So it’s come to this

You know the deal between President Obama and Republican congressmen to extend the Bush tax cuts for households making more than $250,000 is real, because the New York Times is trying lamely to justify it. They make an okay point. David Leonhardt argues that the extension of unemployment benefits, the cut in payroll taxes and the various credits for college tuition and whatnot amount to another stimulus package. He’s right, in the sense that it costs $900 billion and hopefully the economy will get better after we do it. On the other hand, the original stimulus package didn’t blow $120 billion on the wealthiest 2% of Americans at a time when those Americans were convincing their poorer, fatter brethren to demonstrate in the streets about the federal deficit. And that’s what it is about the Obama tax cut agreement: it seems like a pretty good deal, provided you don’t think about American politics over the last two years.

At least nobody had to make any tough decisions. Even though we all agree that the federal debt is a moral and economic drag on the nation, we’re spending just shy of a trillion dollars to buy the kind of compromise where everybody gets everything they wanted. We’re cutting payroll taxes* even though Social Security is A) politically sacred and B) probably in crisis. Democrats are buying two years of not having to stand up to Republican bullying, on the assumption that everything will somehow be better in 2012, and throwing in an absurdly weak estate tax so that they don’t get punched in the arm on the way out of the room. And Republicans are “considering” acquiescing to an unemployment extension, the one measure they didn’t successfully block last spring.

See? Compromise is easy when you pretend you have unlimited resources. All you have to do is put aside your moral obligation to future Americans and start buying stuff. And the best part is, you’ll be out of office before your rapidly aging children have to pay for it!

Of course, the alternative carried enormous risks. Had Democratic congressmen called the GOP’s bluff and pointed out that control of the House, Senate and Oval Office meant that they didn’t have to swear unwavering obedience to 2% of the electorate, all of the Bush tax cuts might have lapsed. We might easily have suffered a Roosevelt Recession, like the one that occurred in 1938 when Congress tried to balance the budget in the midst of the Depression. And the American people might or might not have remembered who blocked the whole tax cut package in the first place, and might have blamed the President or the party that swept the midterms or the one that still held the Senate.

Frankly, the whole thing would have been a free-floating cloud of blame and political risk. And why take that vague, unknowable risk when you can take the concrete risk of adding a trillion dollars to the federal deficit? The answer, of course, is “so that future generations of Americans don’t have to support themselves by making internet pornography for Chinese plastics companies.” It is true that the United States is more economically vulnerable than it has been in 50 years, and it is true that this vulnerability is underwritten by our enormous deficit. It is also true that the wealthiest 2% of Americans control a larger share of the nation’s wealth than at any time since 1929. And it is also true that a tax cut for the rich became such a political sticking point that both parties came together and paid $900 billion to not have to think about it for two years.

But the only way the situation could have been avoided was if the Republicans had considered it unethical to obstruct the Senate for political reasons, or if the Democrats had the confidence to force them to actually commit that obstruction the first time they threatened it, or if the American people followed politics well enough to recognize that obstruction when they saw it, or if the President chastised his party’s congressmen for their cowardice, or if those Congressmen had enough confidence in their own ideology to address this problem before the midterms, or if they had enough integrity to stick to their principles during a lame duck. One of those things happening was the only way this situation could have been avoided.

As it is, none of them did. Even though we all agreed that these are extremely important issues that bear on the future of our nation, we somehow also all punted on them. Somehow, despite the hundreds of committed patriots in our legislative branch, we have succumbed to the tyranny of short-term thinking. Mary Landrieu, D-LA, put it best when she spoke to the Hill:

If I end up voting for this package, it will not be silently, it will be being dragged to that position having firmly established that I disagree strongly with some provisions and can’t imagine this president leading the country in that direction.

Like a lot of our leaders, Landrieu can’t believe where this country is headed. It’s good that she remembers what responsible government ought to look like, even as she trudges to her job as a US senator to vote for the opposite. It’s good that we all remember what we should be doing, even as we do nothing and borrow money and wait for things to get better. We need to keep what we wanted before we compromised fresh in our minds, so that we’ll be able to tell our children we told them so.

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  1. I hope it doesn’t escape the attention of our esteemed leaders that Czechoslovakia and Hungary pose a clear and present danger with regard to our continued leadership in the production of Internet pornography. Future generations are at risk.

  2. I tend to see the tax levels on our richest citizens as a question of economic justice, but the Republican argument – at least superficially – is that lower taxes on the rich means economic growth. Anybody know of research/data that supports or contradicts?

  3. DUGGER, WILLIAM M. The Wealth Tax: A Policy Proposal.
    Journal of Economic Issues Vol: 24 Issue: 1 ISSN: 0021-3624 Date: 03/1990 Pages: 133 – 144

    This is the second article I find when searching “trickle down economics” in my university’s library (The first is an article specific to black men who have not attended college). I don’t know if you have a way to read it or not, but the findings were that redistributing wealth to the highest earners does not improve the economy in general measurements, but it does increase the national debt. This article was an analysis from 1990 of the Economic Recovery Tax Act of 1981 and the Tax Reform Act of 1986. I’m sure there is plenty more research out there, I don’t want to go looking for it right now though.

  4. Captain: There’s endless research, analysis, etc. that shows that supply-side economics doesn’t work. But there’s nobody to hold that standard: Democrats, who you think would be all over this line of thinking, need rich people in order to fund their campaigns.

    If you want to improve American politics, publicly fund elections. It’s not a magic bullet, but it’s the closest thing we have.

  5. Re: trickle down…

    This Atlantic Monthly article is excellent, featuring Reagan’s budget director explaining why none of it actually worked and that it, trickle down, was thinly veiled class warfare.

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