Saturday, February 5, 2011

Obama's Tax Cut Position: A Strategic Retreat

This post was begun on December 7, 2010, before the tiff between Obama and some progressives reached its conclusion. Interestingly, we have not heard much yet this year from progressives with regard to tax policy and moving the economy forward. It would seem now is a good time to draw the terms of debate in more progressive terms. Perhaps, though, the progressives in Congress are plumb worn out from their fight last year.

Here we go again, fighting amongst ourselves over which battles to fight. I really don't think this is the right time, although as progressives band together and fight for a better deal, I wonder whether I'm right.

I really agree with President Obama that we need to have a detailed discussion of what our national priorities are going forward, and how we're going to pay for them. We need to update and streamline the tax system and make it more progressive. We need to look at our educational system, from Kindergarten to post graduate, and how to allow access to a decent education and opportunities for everyone. We need to discuss how to approach our looming environmental and energy crises. If we are going to dedicate resources toward our future, one that is just as well as comfortable, we need to delve into a whole host of issues that all our partisan wrangling has served to help us avoid. This cannot be done in a month.

If we spend the next month fighting for a different tax cut deal that includes the extension of unemployment benefits, and win, that's great, but then the really important discussion probably won't happen. The American people will think it's all been settled, and we'll once more have papered over a whole host of problems without discussing the real issues, and no one will have the interest or the energy for a national conversation starting next year.

On the other hand, I'm hearing progressives in congress like Representatives McDermott and Inslee, and Senator Bernie Sanders, say that if we just allow the cuts to expire then we go into the next session with a good negotiating position, since the Republicans have placed a lot of political capital on the idea of keeping the tax cuts for everyone, including the upper income brackets. I think this is a reasonable position, however, by going this route we put the extension of unemployment benefits at risk, which is both unjust and poor economic policy. And as I said, even if we did win that too, if we really pushed it and twisted some arms on both sides of the aisle, all that pushing and arm twisting has a price. We'll all be done by January, congratulating ourselves and glad we got the good deal, but it's still just a band aid.

I realize there won't be as many Democrats, in Congress next year, but it isn't that important. According to Gallup, most people in the U.S. think we ought to end the tax cuts on the top income earners, and some think we need to end all the tax cuts. The group thinking we need to end only the cuts at the top, however, is shrinking. And the reality is, there will need to be both spending cuts and tax increases in the future if we are going to balance the budget. Tax rates at all income levels are lower than they need to be if we want to pay for all the services people demand. We as a nation need to use the next two years to really dialogue and lay out our core values going forward. No one will get everything they want. Democrats and progressives need to get together and decide what is sacrosanct and where we're willing to compromise. This seems to be a weak point for the left in this country: every issue is the most important issue, and no issue can be compromised. We absolutely must look at the big picture right now and decide what three or four things will push us into the future in a way that allows democracy and opportunity to flourish. The first step, I think, is to let this deal go through, even as we hammer out our priorities in preparation for the battles ahead.

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