. you make me want to respond to every one of your comments

but i never know how to start.