I agree with Schumer, Sanders, and all of the progressives who argue that extending the Bush tax cuts for the rich is a mistake. It is a mistake because the rich don't need it, their income and wealth has skyrocketed over the past ten years while everyone else's has tanked. It is a mistake because Republicans (and some Democrats) will insist on "savage" cuts in social spending, in the words of Paul Krugman, all in the name of cutting the deficit. It is a mistake because there are better ways to stimulate the economy--such as unemployment insurance, money for infrastructure, even direct government hiring. And it is a mistake because it is unpopular, according to recent polls. HOWEVER, Obama and many other Democrats who will be up for re-election in 2012 also realize a basic political fact: there will be NO OTHER ECONOMIC STIMULUS PASSED BY CONGRESS IN THE NEXT CONGRESS. This is it. The analysis is that the reason Republicans gained more than 60 seats in Congress this year is because the economy is in the tank.
I hate it. I really do. If I were Bernie Sanders I would not vote for it. If I were Chuck Schumer I would not vote for it. If I was Barbara Boxer I would not vote for it. These progressive Senators stand on principle, and on principle, they are correct. Their seats are not threatened by this vote. Let Republicans vote for it.
However, if I was Kent Conrad or Obama, I would vote for this tax "deal." The political landscape is such that Republicans have successfully spun the terrible economic situation as the fault of the current administration. Or, rather, the "status quo." Guess what? In the eyes of "Joe Public" current Democrats are the "status quo." What matters to most voters is not how one person voted on one thing or another. It is on how the economy is doing. Obama MUST, MUST, MUST preside over a growing economy with a more "normal" level of unemployment if he is going to be re-elected. Same for Kent Conrad. Same for the other 22 Democratic Senators that are up for re-election in 2012. Further, if Obama can get Republicans to vote for a bill he signs into law, it is a "bi-partisan" law, taking some steam out of the (persistant but hilarious) claim that he is a "radical liberal."
How is Obama going to do that--ensure that he is presiding over a growing economy with a lower unemployment rate? What practical, possible solutions does Bernie Sanders or Chuck Schumer have to grow the economy and create more jobs? Another stimulus package? IT'S NOT HAPPENING--THAT TRAIN HAS LEFT THE STATION (and I agree with Krugman that the original stimulus package was too small). There is NO ONE who is arguing or believes that the incoming Boehner Congress will write or pass a stimulus bill.
In Krugman's column yesterday he argued that NOT extending the Bush tax cuts would cost about .1 to .3 percent unemployment. And, because the Republicans appear to have "blackmailed" the Democrats and Obama, they should vote against the tax cut extensions, since this will enable and encourage more blackmailing.
This analysis is incorrect, because, as I have said, Obama is not being blackmailed. He lost the argument. He knows there will be no stimulus and he knows there will be no "middle class only" (98%) tax cuts only. This is the only game in town. It's not blackmail. It's political reality.
The REASON I think Obama lost the argument is because he didn't make the case. Why should rich people pay more in taxes??? No one is persuasively making this argument. Conservatives (who are not in the top 2% but vote for Republicans nevertheless) believe the rich DESERVE tax breaks. They actually believe we live in a meritocracy. The rich really do work "harder" then the rest.
Who is Debunking this myth??? No one is. Democrats must articulate why the rich need to pay more in taxes: it is because the rich use more resources than the rest of us. They profit from the public's resources and are thus subsidized. They (and their businesses) use disproportionately more publicly funded roads, bridges, ports, airports, other infrastructure, military funding on research and development, and law enforcement and regulation. They profit from the stable business climate that is enforced by public servants. They profit from an publicly educated workforce. They profit from our foreign policy that fights wars for oil. They also profit from polluting our air, water, and land. In other words, we have not placed adequate monetary value on our shared resources and charged the damn bastards for destroying it. That is why the rich should pay more in taxes. No one in the public arena, as far as I know, is making that argument. Maybe they don't believe it. Maybe people actually believe taxing the rich is "redistribution." It's not. It's making the rich abuse us all a little less.
That, in short is why Obama and the Democrats will extend the Bush tax cuts. They lost the argument, because they never made it.