In his feisty performance at his Tuesday press conference, President Obama said he didn't want the American people to be collateral damage in the political dispute over tax cuts and extending the unemployment insurance. Depending on your own political vantage point, Obama either abandoned progressives, capitulated to the Republicans or proved to be pragmatic.
Conservatives like Jennifer Rubin , the new right-wing columnist for the Washington Post, called it the "worst press conference of any President"--I guess, even worse than Nixon's where he said he wasn't a crook.
Andrew Sullivan in his Daily Dish complimented the President, saying that the tax cut compromise actually deflates all the anti-Obama rhetoric from the Republicans since they made a deal with the "most socialist President in history".
David Broder woke up from his coma to write that Obama just placed himself in the political sweetspot in American politics--the Independent Center--and has boxed the Republicans in the corner.
Democrats complain that his postponement of the tax fight puts it in the middle of the presidential election year. The teabaggers are furious and Senator DeMint is against it because of "the cost of extending unemployment benefits". No populism there.
I found on yesterday's Dailykos a fascinating post of someone using a mathematical formula devised by political scientists to project Presidential elections on the growth in the economy and other economic factors. With no tax deal, Obama gets 49.5% of the vote in 2012, while with it he gets 53.5%. It's a fantastic exercise.
The early projections from economists say that this package will create or save 2.1-3 million jobs. Moody Analytics revised their GDP numbers to project a 4% growith in the economy, rather than the modest 2.5%.
I always worry that the Obama Administration doesn't spell out the effects of some of the programs they advocate and instead hide behind Washington speak, listing programs by their congressional known names. Then the average American doesn't have a clue what they are talking about. What I found fascinating was the Black community's response to President Obama announcements. Blacks flooded call lines at talk shows to voice support. There is a simple reason--they understood what the extension of unemployment does for their community, where unemployment is at Depression levels, and what some of the working class tax cuts mean. And, believe it or not, all the alarm about Social Security raised by FireLakeDog and other liberal bloggers is just B.S.
So let's pretend that we have not heard about various additions and subtractions from the plan and say it passes as outlined by the President. What happens:
1. Unemployment insurance will be extended for 13 months. The failure to extend these benefits would not only be immoral but also it would cause the loss of 600,000 jobs. This prevents the loss of benefits to 2 million people this December and over the next year 7 million people will no longer have to worry about their benefits ending.
2. Working families would not see their taxes rise $3,000 on january 1. The Bush era middle class tax cuts would extend for two years with the additional Obama provisions that were added under the Stimulus package. In effect, Obama's largest tax cut in American history will be extended in full for two years. This was his core tax cut pledge from the election campaign.
3. There is a $120 billion payroll tax for about 155 million Americans. This had been recommended by the Catfood Commission as one of the easiest ways to stimulate the economy. Nouriel Roubini endorsed the idea earlier in the year as one of the key ways to spur growth in the economy. This means more money in one's paycheck immediately.
4. Reforming the Alternative Minimum Tax ensoures another 21 million will not have any tax increase.
5. The provision of 100% expensing for businesses next year means that businesses can buy the equipment they need and write it off their taxes completely. This was a key component urged by small businesses for the last two years and been denied by the Republicans.
6. President Obama secured a two-year increase of the full Child Tax Credit and Earned Income Tax Credit. This provides ongoing tax cuts to 12 million low income families with a total of 24 million children. He also won an extension of the American opportunity Tax Credit for two years. The AOTC includes a partially refundable tax credit of up to $2,500 to help students and families cover the cost of college tuition. The Earned Income Tax Credit means an additional $800 in assistance to families with 3 or more children. This benefits 6.5 million working parents with 15 million kids. The Child Tax Credit ensures a $1,000 tax credit to 10.5 million lower income families with 18 million children. If you are struggling to make ends meet, you learn quickly about these opportunities and these are the pieces in the puzzle must appreciated by the working class.
7.The Complete expensing of business expenses , according to the Treasury Department, could generate more than $50 billion in additional investment this coming year. This provision alone has been called the largest temporary investment incentive in American history.
8. There is a two-year extension on the Research and Development tax credit and other tax incentives to support business expansion.
O.K., I give you all this if you give me two-years of tax breaks for the top 2%. A good deal? In terms of money, all of the above is several times the cost for the wealthy tax breaks. Remember President Obama went into the negotiations simply with the thought of extending middle class tax cuts and getting an extension of unemployment benefits. So, who got the better of the deal? And who helped the most people suffering in these times?
If you want to be an ideologue, be my guest. If you actually want to move the country along, take the deal.
Is there a better and more efficient way to stimulate the economy? Of course, there is. But through this negotiation, President Obama gets a back-door stimulus package that may surpass his first stumlus package. He would not have gotten this passed in any other form. He gets the Republicans to back off the cries about the deficits until these sophisticated issues can actually be negotiated. He also ends any rationale by the Republicans to be obstructionists. His slap at progressives also distances himself from being tagged as a leftist--which he never was. And, he cleverly becomes the only populist in the Washington crowd--clearly the man fighting for the average American.
I recognize Republicans never listening to a word President Obama says but Democrats have no excuse. In his press conference, President Obama said he wants to discuss the whole revision of the tax code in the discussion about the debt next year because it is inequitable and unfair. Apparently, no one heard him. Apparently, no one heard him talk about Republicans taking hostages. He has hung the mantle of tax cuts for the rich only just at their doorstep. I think he got it right when he said those tax cuts were the essence of their economic philosphy.
So what if Mitch McConnell boasts about Obama abandoning course. At least Republicans now are starting to "spin" again and not just lie. This is an advance in my view.
Remember the priorities--Get out of the Economic Mess we're in; then lay down the foundation for a new economy. I think President Obama got it right.
But clearly we are in for another Health Reform ride the last days of the LameDuck session.
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