Jay, remember that I am an independent. Hence, my thoughts are not in line with the liberal left although I agree with them wrt the environment etc. On tax and spend, I must admit I do not understand economics as much to be riled or placated. And, you were right that Obama is not a full progressive.
On this deal, what I dislike most is the way it was done. Wrt the end-result, I am agnostic. The Republicans held the tax cuts for the middle class hostage and Obama capitulated. I was aghast that the Republicans could spin the fight as the Democrats and Obama creating a tax hike for everyone when the Republicans were voting against the tax cuts. Did you see the media report that the Republicans were voting to hike taxes for everyone? Or holding the country at ransom to get tax breaks for their rich friends? That should have been the truth. Obama and the democrats are novices at playing the PR game. McConnell is the master politican and negotiator in all of this. I will not get Obama to negotiate when I buy my next car but I am ready to pay McConnell to be on my side
The problem is in any negotiation you should be ready to bluff and say that okay if you do not pass tax cuts for the middle-class, then we will go to the electorate to say that you have increased your taxes. You go on a PR offensive and it would be slam dunk, imho. But, the more you allow people to take hostage, the more you enable them. Even if you do not want it, you should start negotiating from the far left and then end up at the sensible middle.
The proposal to allow the Bush tax cuts to continue for all income below $250k is actually cutting taxes for *all* Americans, not 98% but 100% wrt what it would otherwise be without the bill being passed. Why is this then framed as a middle-class tax cut? Why did Obama and the democrats not spin this as a tax cut for all Americans? Even multi-millionaires would pay less taxes if the House bill passed the senate than they would otherwise. Did you know that? I assume that you are a highly informed person and you know that. But, by and large, the masses do not know. It was a major PR failure.
If I were Obama, I would hold a vote every month to make the tax cuts on all income under $250k for all Americans permanent. And I would bring this vote every month to show the American people that I want tax cuts for all and the Republicans have to either vote for it or show the American public, who their actual bosses are.
Now, onto the economic side of things. I think that during a recession, it is not a good idea to raise taxes. So, I think that a two year extension of status quo is not that bad. I would rather that Obama try to build a coalition of the center to make the tax code more efficient along the lines of what the Simpson-Bowles commission did. I would like low marginal tax rates coupled with some form of Pigouvian taxes (sin taxes on gasolene, tobacco, alcohol), land value taxes, low estate taxes, value-added taxes. All of this should be done to keep them as low as possible except the Pigouvian taxes, I suppose. Well even in that case, you have to be careful in taxing gasolene. Given the deficit, I think that we are looking at a significant restructuring of the tax and spend scheme in the next four years anyway. Of course, people like PKB, Arjun, etc. possibly understand much more about the economy and so they can comment better about what should be the right tax structure. Anyway, a temporary status quo for two years does not rile me that much as the way Obama caved does.
I am actually for restructuring social security and stopping waste on defense and social services. So, my responses are not always aligned with the hard left. Notice that the Republicans did not really care for the deficit that much but they really care about the rich. I do not care that much about the rich but about the economy as a whole.
Politically, it does make sense. Obama did not do the PR and messaging work. The Republicans caught him on this. So, now, he is faced with two choices. Let the tax cuts expire and then the economy goes more into the dumps. The Republicans do not care about that because the majority of the blame with go to Obama and the Democrats. Then, the Republicans come to power. They rightly called the bluff that Obama cannot let the tax cuts expire. The Republicans were ready to let the country to go to the dumps if it meant that their party would gain power. Obama is faced with a hard choice. Disappoint his base versus damage the economy. He knows he can get his base back but he knows that the economy, if it goes down for a few months, cannot be righted that easily. So, he made his choice. I hope he learns the lesson and utilizes the power of the bully-pulpit more effectively in the future.
All this, of course, is my armchair-critiquing. Who knows what exactly goes on inside the chambers at Washington!
Among one things I do not support in the deal is this:
http://www.huffingtonpost.com/2010/12/0 ... 93572.html Seems like the Republicans got a better deal.