Obama caves on tax breaks for the American aristocracy

Well, it looks as though the Obama administration has made a deal with the Republicans to extend the Bush tax breaks for the super-wealthy for two years (which will undoubtedly lead to more) in exchange for an additional thirteen months of unemployment benefits for jobless Americans, and an agreement to renew the Bush tax cuts for the middle class. There’s more, like a cut in the estate tax, but that’s the gist of it. Obama, in short, has given the Republicans everything that they’ve asked for, and gotten very little in return. Here, if you can stand to watch it, is a thoroughly beaten Barack Obama defending his decision:

And here, by way of contrast, is what a real progressive leader looks like.

So, Bernie Sanders (seen in the clip above) is saying that he’ll filibuster it in the Senate. And, indications are that the House leadership isn’t completely onboard. A congressional source is quoted as telling CNN, “We won’t rubber stamp a deal between the White House and (Senate Minority Leader) Mitch McConnell.” But, it sure seems as though it’s a done deal at this point. It looks like Obama, desperate to get unemployment benefits extended for 2 million Americans and keep the Bush tax cuts for the middle class from expiring, gave the Republicans everything they wanted. Instead of standing up to their blackmail, and risking the repercussions, he caved in. And, in doing so, he not only enlarged our national debt, but he further expanded the gap between rich and poor in America. I understand that he was in a tough spot, as he desperately wanted to provide relief for those families in need, and resume discussions on the ratification of the START treaty, but I don’t think, when everything is said and done, that this deal will be a good thing for our country.

The only good news in all of this is that Obama may have, once and for all, alienated enough of his base to make a progressive third-party a viable option. I can only speak for myself, but I think there are a lot of us for whom this was the straw that broke the camel’s back… A real Democratic leader would have let the Bush tax cuts expire and then, as Chuch Schumer suggested, come back at the start of the next Congress with a comprehensive financial package of his own, built around middle class tax cuts, branded under his own name, and not that of Bush. But, we caved in, as we always do.

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28 Comments

  1. Lisa
    Posted December 6, 2010 at 10:24 pm | Permalink

    Actually, perhaps the real message is that we all need to move to Vermont and create a different world THERE at least. I’ll never quite forget a conversation with a Vermont native about 5 years ago where she said her small town of 1,000 and one nearby had gotten together to put up a windmill so they were more energy self-reliant. I could not, in any small part of my brain, ever quite imagine that happening in Michigan…

  2. Jim
    Posted December 6, 2010 at 10:47 pm | Permalink

    I know this deal sucks, but if you are inclined to look for more of an upside, read
    http://voices.washingtonpost.com/ezra-klein/2010/12/an_imperfect_but_not-that-bad.html
    and
    http://www.tnr.com/blog/jonathan-cohn/79694/the-tax-deal-hate-the-tax-deal

  3. Posted December 6, 2010 at 10:58 pm | Permalink

    Seriously, such a pussy move.

  4. Posted December 6, 2010 at 11:11 pm | Permalink

    Totally douchey.

    While we’re on the subject of self-reliance, I again will point out how we have sooo much fresh water here in MI. How better to be self-reliant? With our agricultural diversity (second only to Cali)…we got a good thing going on here.

  5. Andy Ypsilanti
    Posted December 6, 2010 at 11:59 pm | Permalink

    I just don’t understand how any group of people can scream “the debt is out of control and going to kill us all” and then add 700 billion dollars to it, and be ok with it. I further fail to understand how America, and the tea party, is cool with it.

    I’m also having a big problem understanding how making sure millionaires don’t have to pay 1.8% higher taxes so those 60,000 people can, I don’t know, buy a new BMW this year is more vital to our economy then extending unemployment so millions of Americans can buy groceries.

    Finally, I am utterly baffled how we can still think that these tax cuts are vital to job creation when we have lost record numbers of jobs since they were put in place.

    Check, please.

  6. Name: Mark
    Posted December 7, 2010 at 12:10 am | Permalink

    Would Harry Truman have done this? I understand that there always, in the end, has to be a compromise, and that liberals are never, ever going to get all that they want. That’s the nature of politics. The problem is that Obama is not pulling out all the stops to get the most progressive final deal possible. He’s not out there on the stump giving the Republicans heat for their unpopular positions. I think that both Carter and Clinton, moderates though they were on domestic policy, would have fought harder for, and achieved, a more progressive final settlement had they been faced with a situation like this.

  7. Posted December 7, 2010 at 12:39 am | Permalink

    An interesting comment on the Huffington Post about this, if only because of the Superman 2 reference:

    http://www.huffingtonpost.com/social/aaronr2000/obama-tax-cut-compromise_n_792776_69867912.html

    For all who are incensed that the president didn’t engage these incredulou s Republican s in a long drawn out pissing match, when are you going to accept the fact that this was a battle he could not win? Everything was expendable to the Republican s – middle class tax cuts, unemployme nt benefits, even the START Treaty which is vital to our national security. They pay no political price for their hubris and hypocrisy which gets bolder and more frequent with each passing day. You can’t beat a group with nothing to lose and no shame for saying passing tax cut for the rich then in seconds gripe about how the exponentia lly cheaper unemployme nt benefits must be paid for by cuts elsewhere.

    Remember Superman 2. The Kryptonian villians fought Superman in downtown Manhattan. The general said “I’ve discovered Superman’s weakness. He cares for the people. Sort of like pets.” They then exacted their wrath on the public to which Superman back down and gave them that victory to spare the people from the peril that was surely coming their way.

    So naturally the people directed their anger not at the villains but at the hero. “Superman don’t leave us!” some said. Others “He’s a coward!” Like in the movie, you who are angry at the wrong guy are too short sighted to see that had this battle pursued endlessly that the collateral damage would have been a cost that you may have been willing to pay but that others could not afford.

  8. 2littledickiebirds
    Posted December 7, 2010 at 2:23 am | Permalink

    Hmmm. I don’t think this Obama character was vetted properly.

  9. Glen S.
    Posted December 7, 2010 at 4:52 am | Permalink

    There is still time to stop this asinine “compromise” — but only if we can persuade enough Democrats in the House and Senate t0 stand together against Obama and his Republican allies. Please take a moment today to call or e-mail Representative Dingell and Senators Levin and Stabenow, and urge them to vote “no” on this latest assault against the 99% of Americans who are not among the super-rich.

  10. Tommy
    Posted December 7, 2010 at 7:14 am | Permalink

    I like Bernie Sanders, but he won’t filibuster. Someone will get to him first so that he comes to heel. Schumer is a jackass. He will bloviate and find any camera with a red light on to eloquently explain why this is so bad – and then he will vote for it. About 2% more or less in taxes really seems like no big deal to me. A bigger vision is needed, but I am not holding my breath. As far as Obama goes – he’s over. He did what he was put in office to do, take care of Wall Street. Mission accomplished.

  11. Tommy
    Posted December 7, 2010 at 7:24 am | Permalink

    In Brief, highlights of the proposed bipartisan tax cutting agreement announced Monday by President Barack Obama.

    – Extends all tax rates approved under President Bush for two more years for all taxpayers. Republicans wanted a permanent extension. Obama wanted to extend the current tax rates only to households earning less than $250,000.

    – Applies a 35 percent tax for two years on estates worth more than $5 million. The Obama administration had proposed a 45 percent rate with a $3.5 million threshold.

    – Extends unemployment insurance for 13 months, providing benefits to two million long-term unemployed workers in December and seven million over the next year.

    – Cuts payroll taxes by 2 percentage points for 2011 for a total of $120 billion. That means employees will pay 4.2 percent to Social Security instead of 6.2 percent. A worker who earns $40,000 a year would get $800 over the year; a worker who makes $70,000 would get $1,400.

    – Extends increases in the Earned Income Tax Credit, the child credit and tuition credits adopted in the 2009 economic stimulus package that were set to expire.

    – Allows businesses to write off 100 percent of their capital investments for tax purposes during 2011. The current write-off is 50 percent.

  12. Mark H.
    Posted December 7, 2010 at 7:33 am | Permalink

    The real strategic purpose behind the GOP’s drive to cut taxes is to inflate the deficit and national debt, making them so huge that any new domestic spending becomes unthinkable for years to come. This ensures that federal programs do not add to the Democratic party’s natural base; it ensures government failure, and that’s the objective. If government is successful, people will more likely vote Democratic…..

    This has been the GOP strategy for 30 years, and it’s largely been working. Obama is now an official member of the Republican leadership, and the Democratic Party national headquarters is now issuing refunds, I hear, to all who contributed to his campaign in 2008 believing him to be both a Democrat and a human being with a spine.

  13. Glen S.
    Posted December 7, 2010 at 7:44 am | Permalink

    “That means employees will pay 4.2 percent to Social Security instead of 6.2 percent.”

    Lemme’ guess: Next, Obama will use this reduction in Social Security taxes as further proof of the Social Security “crisis,” and yet more justification for “entitlement” reform aimed at accelerating the already unprecedented transfer of wealth from the poor and working classes to the super-rich.

    Moreover, setting the extension of the tax cuts at not 1, not 3, but 2 years is a devastating strategic blunder — setting up another round of this fight as probably THE central issue of the 2012 presidential campaign … unless … Obama’s real strategy is that by 2012, having actually COMPLETED his political evolution toward becoming a Republican — he will simply make tax cuts for the rich a key part of his re-election platform.

  14. Jim
    Posted December 7, 2010 at 8:57 am | Permalink

    Obama did get some good things in this deal:
    http://krugman.blogs.nytimes.com/2010/12/07/the-deal/
    I would have liked Obama to see hold a hard line, but it’s hard to imagine that that could have ended well, especially for the long-term unemployed.

  15. Knox
    Posted December 7, 2010 at 9:24 am | Permalink

    I agree with Higbee. It all goes back to Grover Norqist and his “kill the beast” philosophy. This deal puts more money in the pockets of the rich, and allows Republicans to make the case that social programs, which tend to benefit Democrats politically, are slashed and killed. I’ve been of the opinion, up until now, that Obama was weak and timid — afraid to fight for what he believed in. Now I’m not so sure. While there are a few principled Democrats left, who really seem to care, I think most are fairly conservative and beholden to the rich. I’m not convinced this isn’t the outcome that many of them wanted all along. We need a third party that focuses on getting the money out of politics.

  16. Posted December 7, 2010 at 9:31 am | Permalink

    Glad to see many of you are finally understanding that what’s really needed is something other than a Democrat or a Republican. Hell does have gradations; but both these parties have always been dogs walked by Kapital.

  17. Meta
    Posted December 7, 2010 at 11:06 am | Permalink

    From Think Progress:

    Yesterday, President Obama announced a tentative deal with congressional Republicans to extend the Bush-era tax cuts for all Americans for two years in exchange for a 13-month extension in unemployment benefits and other tax benefits for American workers. Given the fact that Republicans had indicated that they will not compromise on their desire to extend the costly tax cuts for the wealthiest Americans, the President decided to get a deal done now to avoid an economic hit to the middle class during this holiday season. “I’m not willing to let working families across this country become collateral damage for political warfare here in Washington,” Obama said in a statement. “Sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do.” Despite Republican wrangling over the past two years about deficit spending and debt, the New York Times reports that the entire package “would cost about $900 billion over the next two years, to be financed entirely by adding to the national debt.” However, “[o]n balance,” CAP President and CEO John Podesta said in a statement, “I think the President was right to choose helping working Americans over a December conflagration. But the question hanging over Washington and the country today is how will he avoid repeating the same scenario being played out again and again for the next two years? That’s a question that’s keeping me awake at night.”

    THE GOOD: As the Wonk Room’s Pat Garofalo noted, “in return for continuing the fiscally irresponsible and economically unsuccessful Bush tax policy,” the President will receive “a desperately necessary extension of jobless benefits of the sort that used to be completely uncontroversial until this Congress came to town.” But instead of a short-term extension, unemployed Americans looking for work who have exhausted state benefits will receive an extension of up to 13 months. All employed workers will receive a 2 percent payroll tax cut for one year, which means for example that a family making $50,000 per year would save about $1,000. The deal also contains “expanded versions of the child tax credit and the earned income tax credit that benefit working-class families” and also included is an expanded college tuition deduction. The Times’ David Leonhardt writes, “No politician is likely to use this word — at least no Democratic politician — but the deal amounts to a second stimulus bill.” Indeed, Center for American Progress experts Michael Linden and Michael Ettlinger calculated that the deal would save or create nearly 2.2 million jobs. However, they also noted that if the $133 billion “misallocated to the bonus tax breaks” for the wealthy had “been instead put to additional payroll tax cuts, 2.7 million jobs would be saved or created.”

    ‘ONE UGLY SURPRISE’: In addition to the deficit-busting tax break extension for the rich, the Washington Post’s Ezra Klein notes the “ugly surprise” in the tax cut deal: reinstating the currently-expired estate tax. As it stands now, the estate tax will be reinstated next year at a 55 percent rate with a $1 million exemption, meaning that any estate assets above $1 million will be taxed at that rate. However, the tax deal will include the estate tax plan cooked up by Sens. Blanche Lincoln (D-AR) and Jon Kyl (R-AZ), which sets a 35 percent tax rate with a $5 million exemption (Obama had proposed permanently setting the estate tax at the 2009 level of 45 percent with a $3.5 million exemption). Garofalo notes that this is “the most pernicious piece of this deal” because “[i]t will amount to another $7 billion in tax breaks in 2011 that benefit no one but the ultra-wealthy. Under Obama’s plan, just 0.25 percent of estates in the country would conceivably have to pay the estate tax, but Lincoln and Kyl proposed spending billions to lop another 0.11 percent off of that.”

    THE LEFT’S MIXED REACTION: Reports on the compromise seem to suggest that congressional Democrats aren’t happy with the White House. For starters, “the House Democrats have not signed off on any deal,” said Rep. Chris Van Hollen (D-MD). Politico reports that when House Speaker Nancy Pelosi (D-CA) “relayed her view of the White House position on tax cuts to her fellow leaders on Sunday, it was roundly panned, according to sources familiar with the discussion.” Some Democrats said “the lenient terms of the estate tax agreement are likely to be particularly problematic.” But others weren’t so diplomatic. “This is the president’s Gettysburg,” said Rep. Jim McDermott (D-WA), a leading progressive and a subcommittee chairman on the tax-writing Ways and Means Committee. Rep. Anthony Weiner (D-NY) likened the agreement to “punting on 3rd down.” Another unnamed “participant” in the discussions said, “What the [heck]? Could we have a little fight before we cave? Why go right to surrender?” Sen. Bernie Sanders (I-VT) vowed to filibuster the plan, retiring Sen. George Voinovich (R-OH) promised to vote against any tax extension, and Sen. Tom Harkin (D-IA) said Republicans “have successfully used the fragile economic security of our middle class and the hardship of millions jobless American as bargaining chips to secure tax breaks for the very wealthiest among us.” Still, reaction from the left wasn’t all negative. Klein wrote that the deal is “a lot better than I would’ve told you the White House was going to get if you’d asked me a week ago,” while the Post’s Greg Sargent noted that the result may not be all the White House’s fault: “It’s only fair to note one crucial thing in the White House’s defense: It isn’t Obama’s fault that Congressional Democrats punted on holding a vote on just the middle class tax cuts before the election. Indeed, the White House appears to have wanted just the opposite.”

  18. Kim
    Posted December 7, 2010 at 12:06 pm | Permalink

    I like this column by Katrina vanden Heuvel in the Washington Post:

    Consider what we’ve seen since the shellacking Democrats took in the fall elections.

    On Afghanistan, the administration has intimated that the 2011 pullout date is “inoperable,” with the White House talking 2014 and Gen. David H. Petraeus suggesting decades of occupation. On bipartisanship, the president seems to think that cooperation requires self-abasement. He apologized to the obstructionist Republican leadership for not reaching out, a gesture reciprocated with another poke in the eye. He chose to meet with the hyper-partisan Chamber of Commerce after it ran one of the most dishonest independent campaigns in memory. He appears to be courting Roger Altman, a former investment banker, for his economic team, leavening the Goldman Sachs flavor of his administration with a salty Lehman Brothers veteran.

    On the economy, the president has abandoned what Americans are focused on – jobs – to embrace what the Beltway elites care about – deficits. His freeze of federal workers’ pay, of more symbolic than deficit-reducing value, only reinforced right-wing tripe: that federal employees are overpaid; that overspending is our problem, as opposed to inane tax cuts for the top end; that we should impose austerity now, instead of working to get the economy going.

    Now the not-so-subtle retreats are turning into a rout. The president is touting a NAFTA-like corporate trade deal with South Korea. He appears to be headed toward supporting cuts in Social Security and Medicare and irresponsible reductions in domestic investment. And he’s on the verge of kowtowing to Republican bluster and cutting a deal to extend George W. Bush’s tax cuts for the rich in exchange (one hopes) for extending unemployment insurance and possibly getting a vote on the New START treaty.

    Read the rest here.

    http://www.washingtonpost.com/wp-dyn/content/article/2010/12/06/AR2010120606022.html?hpid=opinionsbox1

  19. Mike Shecket
    Posted December 7, 2010 at 1:03 pm | Permalink

    Somehow I can’t get myself that worked up about this as some kind of moral issue, that we’re going to temporarily not take away something a few rich people already had. It’s not like we’re getting rid of all of their income taxes forever. And I think the economic policy argument for not taking it away now is within the realm of what reasonable people can disagree about.

    Like I’ve said before, if you believed that this president was going to be a more electable version of Dennis Kucinich, you weren’t really listening to what he was saying. As long as he continues to manage to not invade some new country for no reason, I’m going to be reasonably satisfied with him.

  20. Glen S.
    Posted December 7, 2010 at 1:37 pm | Permalink

    Extending the tax cuts will do nothing to help the economy or create jobs, but WILL accelerate the already growing budget deficit — thus providing Obama and the Republicans an even greater justification for their plans to shred the New Deal safety net that has, until recently, protected many poor and working-class Americans from the worst excesses of capitalism.

    Far from being just another issue about which reasonable people can agree or disagree — I think this “compromise” is a disaster (tactically, politically, and economically) that may become a pivotal episode that will define Obama’s presidency, and shape the makeup of the Democratic Party for a generation (if it continues to exist).

    If this doesn’t spark a Democratic rebellion in the House and/or Senate Democrats don’t mount a serious filibuster against Obama and his so-called compromise — I am done with the Democrats for good.

  21. Tommy
    Posted December 7, 2010 at 2:03 pm | Permalink

    Glen – they it won’t (spark a Democratic rebellion in the House and/or Senate), they won’t (filibuster). Don’t forget to turn off the lights. God how we need a third party. If not now, when?

  22. Andy C
    Posted December 7, 2010 at 2:10 pm | Permalink

    The Republicans have filibustered everything since the Democrats have taken power. Even though it’s what they want, I’m sure they’ll filibuster this too. I’m serious here.

    http://newsjunkiepost.com/wp-content/uploads/2010/03/Cloture-Invoked3Final.png

  23. Edward
    Posted December 7, 2010 at 2:16 pm | Permalink

    Obama is scheduled to address the nation at 2:20 to discuss this deal.

    Maybe, if all of us went to DC and started rattling the gates, we’d see some action, but that’s not going to happen. The truth is, if no one cares enough to stop the war, no one will care enough to stop this.

  24. Peter Larson
    Posted December 7, 2010 at 6:43 pm | Permalink

    I can totally imagine a community windmill in Michigan. In fact, I recently had a conversation with a neighbor about creating a community wireless Internet connection. I think it just depends on where you go.

    Plus, we have water!

  25. tommy
    Posted December 7, 2010 at 8:31 pm | Permalink

    Three consecutive headlines right now on the Huffington Post:
    -Concession On Tax Cuts Sends Obama Fans To New Level Of Despair
    -Judge Reluctantly OKs Extra-Judicial Killings By Obama Admin
    -U.S. Drops Demand For Israeli Settlement Freeze

    Sounds like the ‘Big O’ is following the directions of his masters quite well.

  26. dp in ypsi
    Posted December 7, 2010 at 9:05 pm | Permalink

    I have said it before and will say it again… why be surprised when we know elected democrats are mostly strategically inept:

    http://www.npr.org/2010/12/07/131866488/democrats-frustrated-over-obama-tax-deal-with-gop

    Martin Frost: “The facts of the matter are the Republicans have run circles around us on messaging recently.”

    If by recently he means most of the last 30+ years, then I’m in complete agreement.

    Sad… but very true.

    Voters and non-participating citizens are left being screwed by inept Democrats, and malicious Republicans, running the show. What a fantastic system we have!

  27. Andy C
    Posted December 7, 2010 at 10:36 pm | Permalink

    It’s so true that the Republicans are better at messaging, but polls says that at least 60% of America is against the tax cuts for the rich. Just like 78% of America is against DADT. The Republicans are not representing the people, but they don’t need to once they’re in. It is their messaging that gets them elected.

    I once hear some one on NPR say that if the Democrats have only 40% support on a bill they say “that’s not enough support” and dump it. If the Republicans have only 40% support on a bill they say “that’s a good start, now how do we sell it to another 20%?”. I thought that really summed up the Health Care debacle.

  28. Andy C
    Posted December 8, 2010 at 10:07 am | Permalink

    Jim DeMint stated he will filibusterer the Tax Plan. DeMint told conservative radio host Hugh Hewitt the deal is inadequate because it doesn’t permanently extend the high-end tax cuts, it alters the estate tax for estates valued at over $5 million, and doesn’t offset unemployment insurance.

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