Obama outmaneuvers GOP on tax cuts (mostly)

But the deal needs a clean-energy fix

If you look at the numbers alone, the tax cut deal looks to have robbed Republicans blind….

If you’re worried about stimulus, joblessness and the working poor, this is probably a better deal than you thought you were going to get. “It’s a bigger deal than anyone expected,” says Bob Greenstein, president of the Center on Budget and Policy Priorities.

I agree with Ezra Klein here — and Bob Greenstein.  This is a good deal whether you care about the economy, the poor, the jobless — or the key economic factors that determine whether Obama is reelected vs. a right-wing Republican taking office (with a GOP Senate and House) and undoing even the half a loaf Obama has achieved to date.

Readers know that I yield to no one in my disappointment with the Barack ‘no narrative’ Obama.  His messaging is catastrophically bad, as is the White Houses’s overall communications strategy (see links here).  And  I just can’t see how history or future generations will ever forgive him for letting die our best chance to preserve a livable climate and restore US leadership in clean energy  — without a serious fight (see “The failed presidency of Barack Obama, Part 2“)

But the savaging he has been receiving over the tax deal from folks I often agree with — like Paul Krugman and Bernie Sanders and the gang at HuffPost — is beyond explanation (though Krugman tempered his criticism on the PBS Newshour last night once he saw the complete terms of the deal).  Even on strictly political grounds, Obama has done vastly better than one could have imagined — given the blunder (by Congressional Democrats, not Obama, according to Greg Sargent) in refusing to vote on extending the tax cuts for those making under $250,000 a year before the election.  That mistake — coupled with the obvious fact that every single Republican will vote in lockstep against any bill that did not at least temporarily extend all the tax cuts — made Obama’s choice obvious.  See also TNR‘s “The Tax-Cut Deal Is Actually a Win for the Democrats.”

Indeed when you remember that we live in the real world — where neither Obama nor Reid nor Pelosi is very good at creating a big picture narrative for progressive policies — the final deal is remarkable.  Obama got a $900 billion stimulus that creates or saves 2.2 million jobs and — from a bunch of former anti-stimulus “deficit hawks.”  Moreover, the public knows who was on the side of the wealthy in this deal and who was on the side of the middle class.

And — or, rather, ‘but’ — the final bill may even be bigger.  Indeed it must be.   We must extend the clean energy tax breaks and incentives — or if we follow Jon Coifman’s advice to “Steal the Republican Playbook “” Now.” we must not “raise taxes on clean energy jobs in the middle of a recession.”

Rep. Ed Markey (D-MA), Chairman of the Select Committee on Energy Independence explains here that 100,000 renewable energy jobs are at stake. CAP’s Daniel J. Weiss goes into more detail in this re-post:

President Barack Obama and congressional Republicans have an agreement that would extend tax cuts for the middle class as well as provide billions of dollars for bonus tax cuts and estate tax relief for the richest Americans. A new Center for American Progress analysis found that the overall agreement would “create or save 2.2 million jobs despite wasteful tax policies.” But it appears that an important piece was left out of the framework tax deal: two relatively small clean energy tax provisions that have created tens of thousands of jobs and will improve U.S. economic competitiveness while reducing pollution.

As of this writing, the deal does not include extension of two American Recovery and Reinvestment Act programs that expire at the end of 2010 and have helped build a bigger domestic clean tech industry: the “Treasury Grant Program” (Sec. 1603 of the American Recovery and Reinvestment Act) and the Advanced Energy Manufacturing tax credit (section 48C of the tax code). They have created construction and manufacturing jobs in nearly every state.

President Obama acknowledged that the tax agreement was a compromise forged as a result of the Republican refusal to extend middle-class tax cuts without $133 billion in bonus tax breaks for the richest 2 percent of Americans. The president noted that the agreement includes provisions to create jobs at his December 7 press conference: “[Some people] suggest that we may see faster growth and more job growth as a consequence of this package.”

This compromise package ought to include the two expiring renewable energy tax programs that have a proven job-creation record if more jobs is a major goal.

Treasury Grant Program (Sec. 1603)

The Treasury Grant Program (1603) provides grants for wind, solar, and other renewable energy projects in lieu of tax credits available under existing law. This program benefits small- and medium-size companies that do not have enough tax liability to use tax credits.

This program has been a stunning success at boosting investment in renewable electricity and creating jobs. The Lawrence Berkeley National Lab estimates that in its first eight months the 1603 program funded “4,250 GW of renewable power projects.” It also supported nearly 55,000 jobs in the wind energy industry alone.

The solar industry received a similar employment boost from the 1603 program. The Solar Energy Industries Association determined that:

The 1603 Treasury Grant Program has supported the deployment of 1,179 solar energy systems as of November 22nd, 2010. Since guidance for the program was released in July of 2009, the manufacture and construction of these solar energy projects has supported roughly 20,000 U.S. jobs.

These jobs were created in part because the relatively small public investment leveraged significant private investment. Private entities invested $9 for every $2 spent by the 1603 program. Pat Eilers, managing director of Madison Dearborn Partners, which finances clean energy projects, noted that:

Nearly $2 billion of 1603 grants were disbursed in 2009 which helped stimulate nearly $9 billion of new investments by the private sector in renewable energy projects and created an estimated 72,000 jobs in the wind and solar industries.

According to the U.S. Partnership for Renewable Energy Finance, or PREF, “the extension of the 1603 program can help to create or preserve over 100,000 ‘green’ jobs.” The American Wind Energy Association warned that layoffs are imminent without an extension.

“We have people being laid off right now, and we expect to see more without fast action on the tax extenders now being negotiated,” said Denise Bode, CEO of AWEA. According to the trade group’s research, there are over 15,000 jobs in the manufacturing pipeline alone. “We are risking those jobs by not sending a clear signal that America remains open for business in wind energy,” Bode said.

The budget cost of this program is negligible since it converts an existing tax credit into a cash grant. USPREF noted that:

Some observers have voiced concerns regarding a perceived higher cost to the Treasury of the use of a cash grant versus a tax credit. Actually, the program simply provides for a cash payment instead of a reduction in future tax revenue and thus has a limited net impact on cost”¦ Any extension of the program would simply extend the variation on the subsidy, but not add significant new cost to the Treasury.

Advanced Energy Manufacturing Tax Credit (48C)

The Advanced Energy Manufacturing Tax Credit helps manufacturers build new factories or retrofit existing factories to build clean energy products, such as electric vehicle batteries, solar panels, or wind turbines. It helps create domestic clean tech manufacturing facilities so that the wind and solar energy projects funded by 1603 employ components produced in the United States by American workers.

This program funded investments in 183 projects in 43 states before reaching its cap of $2.3 billion. The White House reported that the program was very popular and created thousands of jobs.

The program”¦was oversubscribed by a ratio of more than 3 to 1, reflecting a deep pipeline of high quality clean energy manufacturing opportunities in the U.S.

Recovery Act investments of up to $2.3 billion for advanced energy manufacturing facilities will generate more than 17,000 jobs. This investment will be matched by as much as $5.4 billion in private sector funding likely supporting up to 41,000 additional jobs.

Last January the administration requested another $5 billion for 48C, which could leverage more than $11 billion in private financing and create an additional 80,000 jobs or more.

These programs put people to work, reduce pollution, and have limited cost

The United States is suffering from the worst economy in 80 years. The Troubled Asset Relief Program and ARRA prevented the Great Recession from becoming another Great Depression. Nonetheless, unemployment remains unacceptably high, which causes real pain for American families. The tax deal would fight unemployment with several quick-acting measures, such as the extension of unemployment insurance and the payroll tax cut.

The deal, however, includes $120 billion in bonus tax cuts for the wealthiest Americans. The 1603 and 48C programs are proven job creators that cost a tiny fraction of the tax cuts to the richest taxpayers. What’s more, these public investments would have an outsized economic impact with greater job-creating investments because they leverage significant amounts of private capital. Such an extension could support nearly 200,000 additional jobs modernizing America’s energy infrastructure by building, operating, or manufacturing wind turbines, solar panels, and other clean energy equipment.

The deployment of these resources would also improve public health by reducing air and greenhouse gas pollution from coal and other fossil-fuel-generated electricity. In fact, CAP used PREF data on electricity generation from pending renewable projects that get built only if 1603 is extended to estimate that continuing 1603 could reduce annual carbon pollution by 8 million tons. It would be unfortunate if Congress were to end programs that reduce GHG pollution while administration officials are in Cancun arguing that the United States will achieve its global warming pollution reduction commitments.

Many progressives have raised legitimate concerns about the tax deal. On balance, its provisions would create badly needed jobs. John Podesta, President and CEO of the Center for American Progress, noted that the compromise has:

“¦a steep price, but this deal will mean about 2 million jobs saved or created over the next two years. On balance, I think the president was right to choose helping working Americans over a December conflagration.

Congress should support additional jobs with a relatively small investment by extending the Treasury Grant Program and Advanced Energy Manufacturing tax credit. Inaction would increase unemployment when we can least afford it. Renewing these measures, on the other hand, will grow the economy while cutting pollution.

Daniel J. Weiss is the Director of Climate Strategy at American Progress.  Thanks to Richard Caperton.

Rather than trying to kill this deal, congressional Democrats and progressives around the country should work to ensure that these programs are put in the final bill.  If so, then this will be a homerun.

Yet that’s now how progressives see it, as Klein notes, :

If you look at the numbers alone, the tax cut deal looks to have robbed Republicans blind. The GOP got around $95 billion in tax cuts for wealthy Americans and $30 billion in estate tax cuts. Democrats got $120 billion in payroll-tax cuts, $40 billion in refundable tax credits (Earned Income Tax Credit, Child Tax Credit and education tax credits), $56 billion in unemployment insurance, and, depending on how you count it, about $180 billion (two-year cost) or $30 billion (10-year cost) in new tax incentives for businesses to invest.

But that’s not how it’s being understood. Republicans are treating it as a victory, and liberals as a defeat. Which raises two separate questions: Why did Republicans give Obama so much? And why aren’t Democrats happier about it?

You can read Klein’s take on the GOP online.

Which brings us to the liberals. My conversations with various progressives over the past 24 hours have convinced me that the problem is less the specifics of the deal — though liberals legitimately dislike the tax cuts for the rich, and rightly point out that Obama swore to let them expire — than the way in which it was reached. Put simply, Obama and the Democrats didn’t fight for them. There were no veto threats or serious effort to take the case to the public.

Instead, the White House disappeared into a closed room with the Republicans and cut a deal that they’d made no effort to sell to progressives. When the deal was cut, the president took an oblique shot at their preferences, saying “the American people didn’t send us here to wage symbolic battles or win symbolic victories.” And this came a mere week or two after the White House announced a federal pay freeze. The pattern, for progressives, seems clear: The White House uses them during elections, but doesn’t listen to, or consult them, while governing. In fact, it insults them, and then tells them to quiet down, they got the best bargain possible, even if it wasn’t the one they’d asked for, or been promised.

If you’re worried about stimulus, joblessness and the working poor, this is probably a better deal than you thought you were going to get. “It’s a bigger deal than anyone expected,” says Bob Greenstein, president of the Center on Budget and Policy Priorities. “Both sides gave more expected and both sides got more than expected.” The White House walked out of the negotiations with more stimulus than anyone had seen coming. But they did it in a way that made their staunchest allies feel left behind, and in many cases, utterly betrayed.

That the Obama administration has turned out to be fairly good at the inside Washington game of negotiations and legislative compromise and quite bad at communicating to the public and keeping their base excited is not what most would have predicted during the 2008 campaign. But it’s true.

55 Responses to Obama outmaneuvers GOP on tax cuts (mostly)

  1. Mimikatz says:

    I agree that this is as good a deal as the Dems are likely to get. Now they could have done something BEFORE the election as Obama wanted, but they waited, and they got clobbered in the election. Many progressives are simnply delusional to think that when the GOP-led House comes back in January they would be easier to negiotiate with. No, the GOP will want to end the estate tax, make the high-end Bush cuts permanent and let the low-income cuts like the Earned Income Tax Credit and the 10% bracket and the up-to-$9,000 zero bracket fall by the wayside, and forget unemployment insurance altogether. The Dems will have no leverage in the House, it will be like 2002-2006, and if the Dems couldn’t break a filibuster on the middle class tax cuts in the Senate this month, how will they filibuster when there are 6 more GOPers and some of the new Dems are more conservative than those they replaced? If the Dems wanted to do it their way they should have done it months ago.

    Let’s face it. The financial services industry put something like $89 million into the election , and other rich folks put more in, to protect their tax cuts and they will get what they want because much of the majority who now says they don’t want the high-end tax cuts either voted for the GOP or didn’t vote at all. This is the problem–the rich have bought Congress, so it is hard to try to base policy on fairness and equity and fiscal common sense when they cared enough to buy the result they wanted.

  2. Mike Roddy says:

    The details of what Obama got in return aren’t worth it, in my opinion. Plenty of Americans are getting the sense that rich people make all of the key decisions in Washington. They have already effected a big transfer of wealth from the middle class to the top 1% of earners. If any key legislation is going to have to continue to go through the rich, we’re screwed in the long run, since so much of their wealth is invested in fossil fuel companies and the banks that finance them.

  3. burk says:

    I agree that the stimulus aspects of this deal are excellent. But the larger issue of inequality was where the fold occurred. Democrats are livid that Obama didn’t have the spine to play chicken with the Republicans- to call their bluff of letting all the cuts expire in order to pin them publicly with their real agenda- holding every one in the US hostage to their complete corruption by and for the rich. That is such a political no-brainer and winner that Democrats were itching for this fight.

    And remember why we are in this situation- the unconscionable Senate rules that give Republicans more than one vote per Senator. If they didn’t have that, they wouldn’t have any- ANY- power at all at this point, and we would be living in a totally different policy universe. Fixing that institutional, unrepresentative, and unconstitutional sclerosis is most important.

  4. In just a few short months we will hit the debt ceiling. The Republicans will control the House. What will they hold demand to keep the government running?

    Social Security, Medicare, Medicaid and the health care bill are all targets. The compromise just past funds cuts in FICA taxes by borrowing from the general fund. There will be strong pressure to reduce Social Security payouts.

    The tax cuts passed this go round will be harder to eliminate with Republicans in control in 2012. Republicans made this deal to set more tax increase traps for Democrats in coming years. It’s short term gain for long term pain.

  5. Jonah says:

    I’m pretty impressed at the negotiation which went on here. Obama seemed to get his way with everything else except the single high tax bracket item and the high-end estate tax. It shows what the GOP is really about ($ for the rich), and what they’ll respond to – what could also be bought in another two years with a further extension of the tax cuts?

    Furthermore, the narrative which the media seems to be creating around this could be very useful to Obama. They’re painting it as Obama making a centrist decision against the wishes of the liberal rank and file. Suddenly Obama looks centrist to Fox News, and that’s a big deal. “The president is facing pushback from his own party after agreeing to a tax cut bill with Republicans.” declares the subheading on “Obama Defends Tax Deal, but His Party Stays Hostile” headlines the NYT.

    What comes of this? Perhaps a stronger liberal bloc within the Congress will rise in opposition to the newly media-anointed centrist Obama. Perhaps then the president can serve the role which he’s best at – mediating between the two extremes in congress. We’ve already seen that he’s lousy at driving an issue on his own – but his success here gives me hope that he can find the right carrots ($ for the rich) and sticks (threat of EPA action?) to entice the GOP to come to the table on carbon. This deal makes that unlikeliest of scenarios just the tiniest bit possible, I think.

  6. Chris Winter says:

    Mike Roddy wrote: “The details of what Obama got in return aren’t worth it, in my opinion. Plenty of Americans are getting the sense that rich people make all of the key decisions in Washington. They have already effected a big transfer of wealth from the middle class to the top 1% of earners. If any key legislation is going to have to continue to go through the rich, we’re screwed in the long run, since so much of their wealth is invested in fossil fuel companies and the banks that finance them.”

    The one bright spot I can see in this situation is the Republicans’ oft-repeated claim that tax cuts for the wealthy will create plenty of jobs. That didn’t happen during the GW Bush administration. Things are different now, and I hope the economy continues to recover and to lower unemployment. But I don’t expect the rate of job creation to rise. When it doesn’t, Democrats can hold this fact over the heads of their opponents.

    That’s not what I’d call a dazzlingly bright spot, but it’s something.

  7. Chris Winter says:

    FishOutOfWater wrote: “Social Security, Medicare, Medicaid and the health care bill are all targets.”

    True, but don’t forget all those Tea-Partiers crying, “Keep your government hands off my Medicare!” Messing with those entitlements carries a lot of risk for political backlash.

  8. Chris Winter says:

    Jonah wrote: “This deal makes that unlikeliest of scenarios just the tiniest bit possible, I think.”

    So what kind of a player does this make Obama?

    “Not poker, Captain Kirk — chess.” ;-)

  9. L. Carey says:

    Ezra Klein: “The pattern, for progressives, seems clear: The White House uses them during elections, but doesn’t listen to, or consult them, while governing. In fact, it insults them, and then tells them to quiet down, they got the best bargain possible, even if it wasn’t the one they’d asked for, or been promised.” That seems to be a concise summary of the real problem: while the tax cuts compromise is, on its own merits, probably a pretty good deal, it just represents one more instance of the Obama White House going out of its way to botch up their messaging and infuriate their own base, for no particularly good reason. I thought Obama wanted to be a two term president, but he seems to be consistently doing his level best to drive down any remaining enthusiasm on the part of his former supporters. The commentators keep carrying on about “Obama’s liberal base” and the “left wing of the Democratic party”, as though this affects only dyed in the wool lefties, but I believe that a lot of moderate and conservative Democrats are getting just as upset. Come 2012, very few people are going to be enthused about voting for somebody who consistently says “vote for me – I have some good ideas, but I’ll never thank you, acknowledge your support or tell you what I’m doing or why I’m doing it, and by the way, I’ll make sure at every opportunity to paint you as ungrateful and radical for supporting me”.

    [JR: Well, I’m as critical of Obama as anyone, but the fact is that achieved something that no Democratic president has ever done — genuine health care reform. There never was going to be a public option but the White House screwed up the messaging so badly that he turned a positive into a negative.]

  10. Tom Bennion says:

    Obama is still playing rope a dope with the GOP. They just dont get it at all. Having boxed themselves into a corner over their no “taxes on the rich”, Obama has milked them for everything else. He also gets to call them blackmailers and hostage takers in public. While also becoming a darling of Fox news, while also energizing the progressive base to ‘force’ him into a tougher stance in future (and who he can woe back in good time). Its risky, but in a nation state that is basically ungovernable at the federal level (primarily because of the filibuster plus a “cash for policies” politics), this is brilliant.

  11. Leif says:

    Can the A President declare a state of “WAR” against a Suicidal segment of its citizens to save the Nation, as long as he has the support of the military? Oh, and Science? Oh, a marginalized 70%+ of the population? (Shot down at every positive suggestion by a minority Pollution for Profits and Party of NO!)

    Would we need to with this bill?

  12. Rabid Doomsayer says:

    Said it before and I will say it again, time for a great speach. Never underestimate the power of a single speach delivered at the right time.

    Time to deliver on “Yes we can”. Properly inform the people and action does not just become possible, but inevitable. When the people truely understand what faces us, not even the Tea Baggers will stand in the way.

    The Australian tells us that his editors determine what gets printed. Strange how all his editors follow the same line. The Australian may admit global warming is a problem, but his media do not. They are firmly in the denier camp, it is about propaganda not news.

    Only the President can cut through the media blackout to reach the entire nation. Time is very short.

  13. Wonhyo says:

    JR, thanks for the inside scoop. It sounds like the WH really did outmaneuver the Republicans to get a deal that looks good for the Republicans but is good for Americans.

    While political outmaneuvering is nice and substantive, the WH can still lose (and is losing) in the long term if it doesn’t fix its messaging. Obama and House/Senate Dems have to make it clear that they are fighting for as much as they can get to maintain the long-term moral support of their constituents.

    Of course, none of this will matter if our society is unprepared for the inevitable effects of climate change. Our leaders have to simultaneously push for reductions in climate changing greenhouse gas emissions, preparations for the inevitable climate catastrophes, and care for those who have already been (and those who inevitably will be) devastated by climate change.

  14. Leif says:

    Mimikatz at 1: “Now they could have done something BEFORE the election as Obama wanted, but they waited, and they got clobbered in the election.”

    That might be such a bad thing. They now a number of low watt bulbs representing the image of big money and fossil. It might be just as good as sending them to Far-off-i-stan. On top of that they are shackled hand and fist. And for the cream on the cake that is the BEST Koch et al’s millions could buy! Once they find there way to Washington there is a whole lot more to learn…

  15. Daniel Ives says:

    I think FishoutofWater nailed it. Liberals are upset about this deal because they were itching for Obama to finally fight the GOP and call their bluff. It was indeed a big political no-brainer, and I’m not so sure the GOP would have voted in lock-step against a deal without the rich tax cuts (Boehner admitted to this, and Scott Brown and the Maine senators might have caved IF Obama would have applied some political pressure).

    Here’s why this deal really makes me upset as a liberal. Obama just made a deal that essentially extends the disasterous Bush economic policy for 2 more years, the same policy he so rampantly attacked as a candidate. These are not the Bush tax cuts anymore, he will own them, and it is going to be a political disaster for Democrats in 2012. They will be campaigning on “NOW we mean it, we are going to end the tax cuts for the rich THIS time” and who is going to believe them? Not even their own base. The GOP and his own base will eat him alive on this issue in 2012, as well as congressional Democrats. He put them in an impossible political situation.

    And mark my words: despite the GOP getting their tax cuts for all incomes, they will turn right around and hit Obama for increasing the deficit with this deal.

  16. Andy says:

    I appreciate the forays into U.S. politics. I’d have missed Mr. Klein’s argument.

    The Republicans are all about appearing to support the ideology of their base. Obama is about acheiving results. It works for me.

  17. Rice Dog says:

    Tom Bennion alludes to the “cash for policies” political practice. Does anyone else out there think that the only hope for our nation is for the outlawing of private $$$ in politics altogether? Why do polititians spend 7 figures to gain a 5 to 6 figure job?

    Take the money away from our legislative process and watch the rats jump off the ship.

  18. Leif says:

    Rewrite if I might. It took my breath away.

    Mimikatz at 1: “Now they could have done something BEFORE the election as Obama wanted, but they waited, and they got clobbered in the election.”

    That might not such a bad thing. They now have a number of low watt bulbs representing the image of big money and fossil. It might be just as good as sending them to Far-off-i-stan. On top of that they are shackled hand and fist even thru the next election. And for the cream on the cake that is the BEST Koch et al’s millions could buy! Once they find there way to Washington there is a whole lot more to learn…

  19. Mimikatz says:

    But how do you get the money out of a political system that is dominated by money?

    The money-in-politics problem has begun to resemble the problem with reapportioning state legislatures in the 1960s, after almost every state had undergone significant urbanization. Legislatures that looked like the US Senate (same number of representatives for huge urban counties and sparsley populated rural counties) refused to reapportion themselves, so in response to a lawsuit the US Supreme Court announced a one-person, one-vote rule in the early 60s, if memory serves.

    Unfortunately, the Supreme Court is now as dominated by members supporting the wealthy and corporate interests as the Senate is, maybe even more so.

  20. Michael Tucker says:


    I agree with you that the tax cut and unemployment package that has been negotiated IS better than many hoped. I hate the way both sides are willing to use the poor and the unemployed as hostages in order to ‘force’ the Republicans to change; Republicans do not care. BUT I would have rather seen a climate change bill FOR ALL than a health care bill for some.

  21. L. Carey says:

    Joe, thanks for your comment to my post. The most infuriating thing is that I agree with you – Obama is brilliant and tenacious and achieved a major milestone with health care reform. But his messaging absolutely stinks – even when he “wins” an issue from an objective standpoint, either the WH manages to completely bungle or bury the messaging, and/or the Republicans manage to paint the result as a “loss.” And I’m still absolutely seething about the way the WH totally screwed up any possibility (admittedly challenging) of getting GHG legislation out of the Senate, without any fight whatsoever – and for Obama to then ramble on in the pre-midterm election interview with Rolling Stone about how he was going to revisit climate legislation in the 111th Congress, as though he could just reopen the issue whenever he wanted … what the heck was he smoking?

    [JR: I can’t tell whether Obama chieved this particular outcome by design or by luck. But he hasn’t figured out how to talk to the progressive base yet. He did score big points with independents, though. The base may be pissed, but not near as pissed as they’ll be at the Republican nominee.]

  22. Jim Groom says:

    What it all comes down to is what level of deficit is acceptable in the so-called compromise package? Do we want to add 3 trillion to the debt or 3.7 trillion? Arguments are being made concerning the stimulating effect of the first 3 trillion, but the additional 700 billion in the form of extended tax cuts to the wealthy faces a steep climb. I’ve seen nothing that convinces me that the wealthy will use that gift to increase employment or to stimulate the economy. Not to mention the fact that the money will have to be borrowed from other countries to pass along to those who don’t need the money. They have done just fine the last 30 years.

  23. Leif says:

    The GOBP should be begging us to take their money and make the economy work.. History shows that their attempts falter. If they give a GOOD FAITH support at least they can say “we tried” and not be saddled with that Pollution-for- Profits albatross. In fact, IMO if they don’t come forth with gobs of money they paint themselves the scoundrels they are. The more so as the economy rejuvenates. It will be fool hardy to do otherwise but heavens knows the “Fools” are the Majority over there, so it is anybodies guess. Beside the majority of the GOBP will follow the money of the Awakening Economy. Any expense will just be the cost of doing business and they will just figure how to make it tax deductible. No Problemo…

    What was that!? Did I feel the earth move?

  24. John McCormick says:

    Joe Romm, you pulled back the blanket.

    “He did score big points with independents, though”

    It is all about President Obama winning back independent voters. From now on, he is the consummate politician hell bent on getting re-elected and his Democratic base will have nowhere else to go in 2012. Dems who decide to walk will be offset by independents who appreciate his governing from the middle.

    I can live with that if the alternative is a repug White House eviscerating EPA and everything I care about.

    John McCormick

  25. john atcheson says:

    The CBO rated 11 stimulus measures and found tax cuts to be the very worst. At a time when public money is in scarce supply and deficits are both a serious economic issue and a political liability, going into debt to pay for the weakest stimulus measure available is simple minded.

    Moreover, the failures of message you often talk about Joe, are due in no small part to three things — no meta narrative, and no values story. People don’t respond to individual policies, they respond to a much larger frame especially when the frame has a moral center.

    The third thing, of course, is that by using their own meta narrative (Ayan Rand Redux) — together with a series of wedge issues — Republicans have been able to avoid getting tarred with the unpopularity of their individual positions.

    Taking a stand on this issue would have delineated the difference in stark terms — Democrats stand for the middle class, and Republicans are little more than lackeys for Wall STreet and the fattest cats.

    We were in the position of having to compromise precisely because Obama and the Dems have been too afraid to take a stand — had we had this fight in the summer, we probably would have had a much better mid-term. Had Obama hit back hard and fast on the Health Care stuff AND had he had the guts to back a public option, (mote than 70% favored that as late as June) we could have contained the asinine Tea Party stuff and seized the moral high ground.

    Following polls is like steering by the bow of the ship — do it too long and you inevitably end up on the rocks.

    This White House is so avid to avoid losing, it will take no risks. As Sun Tzu says, sometimes it is necessary to lose the battle in order to win the war.

    We will never have a message that resonates until we stand for something besides compromise, but more importantly — we will not avoid economic ruin by going into debt to adopt the weakest stimulus available to us.

    And by the way, how long do you think Republicans would have held out against constituents calling and demanding that they retain (or repass) the middle class tax cuts? How long until the passed unemployment which touches nearly every family in America directly of indirectly? And how long would they suffer politically for taking such unreasonable stands.

    No, Obama gave away the store — but worse, he gave away the opportunity for this country to have the kind of debate we so desperately need. One that clearly shows what each Party stands for and who they represent. Worse still, he squandered money we don’t have on a bad policy that will not solve serious and nearly intractable economic troubles.

  26. Mike Roddy says:

    I disagree about your political calculation in your comment to L. Carey, Joe. Americans won’t remember this debate in 2012, but they will remember that the rich are still getting much richer by being able to bully the Democrats, the deficit has grown, and that every social and environmental program that could have helped them would have been gutted.

  27. john atcheson says:

    One other point — even without a national advocate or spokesperson, progressive policies poll better than Republicans’a positions do. See, for example ( or any of dozens of similar polls.

    I wouldn’t be so quick to assume that we were never going to get a public option in Health care — or a middle class tax cut, or a real financial reform bill. At the end of the day, only one thing trumps corporate and fat cat money, and that’s votes. If we had a skillful leader with good messaging, we could take these preferences and make them mandates.

  28. MarkB says:

    Deficit hawks should be completely appalled by this deal. Democrats are saying “we’ll let you borrow money for tax cuts for the rich for 2 years if you let us borrow more money for tax cuts for the middle class and poor for 1 year”. Some deal. The 1-year stuff expires perhaps or they hold it hostage to pass more tax breaks for the rich, and then Republicans controlling Congress extend the Bush tax cuts another 2 years, and maybe eliminate the Estate Tax entirely with a larger majority, buying off Democratic support with a few carrots. It’s truly remarkable how Congress can get around PayGo rules so easily. Meanwhile, the national debt problems mount until it all explodes. A fiscal hawk takes control. Taxes are raised sharply and spending cut across the board. There goes investment in clean energy for good.

    I understand the desire to extend clean energy initiatives for another year, but that’s overwhelmed by the big picture of what this deal implies going forward. I hope Congressional Democrats filibuster. We will see where the real fiscal hawks stand.

  29. The Wonderer says:

    First, your proposals sound good to me and I hope that the final bill includes those or similar provisions.

    What bothers me is that (as Klein) points out, this is a deficit expansion bill all-around. This makes the “deal” all to easy, and again, as with the health care deal, puts off more difficult problems for someone else to deal with.

    2 year payroll tax deduction: Despite the fact that I don’t need it, and will be among the largest beneficiaries, I am worried about the long-term prospect. Let it expire in 2 years? The people who depend on it most, will be the most hurt when it expires. Extend it? I don’t think it is affordable without a change in the tax elsewhere. We need long-term structural changes that put us on the right path, and short-term stimulus. I don’t see that here.

    In what year do you suppose we will elect people who will make difficult choices and focus on the long term?

  30. Prokaryotes says:

    The Tax-Cut Deal Is Actually a Win for the Democrats

  31. Leif says:

    The Wonderer, @28: 2 year payroll tax deduction: Despite the fact that I don’t need it, and will be among the largest beneficiaries, I am worried about the long-term prospect.

    Well you could invest it in the Green Awakening Economy to make sure it succeeds. Or perhaps you would rather invest in BP et al?

  32. The Wonderer says:

    My point had nothing to do with how I will invest my tax cut, but I take your point. BP? Not hardly.

  33. Steve Bloom says:

    The payroll tax is how Social Security gets funded. Fortunately, in two years the Republicans surely won’t be able to take what was stated and agreed to be a temporary cut and relabel it a tax increase when it expires (that could never happen, right?), using that to help boost them into a 2012 win while achieving their holy grail of undermining Social Security. Nothing to worry about there, no sir.

  34. PeterW says:

    If I lived in Iceland or Greece or Ireland or wherever the IMF will target next I would be very pissed off at the unfairness of this. Every other country in the world that spends like drunken sailors gets shut down and forced to implement strick austerity programs. But the U.S. is special, it can print all the money (or sorry quantitative easing) it wants because the U.S. dollar is the currency standard and it’s too big to fail. The rest of the world has to suck it up and pay for it.

    Do you ever wonder why the U.S. is so loved around the world? It’s not just the war machine, it’s the U.S. casino capitalism as well. One these days countries are going to think twice about playing at the U.S.’s rigged roulette wheel.

  35. Jonah says:

    Chris @ #8:

    If there’s a solid reason to believe he saw this coming, and played it cool while everyone else stewed, then I’ll just stop second guessing him forever, as he would obviously have been playing the game at a level I can’t even consider.

    For now, I think the truth is somewhere in between that, and dumb luck.

  36. Tim says:

    I think that the Democrats need to hit the Republicans in exactly the place that the Republicans think that they’re strongest: the legacy of Ronald Reagan. In 1933, after decades of conservatives ran the country into the ground, FDR took control and in the next seven years guided the country through a period of the fastest economic growth of the past century – more than 7% per year. That’s right, the 1933-1940 period – the Great Depression – was actually only as bad as it was because Hoover and the GOP did so much damage to the US that even an average growth rate of 7% per year left the country in economically bad shape right up to eve of WW II. Liberals made most of the country’s decisions, and the middle class flourished, until Ronald Reagan arrived. The ‘pact’ the middle class made with Reaganism has basically been a slow-motion suicide pact for the middle class – and Democrats will continue to deal from a position of weakness until they tear “the gipper” off his pedestal and give his philosophy the trashing it so richly deserves: since 1980, American workers have scored impressive gains in productivity (more than 40%), but 80% of the wage gains that productivity gain generated went to the top 1% of “earners”, and most of the the remaining wage gains went to the next 4% of “earners”. America has the most expensive (and not the best) health care system, in large part because insurance companies slice 30% off the top – thanks to right-wing corruption.

    It took decades of continuous right-wing libel to tarnish the word “liberal” and unless the Democratic party is ready to defend its principles and its constituency, they will continue to deal with the scum in the GOP from a position of weakness. This means that a concerted, relentless attack on the hero of modern conservatism is required. Reaganism has slowly been crushing the American middle class and it has to be continually exposed for having done so. In my opinion, climate change – as crucial an issue as people here know it to be – is not the winning central issue of progressives. Progressives must first gain the upper hand, and then deal with the real problems of the world – with climate change at the top of the list.

  37. Deborah Stark says:

    Re: Daniel Ives | Post #15

    “…..And mark my words: despite the GOP getting their tax cuts for all incomes, they will turn right around and hit Obama for increasing the deficit with this deal…..”

    Let them.

    Let them display themselves for posterity as the miserable, conniving sharkrats they are.

    Here is Senator Kerry’s statement on the matter:

    Kerry backs Obama on tax cuts

    Excellent thread here.

  38. William P says:

    People criticizing Obama for not getting his message out are overlooking one big fact.

    Democrats are shut out of major media in the US to a great extent. Even special announcements and speeches by the President are often not carried.

    On the other hand, we have Fox “News” with an estimated audience of over 35 million. Limbaugh at up to 20 million. Then there are other Republican sources like Savage, Levin, etc. This is where US citizens are getting their political education on current issues.

    Right wing media owns the megaphone. MSNBC, The Daily Show and Colbert command a small audience by comparison.

    Right media uses a gossip technique against Obama and anyone supporting programs to help average people by smearing, demeaning, putting out blatantly false information like on the Obama trip to India, and never a retraction – a constant tearing down of Democrats and their initiatives.

    The right wing propaganda media has one goal: elect Republicans. They use hot button issues like mosques, gay marriage, gun control – fake issues in that they present no serious national threat. Once elected with these issues put out in campaigns and by the right wing media, Republicans get to work on their REAL agenda – deregulation (very much including anti-climate change legislation), lower taxes for the rich and corporations, legislation facilitating profit-generating out sourcing of jobs and more.

    Follow the money. Its about huge amounts of money and every elected Congress person better support the party line or face the public wrath of Rush Limbaugh or a Fox personality.

    Those concerned about climate and other issues to help the PEOPLE of this country better find a way to defeat the big right wing propaganda machine.

  39. Jim Groom says:

    Revenue for the government from all of its sources (taxes..etc) have a short fall of 40% compared to spending. Cutting taxes and depriving the government of revenue at first glance does not appear to make much sense. The deficit hawks must be losing their minds over this so-called compromise plan. Cutting all of the fraud, waste and abuse will not touch the problem. Throw in the earmarks that make such nice newspaper copy and you still have done nothing to address the problem. Freezing federal employees salary is only symbolic and anemic. The leadership of both parties are content with kicking the problem down the road for someone else to attempt to solve. Sacrifice by all Americans is required and that will be very difficult to obtain. One mans sacred cow is another’s primary interest to be cut. I can hardly wait the arrival of the Tea Party to the halls of congress. Boy are we in for difficult and nasty ride.

  40. Alec Johnson says:

    I can see that there may be more upside to this deal than was immediately apparent. I know that if you aggregate the numbers it looks like the Democrats got more than the Republicans did. However, if you look at this on a per capita basis, mindful that the smaller sum the Republicans obtained will be spread among a far smaller number of beneficiaries, I’m back to thinking this isn’t much of a deal.

    And Joe, as much as I admire you [hugely, I should add], when you claim in one of your comments above that “There never was going to be a public option,” I have to wonder how you came to that conclusion. If Obama had done even a passable job on messaging, it might have been a serious contender. I worked on the Presidential Campaigns in Iowa and Obama had the limpest healthcare plan of all. Indeed, his plan specifically excluded a universal mandate. Edwards put the best plan on the table and Obama utterly screwed up implementing it.

  41. A face in the clouds says:

    Made me wonder how the other guy looked. The image of Obama, with a dozen fresh stitches on his face, calling the GOP a pack of bagmen for billionaire hostage-takers who would starve children at Christmas is the headline in the nation’s barber shops. Haven’t heard any comebacks from the hostage takers either. They’ll have to earn every cent too or will be washed out of office in 2012. The difference is it will be personal. The 2010 turnover was cyclical in large part and included some Democrats who had been in office forever or otherwise turned into dead wood.

    Heads up in Texas. The Republicans missed getting a super majority in the State House by 12 votes in Travis County. (The seat was won by a progressive incumbent, Donna Howard of Austin.) This is not necessarily good news for the GOP. As one might suspect, some real silly people were elected. More importantly there are still hard feelings between Republicans following the last Speaker’s election. Then there’s the ever-present divide between rural and urban Republicans, and the Tea Party Republicans who have all sorts of conspiracy theories (some true) about Gov. Perry. After all of that, they will still have to compromise with a small but wily group of Democrats. The Republicans also maintained control of the Texas Senate but there are more than enough Democrats to provide an adequate safety net for any foolishness. And rest assured there will be foolishness, although much of it may interrupted by what appears to be a very serious drought in the making. Texas history suggests that water is thicker than blood. We may be about to find out if that is still true.

  42. Chad says:

    I disagree, Joe, that this bill will help the economy. The tax cuts do help the economy in the short term, as all borrowing does. You can always goose your local, state, or national economy by borrowing money from outside and dumping it into your jurisdiction, and having it rattle around a few times before escaping back into the global markets. The problem is that you have to pay this money back someday, and hurt your economy by an even greater amount than you helped it earlier.

    There are only two times that government borrowing makes sense

    1: In times like 2008, when the economy was in a feedback induced death spiral.

    2: For the construction of long-term capital assets that have positive returns sufficient to cover their interest cost.

    These tax cuts represent neither. Our economy is no longer collapsing, and at some point, we have to slog through the pain rather than putting it off by borrowing even more.

    [JR: The November jobs report shows that more stimulus is needed.]

  43. Sime says:

    I know this is off topic but could Joe or some of you who know what you are talking about take a look at this, it just seems a bit spun to me…



  44. John McCormick says:

    RE # 36 and # 38

    Tim, your eloquent attack on the effects of Reaganism on the middle class is right on.

    Then, you call for: “a concerted, relentless attack on the hero of modern conservatism is required. ” Couldn’t agree more.

    William P., your summation of the condition of America’s news machine was just as good.

    You described it as:

    “we have Fox “News” with an estimated audience of over 35 million. Limbaugh at up to 20 million. Then there are other Republican sources like Savage, Levin, etc. This is where US citizens are getting their political education on current issues. ” Couldn’t agree more.

    So, we progressives now have to right the ship for the middle class and need to educate voters why their middle class lives are slipping away from them. How? MSNBC? Blogs? The Onion?

    We progressives are building the bridge of a better America from one side of the river and the repugs are building it from the opposite side.

    We aren’t going to meet in the middle though. Not any longer. Two bridges passing in the night.

    We started to in the Clinton years but the repugs found the Gingrich and Armey blueprint was better and they hired the Murdoch engineers to finish the job.

    It will take mass street protests to tear down the Murdoch bridge. Who will show up? We geazers? No, not enough of us are suffering, yet. Then we’ll be too old. The youth? They are about turned off to politics and focused on their virtual social lives?

    Sunset in America. A fitting way to take down the Reagan statue.

    John McCormick

  45. Chris Winter says:

    Jonah wrote: “If there’s a solid reason to believe he saw this coming, and played it cool while everyone else stewed, then I’ll just stop second guessing him forever, as he would obviously have been playing the game at a level I can’t even consider.”

    His next moves, and the GOP’s, will shed some light on that.

    The joker in the deck (forgive me for the metaphor whiplash) is the state economies. Today’s paper says the loss of estate tax revenues may boost California’s budget shortfall from $25 to $28 billion.

    “For now, I think the truth is somewhere in between that, and dumb luck.”

    You’re probably correct. The vagaries of financial system performance make luck a part of most political maneuvers.

  46. Sime says:

    re sime@42

    I just had a reply back from CSRRT on the register story linked to in 42, the reply was from Professor Scott Mandia and the response was…


    Thank you for alerting us to this highly misleading story. You should read:

    It should also be noted that there are a few very recent papers that show a positive feedback due to fewer low clouds in a warmer world.

    Scientists are confident that 2C is likely the minimum warming due to a 2xCO2 atmosphere with 3C warming the best estimate. These values are from physics and historical data and the model consensus shows the same.


    Scott A. Mandia
    Professor – Physical Sciences, Asst. Chair
    Suffolk County Community College

    Thank you Professor Mandia and shame on TheRegister!

  47. tom says:

    Joe, Taken out of context this agreement may look like a good deal but in the context of scaling up the war in Afghanistan, allowing banks to be TBTF, allowing private insurance companies a big victory, and making secret deals with big Pharma, this is just one more concession to the plutocracy. Thinking that this is going to be good for Democrats ignores the ugly history of the past 2 election. This is blood in the water for Republicans who will in the end make theses tax cuts permanent. The Republicans will block all valid attempts to stimulate job growth and in 2012 when unemployment is still high Obama will get another shellacking. We’re screwed.

  48. Steve Bloom says:

    Well, Joe, contrary to the hope you expressed above, Krugman doesn’t seem any happier in the cold light of the following day. His verdict:

    Within its own terms the deal is OK but still not nearly enough to do the economic job, and is a political disaster since a) it gives Republicans more opportunities for hostage-taking in late 2011 and 2012 and b) if allowed to just expire will likely result in the sort of downward trend in 2012 (following a small boost in 2011) that history shows presidential administrations are unlikely to survive.

    I would add that all of the implied additional debating time for the economy bodes poorly for climate action.

  49. WeatherDem says:

    re Steve Bloom @33

    Steve hit the nail on the head. At best, Obama might be able to get another too-weak stimulus passed, but it comes at the expense of Social Security in the future. If the payroll tax is reduced in 2010, does anyone seriously think Republican Teabaggers will allow it to go back to its former levels in 2012 without screaming that Democrats are trying to raise taxes on everybody again?

    Meanwhile, Obama does a 180 on his own stated goal from just 2 months ago, on the same topic that he defined McCain on in 2008: the Bush Tax Cuts were bad for the economy and had to be sunsetted, as written. We’re borrowing those billions of dollars and giving it away to those who need it least. The bill on that borrowing will come due someday. It is clear now that Obama joins the ranks of those too cowardly to deal with it. And yes, Pelosi and Reid are on that list too.

    It is interesting that just when the national conversation started to turn toward an honest discussion regarding the long-term affordability of those tax cuts, President Obama makes another bad deal with Republican Teabaggers and then took the time to beat the DFHs … again. I wish Obama had the same level of passion and took those who want to destroy his Presidency and this country to task for their insane policy stances.

  50. Steve Bloom says:

    Joe, as if on cue, the Pielkesphere finally arrives where it has been headed all these years. Flame on!

  51. Leif says:

    Steve Bloom, @ 10: The one PhD in my circle that I am close enough with to talk about this is an Ocean Acoustic Scientist. He came from a Solid Republican back ground and was solid Republican when I first met him over 20 years ago now. Today he is a strong Democrat. Obviously there is more than meets the eye going on here. I would add that he spent a few seasons in Antarctica.

  52. Leif says:

    Steve Bloom @ 50. My numbers are clipped.

  53. Steve Bloom says:

    Leif, I don’t think we should be at all surprised by this since Republicans have been on an increasingly anti-science trend going back about thirty years. Scientists are good at noticing trends.

  54. Chris Crieta says:

    As a frustrated progressive, I am excited to see a spinal cord emerge among Democratic reps. Perhaps if this were a natural phenomenon the November results would have been different. Liberal voters lost much faith in the Democratic majority who failed to show any stones for two years, and as a result many progressives failed to show at the polls. I sadly expect this to backfire as their weak knees win out…but I can still have Hope can’t I??