UPDATE @ 3:45p: Criticism of the president's tax cut deal with Republicans is growing louder by the minute from all quarters of the Democratic Party and progressive policy world. And in a surprising turn, conservative Democrat Sen. Mary Landrieu--who is enraged about the plan--made the stakes clear in a way that the nation's first black president has steadfastly refused to do. Here's what she said to reporters after meeting with Vice President Joe Biden today:
"The median net worth of African-American families -- net worth, not income -- in this country today, according to our census, is $5,000. You want me to repeat that? $5,000. So we are borrowing money from constituencies, and large segments of the population like this," said Landrieu. "I want you all to get your heads around this."
Exactly. She told reporters on the way into the meeting that she'd be explaining the "moral corruptness" of the "Obama-McConnell plan" to the vice president. Scroll down for more details on the plan itself.
As I wrote yesterday, the costs of embracing the tax cut for the wealthy are far greater than the modest gains Obama won. Some have noted that he got more than they would have expected, but that's just the tragedy of low expectations. The president acknowledged in his press conferences today and last night that the deal is "not perfect," while insisting it will create "millions" of jobs. Few buy that claim. The gains will be welcome, but they are marginal and they come at enormous cost.
Here's how Obama defended the deal today (from the NYT):
"I'm not here to play games with the American people or the health of our economy," he said in the 30-minute news conference. "My job is to do whatever I can to get this economy moving. My job is to do whatever I can to spur job creation. My job is to look out for middle-class families who are struggling right now to get by, and Americans who are out of work through no fault of their own."
The question, of course, is whether this deal represents an abandonment or fulfillment of that job.
Notably, neither Nancy Pelosi nor Harry Reid has supported the package. Democrats don't likely have the votes to block it in the Senate. But the president now faces the potential spectacle of huge portions of his own party voting against him and a downright revolt from House Democrats in conference committee. Their anger is driven by the fact Democrats had both the political upper hand and an airtight policy argument on this issue. Voters overwhelmingly support both letting the tax cuts for the wealthy expire and extending unemployment benefits. Mounds of economic data show these things to be good ideas in both the long and short term recovery. The president's caucus is having a hard time understanding why they should back down.
Here's more of Landrieu: "We're going to borrow $46 billion from the poor, from the middle class, from businesses of all sizes basically to give a tax cut to families in America today, that despite the recession, are making over a million dollars. I mean, this is unprecedented. Unprecedented."
There's a lot swirling out there about the tax cut and unemployment extension cave in compromise the president has inked with Republican leaders. Ezra Klein at the Washington Post has a digest of the deal that's both detailed and easy to understand. It's handy for all the non-economists trying to poke their head into tax policy today.
Some of the big progressive economists are giving the package something like a C+. Dean Baker and Paul Krugman (and Klein) say it's not as bad as they thought it would be. Working people got a 13-month extension on unemployment benefits--meaning we don't have to do this again in a couple months, with conservatives ascendant in Congress--and a payroll tax cut for a year. On the other hand, the massive estate tax exemption is horrible and the real battle over tax cuts and the role of government has merely been delayed two years.
President Obama's political team likes the idea of that delay. Rather than have a face off over taxes now, they say they'll spend two more years trying to prove Obama really, really is committed to bipartisanship (that's still in doubt?) and then have the fight over taxes in 2012. That, they say, is the way to win back independent voters. The pesky "professional left" can carp all it wants about the president's 2008 base; the independents are the goal, we're told.
I come down with Robert Reich, who called the deal an "abomination." Yes, the modest gains of the jobless benefit extension and payroll tax cut are nice. But their moderation is the problem. True unemployment--measuring those who have given up looking and who are in part-time jobs--is closer to 20 percent than it is 10. Even the most conservative figures put black unemployment at 15 percent. A number of midwestern cities are in what can only be called a depression. And we're pissing around with these cautious, petty efforts to right the course. Nobody seriously believes this package will add the "millions" of jobs to the economy that the president asserted last night.
To achieve that, we'll need the scale of intervention that is now impossible. By caving in to Republicans' plainly irresponsible demands around tax cuts for the wealthy, the president invites them to continue holding working people hostage for the next two years. He sets himself and his party up to take the blame for an economy that won't recover as a consequence of that hostage taking. And he leaves millions of families struggling to get by in the bizarre embrace of a political comity that plainly exist only in his mind.