Obama's Long-View on Taxes a Huge Mistake?

"I don't want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub." - Grover Norquist, President of Americans for Tax Reform

Obama talks a good line about taking the long-view in defending the ransom he's willing to pay to Republican hostage takers on tax legislation.

Unfortunately, Obama's long-view is probably a huge mistake. Many of us have that gut feeling. James Kwak (real name), blogging on Simon Johnson's baseline Scenario site, explains. First, he argues that the tax cuts for the wealthy are likely to become permanent:

If you think the tax cuts were bad policy, your chances of fixing that bad policy are much worse in two years than they are now. The administration’s best card would have been a threat to veto any bill that contained an extension of the tax cuts for the rich. The House is going to pass an across-the-board permanent extension in 2012. Are the Democrats going to block it in the Senate in an election year? Is Obama going to veto it in 2012? (And even if he leaves it for a lame-duck session, he’s going to have to make a commitment during the campaign.)

He then reminds us that this permanent tax policy is a permanent redistribution of wealth upwards:

This was the best chance to kill the tax cuts once and for all. Yes, it would have been worse in the short run for the economy. But this is a huge price to pay for a modest stimulus made up entirely out of tax cuts (largely tax cuts for the rich). Instead, we are stuck with a huge reduction in the tax burden of the rich and a small reduction in the tax burden of the middle class–which, on balance, helps the rich and hurts the middle class–forever.

Then he reminds us of the Republican long-view, toward which they've been marching for decades, and are nearing the final plunge of their stake, thanks in part to this tax deal from Obama:

... the old Republican “starve the beast” strategy: cut government revenues to the point where it is unable to do anything. ... Republicans have cut revenues and continued to spend on whatever they felt like spending on. But the core of the strategy is that if you cut taxes at every possible opportunity, eventually you will force the government into a crisis where something has to give (and probably it will be a Democratic administration that takes the political hit for cleaning up the mess). And unless American public opinion does an about-face, the thing that will give will be entitlements.

In other words, don't be fooled by excessive Republican government spending, thinking that it is a contradiction to their "less government" philosophy. Rather, they want to spend our government into hoc so that it has no alternative but to cut social programs. Kwak looks into the crystal ball at how this will likely play out:

So perhaps with the best intentions, the Obama administration, by making it more likely that the Bush tax cuts will become permanent... is probably hastening the day when push will come to shove and Medicare will be gutted. The bigger the projected national debt, the more seemingly reasonable people in the middle of the ideological spectrum shake their heads sadly and say something has to be done about Medicare, as if it’s a fact of nature and not a fact of politics.

Obama's unwillingness to at least try to draw the line now makes one wonder whether he is blind to this scenario or whether he also believes in a version of the "starve the beast" strategy.

• Contact the US Senate
• Contact the House of Representatives

Sources:

Baseline Scenario Blog, "More on the Tax Deal," by James Kwak, December 8, 2010.

First published on GDAEman Blog.

2010 Mid-Term Challenges Establishment

The most obvious challenge to the establishment during the 2010 mid-term came from the Tea Party movement, which characterized by populist sound-bites. The impact was felt heavily by the Republican Party establishment as summed up by John Nichols [1]:

... the tea party is the best news that the Democrats had last night, because if Christine O’Donnell, Ken Buck and Joe Miller had not defeated the candidates that the Republicans in Washington wanted, those candidates almost certainly would have won Senate seats, and we would be looking now at a Republican majority in the Senate. So while the tea party brought energy and some fresh and electable candidates in some states, in other states, particularly in your more moderate states, your swing states, the tea party actually brought the only candidates who could lose on Tuesday, and they did.

Post-mid-term, Michael Moore predicts the future and the implications for the establishment political parties [1]:

So, let’s look into the crystal ball and see what 2012 looks like. If the tea party thing keeps its mojo killing, they have a very good chance of, in the primaries, nominating one of their people, Sarah Palin or others, Rand Paul maybe. It’s not unlikely. That will—if that doesn’t happen, and if a more mainstream Republican gets nominated, they will probably be so upset they will run a third party person. And somehow, there’s going to be a very strong possibility of a potential split, and there’s going to be two people from that side running for president of the United States.

Obama, if he continues this war, if he expands the war, if he doesn’t get a hold of Wall Street and wrestle them to the ground, if we have another crash in the next ten years because he didn’t do the job that he was supposed to have done—he left it up to Geithner and Summers to just take us into the next crash—it is not unlikely that there will be a Naderesque-type challenge from the left. And maybe not in the primaries, but actually an independent candidacy. So we’re going to have, for maybe, I think, the second time in the last 150 years, potentially a four-candidate race. In a four-candidate race, Abraham Lincoln—that was the first one, and that was—I think he won with thirty—thirty-some—do you know, John? [JOHN NICHOLS:] Thirty-nine.

Thirty-nine percent of the vote. And Harry Truman in '48, with Dewey, Strom Thurmond and Henry Wallace. It, first of all, presents perhaps the only opportunity in our lifetime where someone from the left could actually win the presidency with a plurality of votes. What it could do is deny Obama his second term. And I think that instead of the Democrats and President Obama taking all of us who are the base that he criticized for the last two months—you know, if he doesn't take seriously why we went out to work for him and got him elected, there’s a very strong possibility that that challenge is going to exist.

Sources:

1. Democracy Now! November 3, 2010.

BuBois on the Two Parties

And why should we "government jobs?" For the same reasons as back in 1922.

The two parties have combined against us to nullify our power by a ‘gentleman's agreement' of non-recognition, no matter how we vote ... May God write us down as asses if ever again we are found putting our trust in either the Republican or the Democratic Parties." --W.E.B. DuBois (1922)

Source:

Thanks to M. Badgett for sending me the quote.

Are we Stuck in Status Quo Due to Insanity?

We all gripe about the two-party system that caters to the establishment, thereby entrenching the status quo. That is, we gripe about our pathetic system that we're told is a "democracy," or a "republic" by purists, yet the "viable" candidates are shills for the corporate establishment, regardless of Party.


I'm reminded of a quote attributed to Albert Einstein, a definition of insanity:

Insanity: doing the same thing over and over again and expecting different results. -- Albert Einstein, (attributed)

It's with these thoughts that, back in 2009, I started another blog entitled, "Challenge the Establishment".

More recently, on GDAE Podcast Episode 29, and in a blog post entitled, "A New Politics", I've begun exploring the question, stated in several ways,

Can principled people on the left and right unite to recapture our democratic institutions from the minority establishment?

Many people react to this with a rolling of the eyes, and thoughts of Sarah Palin in mind... but she's not "principled."

I'm not talking about "uniting" in terms electoral party politics, e.g., a third party. Rather, uniting on issue advocacy, with the result that law makers, and administrations, that don't heed the unified voice of the people will pay a steep price.

Surely I'm not alone in this thinking. There is evidence of the left & right uniting, to greater or lesser success:

• Challenging Clinton's 1995 Anti-terrorism legislation on civil liberties grounds.
• Turning back 2003 media regulations of the Federal Communications Commission (FCC) that would have allowed more consolidation of ownership (and power).
• Challenging the recent Supreme Court decision in Citizens United? Surveys show vast majorities of the general public, left and right, oppose the decision*.
  

So, in an effort to break from the path of insanity, I'm engaging in this exploration. I invite others to join me, and point me to people who might be further along this path.

* A February poll by ABC News/Washington Post found that 80 percent of Americans oppose the Supreme Court ruling on Citizens United, including 73 percent of self-described conservatives. Former Supreme Court Justice Sandra Day O'Connor, at 80-years of age, hit the speaking circuit to denounce the decision due in great part to concern about it's effect on State judicial elections.

Sources:

ABC News poll on Citizens United, Summary & Link to Poll Questions & Results.

Art: Break the Mould by lex-strat

Originally published on GDAEman Blog.

American Exceptionalism: The Connection

So, what's the connection between the concept of American Exeptionalism and the Establishment? There are surely many, but one is a subtext of the two-party system... that the both parties accept the myth of American Exceptionalism.

First, American Exceptionalism is a view, deeply ingrained in our culture, that the United States of America superior among nations as if god-given. The "Gods" in this case were the "founding fathers," and the US form of democracy is viewed as not only the best, but unsurpassable.

This notion of being "special" includes a belief that US actions are for the common good of the world. The US spreads democracy, which is a noble pursuit. It is a belief held by both conservative and liberal Americans, albeit liberals acknowledge past imperfections of slavery, the omission of women's rights in the original constitution, etc.

When it comes to foreign policy in particular, American Exceptionalism binds the Democrats and Republicans to very similar views and imperial activities abroad. Take the following doctrine for example:

Let our position be absolutely clear: An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America, and such an assault will be repelled by any means necessary, including military force.

This policy was voiced in 1980 by President Jimmy Carter. To be even more clear, no outside force will impinge on US Control of Persian Gulf Oil... it is unstated that the "benevolent" United States should have control over this oil rather than anyone else. The establishment agrees, and American Exceptionalism is a common underpinning of that agreement.

For More on the mythology of American Exceptionalism, and its implications, check out GDAE Podcast Episode 18 (35 - min).

The Corporate Parties