Obama extends tax cuts for rich that GOP passed with chicanery & Cheneys vote. How did we get here?
By Joan Walsh - Salon
Texas Insider Report: Washington D.C. 
I know they werent the best of friends when they left Washington but I bet former President Bush & Dick Cheney at least had a phone call tonight congratulating one another on one of the great heists in history. In 2001 they knew they couldnt make their budget-busting tax cuts for the rich permanent so they agreed to phase them out in 2010 leaving the political consequences to another administration.
Even with that chicanery the Bush tax cuts were divisive enough that they required Cheney to cast a tie-breaking vote in the Senate. No problem. Thats how Republicans play: They reward their wealthy base.
Increasingly it seems Democrats too reward the wealthy in their base and ignore their much larger constituency of working and middle class voters struggling in the economy destroyec by Bush and Cheney. President Obamas compromise was a long time coming telegraphed for months but depressing nonetheless.
The good news is that he got a little bit more for caving than some Democrats expected.
Its great that unemployment insurance may be extended 13 months; many Americans will appreciate a payroll tax cut an extended Earned Income Tax Credit and the latest patch of the Alternative Minimum Tax.
But the concessions Obama apparently won from the GOP shouldnt obscure the fact that his party lost and their party won. I want to agree with my colleague Steve Kornacki who argues that in the end with the package of small but not insignificant stimulative programs that are part of the deal Obama got the best result he could.
Steve may be right but I still think a sharply drawn battle over both the budget-busting tax cuts for the wealthy and extending benefits for the unemployed could have in some version of reality maybe not ours strengthened the Democratic party brand to use a word I dont love and reminded confused voters who amd what we stand for.
Meanwhile after the vast transfer of wealth to the top 1 percent of Americans in the last 30 years this deal makes me feel like I live in an oligarchy. (I laid all of this out in this essay on Winner Take All Politics exactly a month ago.)
To get a little bit of help for the unemployed we have to deliver bushels of cash to the wealthiest Americans and their GOP agents?
Felix Salmon of Reuters wrote today about the fact that tax rates are the lowest in 60 years and some of the ramifications of that (with a chart well worth the click over to Reuters): Salmon notes:
- Federal taxes are the lowest in 60 years which gives you a pretty good idea of why Americas long-term debt ratios are a big problem. If the taxes reverted to somewhere near their historical mean the problem would be solved at a stroke.
- Income taxes in particular both personal and corporate are low and falling. That trend is not sustainable.
- Employment taxes by contrastthe regressive bit of the fiscal structureare bearing a large and increasing share of the brunt. Any time that somebody starts complaining about how the poor dont pay income tax point them to this chart. Income taxes are just one part of the pie and everybody with a job pays employment taxes.
- There arent any wealth taxes but the closest thing weve gotestate and gift taxeshave shrunk to zero after contributing a non-negligible amount to the public fisc in earlier decades
The giveaways to the rich also mean that with a Republican House next year Obama will be under constant pressure to cut spending not expand it. More programs to help the jobless are unlikely. Kornacki and Ezra Klein someone else I respect argue this package is the most stimulative Obama could have hoped for and thats his ultimate win: A prayer that this hodgepodge of tradeoffs might goose the economy and bring down unemployment in time for the 2012 elections.
I sure hope theyre right but I am not optimistic.
Tax cuts for the wealthy are just about the least stimulative notion around. The rest of the package may help. Corporate America is already sitting on bags of loot it refuses to spend to help the economy.
Its hard to believe tax cuts will pry any of that money loose.
But I hope Im wrong for the sake of the victims of our economy and the president I supported.
