President Obama announced a compromise with the GOP on a two-year extension of the Bush tax cuts along with an extension of jobless benefits. Since I’m not an economist, I defer to someone who is and whose opinion I respect: Ezra Klein.
So is this a good deal? It’s a lot better than I would’ve told you the White House was going to get if you’d asked me a week ago. There’s some new stimulus in the form of the payroll-tax cut and the expensing proposals. The older stimulus programs that are getting extended — notably the unemployment insurance and the tax credits — probably would’ve expired outside of this deal. The tax cuts for income over $250,000 are a bad way to spend $100 billion or so, and the estate tax deal is really noxious.
It’s bad news for the deficit, though the White House and Congress are right to make the deficit less of a priority than economic recovery. And speaking of that economic recovery? This isn’t enough, and it’s not well targeted. The deal amounts to the White House throwing some bad money after good. But the end result is between $200 and $300 billion more in tax breaks, tax credits and unemployment insurance than there would’ve been if not for this deal (I say $200-$300 billion because of the uncertainty over what would’ve been extended in the absence of this package). That’s better than nothing — or to be more specific, better than backsliding.
And this is what you get when you compromise. Some of my more adamant — and vocal — friends on the left are calling it a sell-out to the Republicans, but there’s got to be a point when you realize that it is better to get something rather than nothing. My biggest fear was that the president and the Democrats would completely cave on everything, and they got very close to it last week. This deal is a lot better than the worst that could have happened, and if that sounds like praising with faint damns, so be it.
What I am worried about is that now that the Republicans have compromised — and I’m sure they’re getting it as bad from their hard-core base as the president is getting from his — they will decide “Okay, we did it once, but that’s it.” So now the rest of the lame-duck agenda — DADT repeal, New Start, the DREAM Act — are off the table. We’ll see. I am sure that the GOP thought they got away with whatever victory they wanted to score in terms of political points and so now they will revert to their version of compromise: do what we say or the bunny gets it.
A cynic once noted that the true sign of a compromise is when both sides think they put one over on the other guy. Frankly, I am getting tired of making this particular issue a battle between political agendas and trying to score “gotcha” points. Whether or not this has an effect on President Obama’s re-election chances in two years is really not the issue at the moment; there will be plenty of time to have that battle. There are a lot of people who do not give a flying rat’s ass about whether or not the White House or the Republicans won. All they care about is whether or not they will be able to make the rent or grocery payment this month and the next. It’s hard to really care about the Beltway magic when you’re deciding whether or not you can spare some ketchup to spice up your dinner of Little Friskies.