Previously, Economic Populist brought the internet the startling news - Obama to Change Party. That was satire, at least on November 14. Just three weeks later, satire becomes reality. In the past few days, President Obama has traded away $620 billion in tax revenues in order to get a $56 billion, 13 month extension of unemployment benefits. Of course, the lost $620 billion will make any further unemployment benefits, or for that matter, any other productive social programs pipe dreams as the deficit explodes over the next two years. (Image: Banksy)
The Obama deal is a long way from the original position of ending Bush tax cuts for the highest earners and simply extending unemployment benefits, as called for by economic and social circumstances.
It started when President Obama sent his vice president to negotiate with Republican leaders on Capitol Hill. Since the president still has a majority in both chambers of Congress, you might wonder why he's negotiating. The House Democrats are ready to rock to show that they're not to blame for the past two years of inaction. There are enough Democratic Senators with either the inclination or the compromised background to strong arm a majority.
If Obama has forgotten how Chicago politics work, he could certainly find someone from the windy city to show him how it's done. Edward ("fast Eddie") Vrdolyak has some free time on his hands for a consulting gig.
So why did Obama come up with such a ridiculous deal? The outcome was an extension of unemployment in return for a two year continuation of the Bush era tax cuts.
"Lieberman noted that as part of the deal that extends the Bush-era tax rates for all income brackets, Democrats got a 13-month extension of unemployment benefits, a payroll tax cut and extensions of the childcare tax credit and the college tuition tax credit." The Hill, Dec. 7
The finances are ugly if you're a budget balancing president who demands revenue neutral legislation. The Obama deal will cost $500 billion in lost revenues as a result of extending the Bush tax cuts, $120 billion in lost payroll taxes (dropping from 6.2% to 4.2% for employees/employers); and $56 billion to extend unemployment for 13 months.
During the Reagan years, David Stockman and his crew slashed away at taxes in hopes of starving programs like Social Security and Federal discretionary spending on social welfare and health programs for the poor. Obama has joined the cult of Reaganomics. Why is this surprise? He spoke glowingly of Reagan during the primaries.
Here's how bad it is
Here's what Louisiana Senator Mary Landrieu said about the deal. Landrieu is a conservative Southern Democrat with big energy agenda. She represents a very conservative state. Even she knows this deal is a disaster.
"He's enthusiastic about this new arrangement dealing with the Republican caucus that stated, according to their leader, their number one objective is to unseat him. I can understand trying to appeal to independent voters. I do that myself. I think it's very important. But this sort of enthusiasm for caucusing with Republicans – and he didn't even, literally, didn't even speak to the Democratic caucus. Not any of it. Not the liberal group, not the moderate group, not the conservative group," said Landrieu. Senate Democrats Openly Upset with Tax Cut Deal
When Mary Landrieu opposes your strategy on tax cuts for the rich, you know you've gone too far. But Obama is just doing his job, the one he signed up for - an elegant, charming functionary for the ruling class who could fool people just long enough to allow the Bush bailout looting to continue in full force.
The Real Obama - The Real Money Party
If you're still surprised at Obama's betrayal, it's time to expand your horizons and see the facts. He's a made man in The Money Party. For those with an empirically justified cynical attitude, this all makes sense.
Obama was a blank slate when he took up his campaign for change in the primaries. He faced a daunting task. He had to defeat the standard bearer for the Clinton clan, Hillary, the future undiplomatic Secretary of State. How do you do that? Make a deal.
Obama's primary campaign relied on huge anti-Bush sentiment and a well run internet fund raising operation. He also relied on bundling - the gathering of maximum individual contributions by bundlers inside major corporations and industry groups.
When he got the nomination, the gloves came off and the campaign trounced McCain by out raising the Republican presidential campaign on Wall Street and other business sectors.
This allowed more of the utterly cynical, hypocrisy in the form of political advertising crucial to mass fundraising on the internet. Obama rode the anti-Bush public wave. Hope, Change, and Trust Me were the platitudes as the corporate media served as an unpaid advocate for the not-so-long con that Obama planned to change anything.
The Big Payback
Once elected, Obama wasted no time in paying back those who put him in power. He appointed Larry Summers as chief economic architect and NY Fed President Timothy Geithner as Secretary of the Treasury. We really don't need any more narrative to determine how the story comes out. Wall Street and the Big Banks backed up a parade of 16 wheelers to the Treasury and begin unloading more money for more bailouts, credits, etc. Summers and Geithner were the helpers who fixed the regulations, wrote the legislation, and provided directions at the loading lock as your money went out the door.
We're at a special moment right now. Obama's creators and his team have "screwed the pooch" by failing to deliver anything for the people who face economic hardship and personal challenges on an ever increasing basis. His popularity is below 50% on a regular basis. He's not taken seriously by his own party. His foreign policy not only lacks imagination, it's now a joke thanks to Wikileaks.
Obama is a spent leader with no real chance of regaining any popularity. What do to?
Go for the big kill - accept the Bush tax cuts and add a tax cut for Social Security payroll tax. Tell the people it's a necessary deal - "this is a long game, not a short one" Dec. 7. Disregard the huge majority of supporters opposing your plan. You don't care. You're not looking for another term. You've got a new job in sight - not so elder, peace prize wining statesman for … The Carlyle Group, etc.
You've earned it. You have accomplished what no Republican could do. Social Security and every other program that benefits the people are now in real peril. The Grail is yours, celebrate your victory. You just have another couple of years of public fretting, fake humility, and dissembling before the big payday.
And never forget, Mr. President that you don't really matter. You're just a functionary taking orders from:
"The Money Party, a small group of enterprises and individuals who have most of the money in this country. They use that money to make more money. Controlling who gets elected to public office is the key to more money for them and less for us.
It is not about Republicans versus Democrats. The Money Party is an equal opportunity employer. They have no permanent friends or enemies, just permanent interests. Democrats are as welcome as Republicans to this party. It’s all good when you’re on the take and the take is legal. Michael Collins Sept 30, 2007
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Politics as Theater
Nice summary. The whole "compromise" thing is just politics as theater. Obama and the Senate leadership could have (and still can) just pass a sane tax policy using the reconciliation process which requires only 50 votes, bypassing any filibuster. That's how the original Bush tax cuts (and Obama's health care plan) were passed in the first place. There was never any need to compromise beyond getting 50 Senators to agree to something. The compromise meme is just a charade to make it appear as if Obama isn't just brazenly doing what the plutocrats want.
You nailed it
"The compromise meme is just a charade to make it appear as if Obama isn't just brazenly doing what the plutocrats want." Plausible deniability, to use a DC neologism. He's fighting for us, (que laugh track).
A sane tax policy would be a great starting point, incent innovation, job creation, repatriation of capital and assets, clean energy, etc. But time after time, they title bills that do just the opposite of the act the title indicates. These guys are one trick ponies and the trick is real old.
What's amazing of all of the betrayals to date by the Obama administration, this one bothers me the least. Yes, it's true. The one that bothered me the most was financial reform. But we have....on one hand, a group of insane, I mean completely absurd, insane stupidity on tax, economic issues, coming from GOP leadership and on the other hand....continually Democrats are busy with their special interests, which actually will hurt the economy, yes that's true too.
The minute Obama put Diana Farrell in his administration, she worked for the ultimate offshore outsourcer/lobbyist group, McKinsey, I knew we were in big trouble.
Did they do anything to ban Federal Contracts from being offshore outsourced, the banks offshore outsourcing, bringing in H-1Bs even? All we got was a token amendment from Bernie Sanders (because this was all he could get) on H-1B.
Confront China on currency manipulation beyond words? No. Even do anything to streamline the SBA and make it easier so small businesses could get grants, contracts? No, it's a real hydra to figure out that system and the delays are so huge, by the time you land anything, you're foreclosed and homeless.
What bothers me the most is the insane rhetoric coming from GOP leadership. It's so psycho and they don't bat an eyelid while they spew complete lies on what really effects the economy. Like tax cuts for the rich, this is such bullshit. income is taxed NET, not GROSS receipts! Gross receipts come in on schedule C, this is for sole prop, which is when someone is self-employed, owns their own business. Then one writes off their expenses, which INCLUDES employees, their wages ...no one is paying income tax on someone else's wages that they hired.
Just an amazing lie the GOP keep spinning and it never gets fronted. Of all business taxes, I'd say sole proprietorship is the easiest to understand, yet not once on cable noise or in the press have I seen it explained that income comes from NET, not GROSS on a self-employed person.
My top outrage was "Little Timmy"
That was the moment any fantasies of a productive administration were squashed. #2 is the speech justifying the Afghanistan expansion claiming it was about the safety of our grandchildren and those of the Afghan people. But this was offensive in it's own way. It was a complex and comprehensive betrayal masked as a surrender. 'At long last, have they no shame?' Apparently not.
Well, your money party theme sums it up. No matter how many voters move, what kind of "grassroots" activism, nothing seems to break the strangle hold special interests and multinational corporations have on the U.S. government. I think this was the same scenario in 1896 and I'm starting to think we need a new form of government to guarantee this corruption can never happen again.
It appears a huge problem is Congress. You get these "leadership" cronyism hierarchy's plus "committee chairs" and that makes the pathetic idea of "representative" government really in the hands of even fewer.
Revolving door but I'm wondering about the structure itself. It seems parliamentary structures have more balance.
I'm sure this reads as revolutionary but the situation is more and more pathetic, the middle class destroyed.
more tax details plus the estate tax
I think a real betrayal was in other taxes, such as the estate tax. That said, my understanding of the uber rich is they have already sheltered, trusted out their wealth so it doesn't get taxed anyway.
How come we're not seeing the Democrats fight to put in the corporate offshore outsourcing loophole plug in? Ya know, all of those corporate tax incentives to offshore outsource your job...
I mean what are these people thinkin' both sides? They simply are not focused on what is good for the nation, what will get people back to work.
Mark Zandi's multiplier estimates for "compromise"
He's got a host of tables on his analysis.
I haven't checked the validity of the numbers but Zandi is a number cruncher, as best as current models give.
I wish he would throw together real proposals and show they could be doing a lot better vs. this "either/or" stuff.
Obama's Deal Just Bombed in the House, voted down
The House just rejected the deal.
Now, the question is will they fight for what would really do something to create jobs.
Just yesterday they passed the Dream act, which I'm sorry, what a screwed up bill that is and it's about their illegal immigrant constituents. This is coming from someone who knows there are people who need to be legalized as their rhetoric proclaims, it's the actual bill I'm referring to.
If they had any sense, they would fight to get that corporate tax incentive loophole to offshore outsource jobs closed, as an amendment. They already passed this once in the House. Hell tack on the China as currency manipulator bill on there, I believe almost every single Congress representative, both houses, has co-sponsored a version of that bill.
Well, it will just make it easier for him to convert to
Republican officially. I have nothing against Obama personally and I think many of the attacks on his birth and religious beliefs have been just awful. But it's necessary to say that as a public leader, he is absolutely without any ethical foundation. His campaign was a fraud, pure and simple. And he's delivered like a champ for all the wrong people. He will be remembered as one of our worst presidents, deservedly so.
American Progress, cost per job
I don't see a reference to this analysis in your post, so check out this one by Michael Linden. It's pretty astounding, although earlier I did an analysis showing tax cuts for the rich do not create jobs, tax cuts aren't creating jobs generally.
I need to do one on multipliers, their assumptions and what the statistics end up telling us. They diverge, if one hasn't noticed and multipliers have gotten more than one policy maker in trouble (hint, globalization rears it's ugly head once more!).
Interesting article with some
Interesting article with some good analysis:
But he buys into the payroll tax cut. What folly. Extend unemployment - $5 bil - and dump the highest income bracket tax cuts.
We can see where this is headed - big crisis in 2012 we can't afford anything! Fear mongering will dominate the election, all created by this lousy, back stabbing deal from President Change. What a burden to carry historically. Obama will be around to her the unanimous condemnation.
Edit: Here's a great opening line, "The recently announced tax framework hammered out by President Barack Obama and Republicans in Congress contains some rather detestable elements." Sweet!
payroll tax cut
They need to make it progressive, this is actually one of the huge reasons for the underground labor economy, i.e. cash under the table. To hire someone is very expensive, between FICA and workman's comp. I think they need to somehow dump that onto multinationals....say if they offshore, make them pay more instead of less.
I don't have an answer just it is really expensive to hire someone.
How utterly revolutionary of you;) This is like the deficit problem and the NYT deficit reduction interactive program. The answers are out there, amongst the people, but the fools running the place don't care.