President Obama explained in his press conference today that he made a decision to work with Republicans in a compromise in order to help all Americans. He refused to allow the Republicans to hold the American people hostage for unemployment insurance and tax cuts for the middle class. That’s why he struck a deal.
President Obama on Tax Cuts and Unemployment Extension
In the above video of President Obama’s press conference, President Obama said of the Republican plan to extend tax cuts for the top 1-2% of America’s wealthiest people:
“Now, Republicans have a different view. They believe that we should also make permanent the tax cuts for the wealthiest 2% of Americans. I completely disagree with this. A permanent extension of these tax cuts would cost us $700 Billion dollars at a time when we need to start focusing on bringing down our deficits. And economists from all across the political spectrum agree that giving tax cuts to millionaires and billionaires does very little to grow our economy.”
What Choices Did President Obama Truly Have with Republicans on Tax Cuts?
In a game of chess, the participants must think way out ahead of each move on the chess board in order to win the game. It seems that President Obama did that today. He made a compromise for the long term benefit of all Americans.
Even though it is repulsive to think that the top 1-2% of the wealthiest Americans will now have even more wealth that most of the time they just sit on, at least the tax cuts will only be extended for 2 years instead of indefinitely.
The financial numbers regarding cost of Tax Cuts:
Currently it is estimated that extension of the Tax Cuts for the top 1-2% averages approximately $70 billion/year. That means it will cost $140 billion for 2 years.
If the 1-2% Tax Cuts for the wealthy are extended permanently, that will cost American tax payers at least $700 Billion Dollars! How’s that for being fiscally irresponsible!
The Senate and Republican Partisanship
Does anyone think that Republicans would have just passed a tax cut in the Senate for the middle class in December? Even if Scott Brown decided to join Democrats, Republicans might have used procedural stalls to prevent passage of the tax cuts for the middle class and employment insurance extension.
What good would it have done to extend the partisan sniping until January when 6 more Republican senators come to town and make passage of key legislation more challenging?
President Obama scanned the horizon and made a decision to do what was best for a majority of Americans, compromise with Republicans.
The good news is that the middle class get a tax cut extension too for those people earning up to $250,000 and also the unemployed get an extension for 13 months.
The CBO Fiscal Policy Recommendations
In their recent November articles, the CBO did say that to improve the economy, there need to be a combination of various stimulus actions. These include change in tax policies and extension of unemployment insurance.
Even though the Republicans seem to be allergic to facts about the value of extending unemployment insurance, the CBO shows in their number crunching and graphs that it is the best way to stimulate the economy and create jobs.
Why? Because people have money to pay for needed items and then businesses thrive when more people are spending money on real things, not just for speculative things on Wall Street.
Unless there are better regulations to prevent shenanigans with exotic financial instruments on Wall Street, we could see another economic disaster in the future.
Wall Street is broken and it does need fixing. The entire collapse of the U.S. economy and the world economy can be traced back to:
1) Greedy out of control speculation with exotic financial products designed by people who use super fast computers and quants to create their opaque products.
2) Lack of transparency in various markets in the U.S. and worldwide regarding the actions of Hedge Funds and institutional Brokerage Houses.
3) Lack of necessary regulations in the financial sector and protections for consumers of financial products and related services.
4) As The Washington Post reports, “Economy Made Few Gains in Bush Years: Eight-Year Period is Weakest in Decades.” This is based on analysis of “key data, and economists across the ideological spectrum.”
That’s why Americans must be very careful to avoid the trips and traps of misleading ideological GOP talking points that ignore their past failures in legislating unsound economic policies for U.S. citizens.
Finally, John McCain’s advisor, Mark Zandi said to the Washington Post in the above referenced article on Bush’s Economic Report Card:
“It’s sad to say, but we really went nowhere for almost ten years, after you extract the boost provided by the housing and mortgage boom,” said Mark Zandi, chief economist of Moody’s Economy.com, and an informal adviser to McCain’s campaign. “It’s almost a lost economic decade.”
Smoke and Mirror Luntzian Talking Points to Confuse Voters
The Republicans are good at staying on message. They are fed talking points from their word-guru, Frank Luntz, who also is called a “Word Doctor.” Luntz does focus groups to find out what words push people’s buttons to get them angry about things. He’s all about what he calls, “words that work.”
Here’s where the media and bloggers come in. These talking points must be properly explained and demystified. Otherwise people connect silly ideas to the silly talking points.
Frank Luntz teaches the GOP and Fox News how to play on people’s fears to get them to act or not act. It’s all about the fear tactics. These are used every day and they are disgraceful.
Talking Point Alert:
The GOP’s misleading talking points:
- “job-killing” (fill in the blank)
No one likes things that kill jobs and Luntz has encouraged the GOP to throw “job-killing” into any sentence they choose about anything they want to demean. Of course reality has nothing to do with this word. It’s just a hot button word combination that scares people. It has no connection with reality. Republicans have no facts to back up their rhetoric and common sense folks should make Republicans prove their emotional scary rhetoric.
Then there is the “certainty” Myth. Republicans have gotten a deal to extend the Bush tax cuts for another 2 years. However, the CBO clearly shows that making the Bush Tax cuts for all people permanent is ill-advised and fiscally irresponsible. If tax cuts for the top 1-2% of the wealthiest people in the U.S. are extended beyond 2 years, the only “certainty” is that we will blow a big fat hole in the budget. This tax cut is fiscally irresponsible. Of that it is certain.
Will anyone make Republicans face the numbers and explain their little word dances with real world facts?