Barack Obama won the great tax-cut showdown of 2010 - and House Democrats don't have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years - which just happen to be the two years of the run-up to the next presidential election. This is a defeat?
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Swindle of the Year
He also had time this weekend to make a visit to "Inside Washington".
No wonder I love Charles.
Earmarks and ridiculous spending are reasons for the Republicans, not the Dems, to hold up this bill, and do it after the start of the next congress.
ReplyDeleteI have to say I'm not so thrilled with this piece by Krauthammer.
ReplyDeleteIn particular I'm thinking that this paragraph ain't so swift:
At great cost that will have to be paid after this newest free lunch, the package will add as much as 1 percent to GDP and lower the unemployment rate by about 1.5 percentage points. That could easily be the difference between victory and defeat in 2012.
Right. Now, for the record, deficit spending does in fact add to GDP. This is not my opinion, this isn't crazy Keynesian theory - this is an accounting identity. So CK is right - this much deficit spending will add to GDP, and may in fact bring down unemployment some.
Now, the way this deficit spending is happening is (mostly) by way of cutting taxes - or rather - by not raising taxes. Most Republicans, and most Tea Party folks, would tend to agree that raising taxes right now is bad.
Each "side" has their "data" indicating that either higher government spending or lower taxes is the best way to "stimulate" the economy. Government spending was a failure (and my inner "progressive" side is bitter because the money could have been spent on needed infrastructure, but whatever). Leaving money in people's pockets can't be much worse and could be much better.
Yes, there is the deficit. The strategy as I understand it is that by foregoing the tax increases, there will be pressure - and with a Republican majority in the House, and opportunity - to cut spending. I've heard of the idea of a series of simple one page bills cutting spending, and letting Obama veto them, to put everything on record. This is not a bad way to go.
Further, if unemployment does go down next year, I don't for the life of me see how Obama can claim credit for it - the Republicans can claim that their election, and the continued tax cuts, were instrumental. And according to Krauthammer, rightly so.
So what's his problem?
Is he really so fixated on a perceived (and IMHO largely mistaken) political "advantage" that Obama will have in 2012 if the economy recovers? Would he really prefer that people remain jobless so that O has a better chance of being voted out?
Hey, CK - check it - Democrats read papers too. You just validated one of their most cynical talking points, that Republicans will try to create more economic misery so Obama can take the blame. Not a wise or commendable strategy, IMHO.
It may well be the case that taxes will have to be raised - but their is a horse / barn door ordering issue here. Let's see some progress cutting back government spending first, otherwise it'll just keep feeding the beast.
If the economy is healthy enough in 2012 that taxes can safely be raised without risking a double dip recession and more unemployment - and new entitlements don't threaten to eat up this new revenue - this will be a good thing - it means that we actually can climb out of this debt hole without massive crisis.
How Republicans spin this to defeat Obama is politics. The current election is over and the issues are policy and governance. The whole "worse is better" thing is too cynical for my taste.
oops. wordo.
ReplyDeletebut there is a horse / barn door ordering issue here.
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Good perspective on the global sovereign bond problem in this Telegraph article.
Without some credible spending cuts, tax increases are meaningless.
Krauthammer bestows upon Obama a savvy gamesmanship I'm not convinced the President or his minions possess. Is Obama irritated with the left? Of course he is. He loved being smothered with adulation, but smothered with ideology to the point where he can't breathe? Not so much. The left has savagely cornered him, and he's angry. Obama may not be the brightest candle in the chandelier (IMO), but he knows he can't dance for the 20% while 80% (including independents) stand in bread lines. Thus his "compromise".
ReplyDeleteThis bill is so oinked out that no respectable repub or blue dog should vote for it. What good is not raising taxes if outrageous, non-essential spending is still commonplace in every bill? Ptooey.
It seems to me that Krauthammer has seen beyond the bill's facade and calculated its true financial and political consequences.