Swindle of the Year

· Friday, December 10, 2010

WASHINGTON -- Barack Obama won the great tax-cut showdown of 2010 -- and House Democrats don't have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years -- which just happen to be the two years of the run-up to the next presidential election. This is a defeat?

If Obama had asked for a second stimulus directly, he would have been laughed out of town. Stimulus I was so reviled that the Democrats banished the word from their lexicon throughout the 2010 campaign. And yet, despite a very weak post-election hand, Obama got the Republicans to offer to increase spending and cut taxes by $990 billion over two years -- $630 billion of it above and beyond extension of the Bush tax cuts.

No mean achievement. After all, these are the same Republicans who spent 2010 running on limited government and reducing debt. And this budget busting occurs less than a week after the president's deficit commission had supposedly signaled a new national consensus of austerity and frugality.

Some Republicans are crowing that Stimulus II is the Republican way -- mostly tax cuts -- rather than the Democrats' spending orgy of Stimulus I. That's consolation? This just means that Republicans are two years too late. Stimulus II will still blow another near-$1 trillion hole in the budget.

At great cost that will have to be paid after this newest free lunch, the package will add as much as 1 percent to GDP and lower the unemployment rate by about 1.5 percentage points. That could easily be the difference between victory and defeat in 2012.

Obama is no fool. While getting Republicans to boost his own re-election chances, he gets them to make a mockery of their newfound, second-chance, post-Bush, tea-party, this-time-we're-serious persona of debt-averse fiscal responsibility.

And he gets all this in return for what? For a mere two-year postponement of a mere 4.6-point increase in marginal tax rates for upper incomes. And an estate tax rate of 35 percent -- it jumps insanely from zero to 55 percent on Jan. 1 -- that is somewhat lower than what the Democrats wanted.

No, cries the left: Obama violated a sacred principle. A 39.6 percent tax rate versus 35 percent is a principle? "This is the public option debate all over again," said Obama at his Tuesday news conference. He is right. The left never understood that to nationalize health care there is no need for a public option because Obamacare turns the private insurers into public utilities. The left is similarly clueless on the tax cut deal: In exchange for temporarily forgoing a small rise in upper-income rates, Obama pulled out of a hat a massive new stimulus -- what the left has been begging for since the failure of Stimulus I, but was heretofore politically unattainable.

Obama's public exasperation with this infantile leftism is both perfectly understandable and politically adept. It is his way back to at least the appearance of centrist moderation. The only way he will get a second look from the independents who elected him in 2008 -- and abandoned the Democrats in 2010 -- is by changing the prevailing (and correct) perception that he is a man of the left.

Hence that news-conference attack on what the administration calls the "professional left" for its combination of sanctimony and myopia. It was Obama's Sister Souljah moment. It had a prickly, irritated sincerity -- their ideological stupidity and inability to see the "long game" really do get under Obama's skin -- but a decidedly calculated quality, too. Where, after all, does the left go? Stay home on Election Day 2012? Vote Republican?

No, says the current buzz, the left will instead challenge Obama for the Democratic nomination. Really now? For decades, African-Americans have been this party's most loyal constituency. They vote 9-1 Democratic through hell and high water, through impeachment and recession, through everything. After four centuries of enduring much, African-Americans finally see one of their own achieve the presidency. And their own party is going to deny him a shot at his own re-election?

Not even Democrats are that stupid. The remaining question is whether they are just stupid enough to not understand -- and therefore vote down -- the swindle of the year just pulled off by their own president.

(c) 2010, The Washington Post Writers Group


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Comments

Hard Thought

Of course it is a swindle.

Everything this administration does is a calculated political move to camoflage their true intentions. They do not care about the American people, the economy or jobs. They just want to hang on to power as long as they can.

Cynical, insincere, power mongers that they are, they realize that making an apparent tax freeze, not a tax cut, is the only way to try and look as if they care about our struggles and financial difficulties.

Posted December 10, 2010 at 4:15:46 AM


Billy

Not only does the Left not get it, but the silly repubs think they have won a victory as they increase our debt. Seems very few get the fact that this is not a good deal for America. The repubs need to take the time now that Nancy is holding up the bill and knock out the increased spending. They need to man-up and do the right thing!

Posted December 10, 2010 at 9:15:46 AM


William

THANK YOU, Mr. Krauthammer, for clearly seeing through this incredible public deception!

And let's not forget barry soetoro having incredibly fanned the flames of class warfare.

If anyone still thinks this tax cut will lead to more investment and jobs, their stupidity is incurable.

Posted December 10, 2010 at 10:04:09 AM


Mick

If THIS doesn't convince the Americans that their president will use any means at his disposal to destroy their country and that it is up to them stop this maniac, they deserve to live under the absolute despotism he is bringing them under.

Posted December 10, 2010 at 10:20:50 AM


kevin

Keeping the tax rates the same next year as they are this year, doesn't 'pump' a single penny into the economy.

The other 'goodies' (investment credit - which businesses will use to buy machinery to increase productivity of EXISTING workers) will not do anything to increase the economy.

Posted December 10, 2010 at 10:50:32 AM


Doug Rodrigues

Americans get the Country that they deserve. If they are too stupid to research the persons that they vote for, when the world comes crashing down upon their heads they'll have no one to blame but themselves. Unfortunately, the rest of us will be swept along with them! Perhaps voters should have to pass an intelligence test to register to vote? Just think....the Democrat Party would alomost disappear. The Republican Party would lose half of it's membership too.

Posted December 10, 2010 at 11:56:27 AM


Pamela Heckel

Lamar Alexander was interviewed on NPR last night. He reminded the host that keeping the tax rates constant was not a tax cut. The effect of the 1/6 reduction in payroll taxes (2% of income) on Social Security was not discussed, but the $5,000,000 exemption for the estate tax was mentioned. In my opinion this bill is still a tax increase.

Posted December 10, 2010 at 1:24:51 PM


MichaelSSEC

This is why we have been screaming for the GOP to give no more compromises with the Left. Do not compromise with them on taxes, do not compromise on energy policy, do not compromise on repealing Obamacare, do not compromise on checkers.

Look what just happened. The idiots on the Left, for whom temper tantrums are a normal part of everyday life, actually think THEY compromised with US. Meanwhile, the GOP actually believes they gave up something small in order to keep current income tax levels where they are. But what are the underlying realities?

For one thing, the Left did not promise not to raise taxes for 2 years. They promised quite specifically not to let the Bush tax cuts expire. They can still raise taxes in other ways -- and they are 100% certain to try, probably next week. So that's not as big a victory as many in the GOP are claiming.

For another thing, in exchange for that sketchy gain, we had to give up opposition to yet another expensive UE extension. It would be bad enough if that extension were paid for with tax dollars. It's not. It's paid for by small business owners, who must now retroactively pay "unemployment insurance compensation" on employees they laid off 2 years ago. Get that? Their pockets are getting picked for employees that haven't worked there since 2008, and they're being forced to pay for "insurance" under a system for which Obama has now radically altered the rules. You own a business, you can suddenly be on the hook for UE benefits for anyone you hire, even YEARS after they don't work for you anymore.

How can anyone plan, run or succeed in a business in that sort of climate? It's preposterous.

Mr Krauthammer is correct. This compromise is a disaster for the GOP, just as EVER compromise with the Left ultimately winds of up being a disaster.

NO MORE COMPROMISE WITH THE LEFT. Don't compromise with them on single speck of dust anywhere on the planet. Not today, not next week, not 200 years from now. Not ever.

Posted December 10, 2010 at 1:53:08 PM


Bill Fox

One can only hope that the infantry coming in January can help rescue this country from the mess that RINOs and Socialist calling themselves Democrats have created.

I do think Repubics could have gotten a better deal, but I a don't agree that at this point, preventing a tax hike is as a bad as a spending increase for the defecit.

Hopefully, the new congress will get it and do some real speding cuts and add real incentives to grow business than merely extending a 10 year old tax policy and calling it a victory.

Posted December 10, 2010 at 2:16:44 PM


M Rick Timms MD

The Democrats will portray this as a trial run of supply side policy - while undermining it at every opportunity. Then in 2012 - they will site the sluggish improvement , if any , and declare that Conservative policy has failed , and push for more progressive socialism. The media will help them spread that message, and along with the 90% black voter block, enough "independents" will join the march to social justice to keep the teleprompter employed for four more. I hate the thought -- but the strategy is obvious.

Posted December 10, 2010 at 7:16:02 PM


Roger McBee

You are right, Dr. Timms. And the Repubics (thank you, Bill Fox) are too caught up in their newfound "power" to see the socialist strategy and the likely results. They are still celebrating their victory...for changing nothing.

Posted December 11, 2010 at 12:58:17 AM


Ol'Joe

Since the Democrats took control in 2008 we were a wagon train, encircled by the indians, outnumbered and outgunned, fighting for our lives. In the last election, we voted for the cavalry to come to our rescue. Now, instead of cavalry, it looks as if we will be getting more indians!

Posted December 11, 2010 at 11:04:14 AM


Terry

"Nothing personal, it's just business."-The Godfather

Posted December 11, 2010 at 11:09:26 AM


Sharp Knife

This is whey you are going to see a third politcal party arise in this country. The democrats and the republicans are not listening to the people.

Posted December 11, 2010 at 6:53:51 PM


karl anglin

A lie has speed, but truth

has endurance.---Edgar J. Mohn

Posted December 12, 2010 at 4:44:45 PM


Ron

Hopefully, the incoming freshmen will have more sense, but this bill, in its present form, won't help the economy because it still costs employers too much. Someone said that extending the tax cuts won't help the economy. Well, it will if no additional spending is involved, especially if the cuts are made permanent. The business world needs to factor in taxes before making large investments.

Posted December 13, 2010 at 11:55:07 AM


David

The best thing to do would be to get a REALLY good fight going (over what I don't care), so that NOTHING happens (budget, tax 'cuts', Porkulus II)until after January 1. Then, it is is the new congress's hands completely, and we CAN hold them accountable. The current Congress should be sent home NOW, banixhed with their tails between their legs.

Posted December 13, 2010 at 12:25:31 PM


billc

Mr. Timms.

"The Democrats will portray this as a trial run of supply side policy - while undermining it at every opportunity. Then in 2012 - they will site the sluggish improvement , if any , and declare that Conservative policy has failed , and push for more progressive socialism"

You are correct in how they will portray this and it will surely be a failure. However, the improvement will likely be non existent. Art Laffer on the Glenn Beck Show diagrammed how businessmen and taxpayers will push as much income as possible forward into 2010 to avoid the tax increase Obama has been promising for the last two years. This will cause a severe shortfall in federal revenue for 2011 even with a tax increase. The defeat of the tax increase will only add to the shortfall.

The 2% savings on payroll taxes will have negligible stimulus effect on the economy as any intelligent American taxpayer who has been observing the lunatics in Washington for the past two years will save it rather than spend it. The inevitable rainy day that they have failed to save for now looks like a monsoon of monumental proportions. As they look the gift horse in the mouth one more time, they are likely to accept the gift this time rather than send it to the mall. Everyone will be thankful they did when the (inflation) monsoon finally arrives as the lunatics continue to bury us in debt.

And yes, they will portray it as another failure of capitalism and push for more socialism. And, of course, they will never be truthful and admit that it was (centrally planned) capitalism that failed.

Posted December 13, 2010 at 1:26:03 PM


Tom

Already we are assuming and blaming the new congress for future events. Let's give the new congress a chance. They are not yet in power, and we know what their decisions are. Let's take it one step at a time. First, it was necessary to stop tax increases, second, repeal Obamacare. It is like a giant chess match.

Posted December 13, 2010 at 4:48:54 PM


Cylar

"While getting Republicans to boost his own re-election chances, he gets them to make a mockery of their newfound, second-chance, post-Bush, tea-party, this-time-we're-serious persona of debt-averse fiscal responsibility." Excuse me, but the new GOP Congress - the ones who were actually saying this back during the fall election campaign - hasn't been seated yet. Maybe we could allow them to get to their chairs on the House floor BEFORE criticizing them? Even Rush pointed this out on his radio show. Where was CK when this was being said to millions of conservative radio listeners?

Posted December 28, 2010 at 4:22:35 AM


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