I’ll start with the specific issue and then spend a bit being a grand pontificator.
First, the thing that tripped this switch in my political consciousness was quite specific: the tax cut/unemployment compromise that the President struck last night with Republicans was not bad. It was certainly shocking to me, and it did contain bad elements, but it is at worst a neutral deal and at best a good deal, at least from a policy perspective.
The nitty gritty: the arrangement included, in chief, five components. The first is the extension of the Bush Tax Cuts for those making less than 250k/year. Well, that’s fine. We liberals have all been in favor of that for a while already. The second is the extension of the tax cuts for those making over 250. Well, yes, this sucks, especially from a political point of view. "The Republicans Get What they Want … Again" has been the headline all day. And it’s certainly true …
But is it really so terrible in the near term? Long term fiscal disaster, yes. But near term, I have to wonder where our collective liberal zeal for Keynes has gotten to. As irritating a line as it is, it is something of a truism, or at least it should register as such to a fiscal liberal: "you don’t raise taxes in a recession." Do the millionaire tax cuts do anything to stimulate the economy? Of course not. Would letting them expire hurt the economy? Again, probably not. But will keeping them hurt? I can’t see how, at least as far as the recovery is concerned. Item three, the extensions of the estate and capital gains tax deductions, falls into this category as well, even if it does sting a bit more from a distribution perspective.
Which brings us to item four, the first of two (yes, TWO) concessions the President was able to extract from the Republicans in exchange for giving them their tax cuts. We get thirteen more months of unemployment insurance. Hello? Did anybody else get that? THIRTEEN more months. The last extension was for three months. This is the largest single federal expenditure on unemployment insurance since the 1980s. This is huge. And it’s fantastically important to the recovery. We get something like $1.60 back for every one of these dollars we spend. This is the single best thing we can do for the economy, its a liberal cause celebre, and the President got the Republicans to sign off on it. For another YEAR.
And finally, item five, the other thing about which Keynesian liberals should be doing backflips: we got Mitch McConnell and John Boehner, less than a month after that horrifying election cycle, to sign on to a 900 billion dollar bill … financed entirely with debt. Nothing will be cut. Nothing will be rerouted. This is new money, 900 billion dollars of it, that the President has secured for the near-term economic stability of the country. What do I call that? I call it a stimulus. The President just inked a deal for a second, bipartisan, deficit-financed stimulus bill worth almost a trillion dollars. Wasn’t that supposed to be impossible?
Oh, and we got a payroll tax holiday for workers. And an extension of education tax credits. And an expansion of the Earned Income Tax Credit.
And here’s where the grand scale pontification starts: when, I ask, did we liberals become what we claim to hate so deeply in those on the other side of the aisle? When did we become stubborn? Intransigent? When did we start refusing to deal? To compromise? To give a little to get a little? Was our top priority the whole while really to keep money away from rich people, and damn the consequences? Even if it meant taking money out of everybody else’s pocket too? Even for a month? For a day?
I don’t want to do business this way. I like this deal. I think this is, net, good for the country, even if Republicans agree with me on that point. I’ve been listening to people all day hollering about how the soft, weak President got rolled by the bullying Republicans. It might be true to a point, but it’s not really all that important. What is important is that good policy comes out of it.