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Ever since President Obama capitulated on one of his most central campaign promises, the President stands fully with the Republicans in exchange for a package of tax cuts and a thirteen month extension of unemployment benefits that doesn't even go beyond the first tier. This cave-in to the Republicans only sets him up for a major battle in 2012 as Krugman says below:

Both the payroll tax break and the unemployment extension are for the first year only. So, a bigger boost next year, fading out in 2012. Since all the evidence says that elections depend on the rate of change of unemployment, not its level, this is actually bad news for Obama: he’s setting himself up for an economic stall in the months leading into the 2012 election.

....

So, was this worth it? I’d still say no, although it’s better than what I expected over the weekend. It still greatly increases the chances of the Bush tax cuts being made permanent — especially because the front-loading of the stimulative stuff actually worsens Obama’s 2012 electoral prospects.

And as TomP rightly points out, the payroll tax holiday is a terrible idea because using general revenues to fund Social Security is the first step in turning it into a welfare program, leaving it open to attacks from Republicans. This payroll tax holiday will not be temporary because in a year from now, Republicans will be using this as a political football against Democrats in the run-up to the 2012 election, and will happily be using it to demand even further cuts in Social Security:

I find it unfathomable that a more conservative Congress, in two years, in an election year, will increase the payroll tax by 2 percent on the very first dollar, and every other dollar up to the cap, earned by virtually every single worker in the country. Consequently, I think we have to assume that the payroll tax holiday will be extended beyond the two years the president is proposing and quite likely could become permanent.

That means that the federal government will have to continue to transfer $120 billion to the Social Security trust funds each and every year even as it has to transfer more and more interest payments as the trust funds continue to grow and as interest rates return to more normal levels. Unless Congress acts to restore Social Security to solvency, the Treasury bonds held in trust will have to be redeemed, again on top of that new $120 billion transfer from the general fund, starting fifteen years from now, assuming Congress even continues to make the $120 billion every year before that point. These dollars will be competing with dollars for defense, environmental protection, education, school lunches, Food Stamps, Medicare, Medicaid, SSI, Pell grants for low income college students, and every other good and service financed by the federal government.

And this will not be good for our Democrats in Congress. They'll face Republicans in 2012 demanding further extension of the tax cuts and further cuts in Social Security and Medicare to reduce the deficit, and Democrats will have hamstrung themselves if they go along with the President's proposal. President Obama is not interested in shaping opinions about the core convictions of the Democratic party. Our Democrats in the House stood up for the middle class against the wealthy, and so did a majority of our Senate Democrats, only to be undercut by President Obama. He's all about himself and his re-election.

If we want more and better Democrats to be elected, we must recognize that allowing this tax deal to go through would raise the deficit to the point where Republicans and President Obama will go hand-in-hand together to cut "entitlements" such as Social Security and Medicare, and cut even more government spending. And our Democrats would have to take hard votes that would result in further losses of their seats in Congress. There's a reason why Republicans like Dick Morris are absolutely gleeful:

To characterize this as a deal is like that famous deal that Emperor Hirohito struck with MacArthur on the battleship Missouri. This is a surrender. This is absolutely Obama caving in. And the Republicans had to extend unemployment benefits anyway because you’re not gonna give a tax cut and at the same time cut off unemployment benefits. But this shows that Obama will blink. And it’s the first of the trifecta of confrontations: this one, the next one will be state bankruptcies, when we’re called on to bail out and then the enchilada which will be defunding Obamacare, a balanced budget plan and blocking the EPA from cap and trade... It is terribly significant that Barack Obama caved in.

This isn't also just about saving the Democratic Party, it's also about saving the legacy that FDR left for us---a strong social safety net for our seniors in Social Security, Medicare, and other social programs that have become the bulwark of our party values. Democrats shouldn't be working hand-in-hand with Republicans to dismantle what it means to be a Democrat, and instead of taking the hard vote on this, it should be the Republicans hanging themselves on this one.

Here's how you can take action in saving the Democratic Party by opposing the tax cuts for the rich to save Social Security and other programs from the incoming Republican assault:

  1. Call your Democratic Senators and Representatives with these talking points below:

Please oppose the tax cut bailout of the wealthy. It increases the deficit at a time in our country when we can least afford it, and it further undermines Social Security by funding it as a welfare program through the replacement of funds lost through the payroll tax cut from the general revenue. I will vote for you in 2012 if you oppose the tax cuts for the rich.

  1. Sign the Dailykos petition to get Senator Sanders' back since he has promised to filibuster this absolute giveaway to the rich on the backs of the middle class and our seniors.
  1. In addition to calling your elected officials, you can e-mail your Representative and your Senators as well.
  1. Also, one of the most effective actions you can take is to show up at your Congressmember's district office with as many people as you can to lodge a protest.
  1. Please click the Facebook "like" button on top to spread the word to as many people you can on Facebook! Also tweet this as well!

It's up to us to save the Democratic Party, and with your help, we can take action by doing so today!

UPDATE: Robert Reich calls the tax cut giveaway to the wealthy an abomination. That's what this basically is.

UPDATE 2: Here's Trumka, of the AFL-CIO, on this deal that hurts the working class to the benefit of the wealthy.

   Two years ago, working Americans had high hopes that we would ultimately emerge from the deep, punishing financial debacle with a sharp focus on a fundamentally stronger, fairer and more balanced economy. Today, that vision has dimmed.

   The tax cut deal rewards Republican obstructionism by giving the wealthy the tax breaks they demanded. It throws away precious resources needed for investments in jobs and our economy on upper income tax cuts that will do very little to propel economic growth—setting up excuses for the deficit hypocrites to argue for even more cuts to programs serving working families. It lards the tax cuts for the top 2 percent with an indefensible cut in the estate tax – giving yet another bonus to the super-rich. Taken together, this package locks in the growing income inequality that has plagued our country for at least another two years – and quite possibly much longer.

   It is unconscionable that the price of support for struggling middle class families and workers who have been unable to find jobs for months and months and months is yet more giveaways for our country’s wealthiest families. Millions of jobless workers have lived in fear for months while Senate Republicans had the gall to use their hardships as political leverage for the benefit of the rich.

   The gains for the middle class and jobless workers in the deal come at too high a price.

   The issue we face today is not the lack of power or opportunity. The question we have to answer is this: How do we use our power to escape caving in to Wall Street and moneyed interests? And how do we create the millions of jobs we need now and move toward a future of broadly shared prosperity?

UPDATE 3: Wow. Even Mary Landrieu, a Blue dog, hates this deal:

"It's what I'm calling the Obama-McConnell plan. We're going to borrow $46 billion from the poor, from the middle class, from businesses of all sizes basically to give a tax cut to families in America today, that despite the recession, are making over a million dollars. I mean, this is unprecedented. Unprecedented. I want to repeat that," she said. Landrieu added, however, that she had yet to make a decision on the final package and was speaking strictly about the extension of tax cuts for the wealthy.

Landrieu put the tax cuts in the context of the poverty and joblessness facing African Americans across the country. "The median net worth of African-American families -- net worth, not income -- in this country today, according to our census, is $5,000. You want me to repeat that? $5,000. So we are borrowing money from constituencies, and large segments of the population like this," said Landrieu. "I want you all to get your heads around this."

Obama had allies in the Senate who would have fought the extension of the tax cuts, Landrieu said, if only he had relied on them. "Why the president didn't think there were forty or fifty or sixty of us to defend him on this principle, I don't know, but he basically didn't think anybody of us cared much about it. Well, I want him to know I do care."

Originally posted to slinkerwink on Tue Dec 07, 2010 at 10:27 AM PST.

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