December 11, 2010

The President's Tin Ear

Let us begin by admitting that President Barack Obama took office with a set of challenges whose combined magnitude hadn't been waiting for any incoming chief executive in our lifetime: two ongoing wars, a financial crisis that narrowly missed taking the United States - and the world rest of the world with it - down the tubes, a massive federal deficit, and a public harshly divided along ideological lines.  Let us also admit that Mr. Obama swept into office on a groundswell of popular support demanding change from the disastrous policies of the Bush years that had led to this set of circumstances, and also that he has done a decent job - to date, anyway - of keeping the country from falling off the edge of a cliff.

Having said that, we must also concede that his recent tax cut deal with Republicans in Congress is not just a miserable political failure, but one that is a very real threat to making him irrelevant, while endangering our society and our economy now and in the future.

For those unfamiliar with the particulars, President George W. Bush shepherded into law two enormous tax cuts - one in 2001 and a second in 2003 - that reduced taxes for almost all Americans, but which were weighted heavily to the benefit of the wealthiest among us.  The stated rationale for this policy was that it would free up money for the rich to create jobs; essentially a version of the supply-side theory that first gained popularity in the Reagan Administration.  These tax cuts, however, were a miserable failure; they exploded the deficit, created income inequality unseen since before the Great Depression, and left Mr. Bush with the worst job creation record of any president since Herbert Hoover.  Of all of the major contributors to the federal deficit, the Bush tax cuts are on track to be - by far - the single biggest factor.

The good news is that the Bush tax cuts are supposed to expire at the end of 2010.  The bad news is that, while this would help reduce the deficit, letting all tax rates return to their 1999 levels during a pronounced economic downturn could derail the faltering recovery we are beginning to see.  President Obama, who had campaigned on a promise to eliminate the Bush cuts for the wealthiest Americans - and who reduced taxes for 95% of the workforce soon after he took office - gave voice to a desire to extend the redcutions for everyone but the richest, at least temporarily.  The thought behind this approach would be to pare the budget shortfall while keeping cash in the hands of working people, at least until the economy gets back on its feet.

While it didn't please everyone, this seemed like a reasonable, pragmatic approach to many.  The noteworthy exception came from movement conservatives, who have been enraged at the prospect of the Bush tax cuts expiring for anyone, while simultaneously ranting about fiscal irresponsibility, despite the obvious contradiction between the two elements of that position and their central role in creating the budget deficit we have today.  Emboldened by their victories in the 2010 mid-term elections, Republicans promised to block all other pending legislation - including the new iteration of the START Treaty, which has broad, bipartisan support - unless all of the Bush tax cuts were extended, even for the very richest, and despite the empirical evidence that such cuts hadn't produced anything even approaching the promised growth in employment over the nine  years since the first cut went into effect.

Instead of making the Republicans put their money where their mouths are, however, the president caved in pre-emptively in much the same manner as he did with regard to the public option during the health care reform debate early in his tenure.  Rather than separate extension of the Bush cuts from any other legislation in order to force Republicans to defend them direcrtly and openly, Mr. Obama instead tied them up in a neat package that not only gave the GOP the ruinous fiscal policies they want, but which introduced a payroll tax holiday that is clearly the first step in a Republican assault on Social Security.  Then, he threw in a reduction of the estate tax, to boot - all allegedly in exchange for an extension of longterm employment benefits he claimed wouldn't have been possible without this deal.

On top of all that - almost impossibly - the president then made it even worse; berating Democrats upset at his swift and unilateral capitulation, calling them "sanctimonious" and unrealistic ideologues who don't understand the nature of governance and the need to keep the country moving forward rather than cater to political rigidity.  In one fell swoop, Mr. Obama abandoned a campaign promise, needlessly ceded a position of strength to concoct an unnecessary closed-door deal that sets dangerous precedents, and not only insulted the very people who got him elected, but had the tin ear to lecture them for failing to be grateful that the hole he's digging for them isn't as absolutely awful as it could be.

How bad is it for President Obama right now?  Bad enough that Bernie Sanders, an independent who caucuses with the Democrats, took to the floor of the Senate on Friday for an eight-hour mock filibuster of the White House deal.  Bad enough that a senior member of the president's own party publicly rejected the claim that any sort of give-away to the rich was necessary to secure additional unemployment benefits.  Bad enough that, doubtful although it might be, there is now open discussion within the Democratic Party of mounting a primary challenge to Mr. Obama in the next election.

Mr. Obama - whatever the issues he faced as he entered office, and whatever successes he has had to date - richly deserves every ounce of criticism he is receiving for this collosal blunder.  He played it like not just a rank amateur, but an arrogant fool, brokering a deal with the worst elements of his party’s opposition and doing so without even bothering to line up his supporters and his allies.   Somehow, the White House came to the conclusion that it could thoroughly undermine the core principles of Mr. Obama's base, angrily dismiss their concerns when the deal came to light, and everything would be just fine.  Perhaps it was a realpolitik calculation that there is no place else for Democratic voters to go, but it was a major misjudgment that looks increasingly as if it will blow up in his face.

Beyond the political pratfall, however, is the president's thorough misreading of both the public sentiment and the issues at hand.  A clear majority of Americans - 59% - favored letting tax cuts for the wealthy expire, and even Reagan Administration Budget Director David Stockman believes that the country simply can't afford to keep the Bush tax cuts in place.

With the economy foundering, unemployment pegged at nearly ten percent, and the deficit continuing to worsen, it seems pretty clear that we need to drive demand in order to stimulate job creation while protecting the middle class and reducing the budget shortfall.  Instead, Mr. Obama worked with the GOP to re-emphasize a program of tax cuts for the wealthy that has thoroughly and empircally failed to boost employment, and which will balloon the deficit to heretofore unrealized dimensions.  And he did it for something - extended unemployment benefits - he could almost certainly have gotten separately, while laying payroll tax groundwork likely to have dire consequences down the road for Social Security's meager safety net.

The United States continues to face a host of massive challenges as a result of the misrule of the Bush Administration.  Barack Obama has made some headway in overcoming these problems, but he has also surrendered positions of strength for the sake of appearing bipartisan, and as a result, achieved significantly less than he could have.  Early on, this might have been forgiven as a misguided belief that attempts at accomodation would help his relations with the Republicans on Capitol Hill, but the tax cut catastrophe demonstrates either an obstinate ignorance of the GOP's disciplined and declared obstructionism, or a sloppiness that can only be termed incompetent.

It is unclear if the fault lies with the president himself, his advisors, or some combination thereof, but this tax cut debacle is a misfire of gigantic proportions, and one about which we should all be concerned, for reasons both economic and political.  That said, there is certainly time for President Obama to recover and govern as we believed candidate Obama intended.  That doesn't mean he could be expected to embrace every progressive goal wholeheartedly - the president is clearly a pragmatic centrist, despite efforts by conservatives to paint him as "far left" - but at least it would be a return to embracing the positions he stated on the campaign trail and an end to the wrong-headed desire for accomodation in the face of stony opposition.  In the meantime, any hope that President Obama's penchant for unnecessary concessions aren't poor execution but rather part of a grand and subtle scheme, has been confirmed conclusively to be wishful thinking.

Mahatma Ghandi is credited with having once said, in regard to passive resistance, "First they ignore you, then they laugh at you, then they fight you, then you win."  In an excellent analysis, Rachel Maddow finds that President Obama has, tragically, reversed that progression:


lokywoky said...

The most sickening thing about this whole deal is that taxpayers who make less than $40,000 for a family or $20,000 for a single will actually see their taxes go UP! and there are between 20 and 50 million of these folks. So we cut taxes on the billionairs - a lot of whom don't even want the tax cuts - and raise taxes on the people who are just scraping by.
Nothing for the 99ers. And all the stuff Obama "got" expires in one years while the rich stuff expires in TWO years?

I could do a better job of negotiating with a gag in my mouth, a bag over my head, and both hands tied behind my back.


PBI said...

Agreed. Of course it may simply be that we're laboring under the wrong set of assumptions, and it's not that President Obama is a bad negotiator, but that he is either a hypocrite or a fraud. I think it's even money on all three options at this point.

lokywoky said...

Well, in any one of the three scenarios, I could still do a better job with a gag, a bag and a tie.