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I confess to being dismayed at the Obama-hate going on around here since the deal was announced last night.  I think those views are extremely short-sighted (possibly), and I want to explain why.

(I also want to give a shout-out to the rec'd diary Umm... We're playing chess, not checkers. And we're winning.  I'm making different points than he is, but our diaries support the same basic premise.)

Remember the following:

41:1 ratio of tax hikes to spending cuts

Got it?

The problem that some are complaining about is that Obama lost/has given away his leverage . . . I don't think so, and I'll explain why after the orange artwork of my daughter...

First, consider what was in the deal:

1.  Ending the Bush tax cuts to the rich.  Yes, we would have liked the threshold to have been lower, but, one ought to consider that this is the first time in 20+ years that the GOP voted for a tax increase.  (Anyone hear from Grover yet today?).  

The chess strategy:

Either Grover's spell is now broken -- or some of these GOPers who voted for it will get primaried from the right, and lose in the general election.

2.  The more important stimulus in the package: unemployment extended for another year

3.  More stim: a 5 year extension on tax credits for college education and the working poor, a five-year extension of the college tuition tax credit, the child tax credit and the earned income tax credit, which were part of the 2009 economic stimulus package.  

4.  Increases cap gains and dividends tax rate to 20 percent, from 15 percent. Capital gains and dividend income would be taxed at 23.8 percent for singles earning above $400,000 and families earning over $450,000, according to a White House fact sheet.   Yes, again, we'd have liked that threshold to have been lower.  But, again, I'll respond: GOPers voted for a tax increase for cap gains.  When's the last time that happened.

5.  It reinstates the Clinton-era limit itemized deductions for individuals earning over $250,000 and families earning over $300,000.  

6.  It permanently patches the Alternative Minimum Tax and extends a variety of expiring business and energy tax provisions for one year, including the research and experimentation tax credit and 50 percent bonus depreciation.

So, here's the question:

Did Obama give away his leverage for the next round?

That is, indeed, one way to look at it.  But I want everyone to consider the following tautology that the Obama critics are using:

The more Obama got in this deal, the more the complainers are saying that he lost his leverage.

So, my first message to the complainers is: would you have preferred the alternative, where Obama got a lot less in this deal?  Where we got cuts to SS and Medicare?  Cuts in the social safety net?

Or would you have preferred the alternative where there was no deal, and tens of millions lose their unemployment, the sequester kicks in, and economy starts to go off the rails?  Look, like it or not, the Dems will get re-elected, or not, in 2014 based on one main criteria: is the economy finally improving or not.  A sequester would tank the economy, which is one of the things the GOP wants, so they can take over Congress and, in 2016, the presidency.

But, here's another way to look at it:

Obama pocketed tax hikes, and almost no cost, and the GOP will be starting from scratch in two months.

I hope everyone noticed that during the day yesterday, Obama repeated, like four or five times, that future cuts (sequestration) are going to come with future "revenue increasers".

In other words -- Obama is pocketing this 41:1 ratio -- and is demanding a 1:1 ratio for cuts in the future.

That sounds like a pretty good darn deal to me.

Picture two months from now -- the GOP is going to have to name some specific cuts.  And even if they have the cojones to do so, Obama will appeal to the public: "we want this to be balanced, we need revenue enhancers, too."

Bottom line: Obama didn't give away leverage -- he pockets some gains and took them off the table, all while getting the GOP to do what they swore to St. Grover what they would never do: raise taxes.

(See also, from WaPo: Tuesday’s tax increase is the biggest in decades -- and consider that the GOP voted for it.)

(Another bottom line: millions were going to lose their unemployment insurance.  Today.  That would have hurt those recipients immensely -- as well as hurt the economy, because UI money gets spent immediately back into the economy).

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Comment Preferences

  •  The war ain't over yet (13+ / 0-)

    This is just another step in the long battle against the GOP.  A look at the big picture is needed here.

  •  if Obama stays true to his (5+ / 0-)

    1:1 demand for future negotiations, I consider this deal a huge success.  

    •  Obama, Demand...... (0+ / 0-)

      Oh yeah.  He demanded that any deal to prevent the fiscal cliff would have to also increase the debt ceiling. He has already ruled out his option of simply ignoring the limit as unconstitutional as many scholars say is possible, (check out for details on this.)

      If he follows the debt limit, and Geithner sent a letter to Congress saying that he will only be able to shuffle accounts for a matter of weeks, and then the U.S. will go cold turnkey, SS. Checks, Federal Payroll, Payment on the debt on our bonds will be in question as our rating will be lowered.

      Republican are more prepared for social chaos.  They have 3.7 times the number of weapons than Democrats (personal poll)  So, their response deep down is bring on the Armageddon as it will rid this country of the moochers who will not make it through.

      Boy, am I ever venting this morning!!!  

  •  Exactly right (2+ / 0-)
    Recommended by:
    A DC Wonk, ericlewis0

    Agree with all your points; this is a big win.

    Worth restating again that it's not clear what leverage people expected the President to have in the debt ceiling fight that he won't have now, since there was no plausible path to avoiding that fight entirely.

  •  Yeah, I heard from Grover... (1+ / 0-)
    Recommended by:
    Kentucky DeanDemocrat

    He was all over CNN, telling Wolf Blitzer and his vast audience that this was a winner, that what we didn't get in this deal, we can get in the showdown over the Debt ceiling.

    Wolf tried to make the point that these republicans will be breaking their no tax pledge, and Grover said, "Hey, this was going to end in a day if this isn't passed, and we made it permanent for 90%,  So, Yeah I would vote for it and so should the Republicans."

    The interview is probably on CNN's web site now.  

  •  As I understand it, they got an alternative (3+ / 0-)
    Recommended by:
    ericlewis0, Odysseus, Catte Nappe

    minimum tax "permanent fix".
    That is something that will affect a lot of the upper-middle class "job creators", (or am I wrong).

    Did they also not get a "farm bill" out of the deal? That also is a big deal.

    The gop mostly got bad optics. We got a bunch of stuff that will help in 2014.

    And the UI, which will also help those hurting the most, as well as the general economy.
    That will also help in 2014.

    Forgive me about being 2014-centric, but the real problem won't be solved until we get these infantile jerks out of the way. We really must get the House back in 2014.

    That is step 1 to the solution of all the other problems everyone is bickering about here.

    You can't make this stuff up.

    by David54 on Tue Jan 01, 2013 at 07:48:32 AM PST

  •  You know what dismays me? (1+ / 0-)
    Recommended by:
    Kentucky DeanDemocrat
    I confess to being dismayed at the Obama-hate going on around here since the deal was announced last night.
    If the unconditionals displayed the same level of cynicism towards the WH that they display to those of us here that actually care about policy we would have a really solid party base.


  •  the cap gains rate will be 25% for most (3+ / 0-)
    Recommended by:
    ybruti, ericlewis0, WineRev

    people over the threshold, and that's because the itemized deduction limit is equivalent to an additional 1.2% points on top of the existing rate.

    that's a 67% increase from 15%.

  •  I'll just wait and see (0+ / 0-)

    Things are flying around in so many directions it's really tough to make sense of the changes.

    Actually it's going to be tough to assess the real-life and the political consequences until we we how real folks' tax bills are affected and how things play out in February. And in March, when the current Continuing Resolution expires.

    And the House still has to buy into this.

    •  The thing about bills with something for everyone (0+ / 0-)

      is that they also provide something for everyone to complain about.

      Really it'll be about who gets screwed, how badly, and whether they can afford it.

      People who don't have much to begin with can't afford to lose very much. So if they're affected, even in small ways, then the "compromise" will have been a giveaway. And that seems to be the trend since...well...since forever but particularly over the past 12 years.

  •  This is the key to whether this is a good deal now (1+ / 0-)
    Recommended by:
    Or would you have preferred the alternative where there was no deal, and tens of millions lose their unemployment, the sequester kicks in, and economy starts to go off the rails?  Look, like it or not, the Dems will get re-elected, or not, in 2014 based on one main criteria: is the economy finally improving or not.  A sequester would tank the economy, which is one of the things the GOP wants, so they can take over Congress and, in 2016, the presidency.
    If this assessment is accurate, I agree.  But I'm not sure the cost of "no deal," for at least a while longer, would have fallen on the Democrats.  I'm deeply concerned that Obama didn't stand firm on the debt ceiling, because I'm not convinced he has it in him to stand firm a few months from now. The goal should be to undermine the Republicans political leverage to maximum extent possible.  I don't see how leaving them the debt ceiling as a weapon helps accomplish that.
  •  As i commented in the chess thread... (1+ / 0-)
    Recommended by:
    A DC Wonk

    ...I am really warming to this deal more and more considering the long game. Congress has always been a body of government where compromise was the way to go (I know Dems do most of the compromising these day but a man can have faith) so we were never going to get everything. All in all i trust the president and the long term vision for the United States.

    •  The long game (0+ / 0-)

      That's a good point -- and it's something that Andrew Sullivan has pointed out for years about Obama.  (In fact, his view is that Obama's ability to play long game is why he does so well).

      E.g., we were all pretty darn frustrated with how long the repeat of DADT took.  But doing it the slow methodical way that Obama did it, by the time it was repealed, it was almost a non-event in the media, and there was next-to-no controversy.

      Taking the long view in Iran is why we haven't bombed them.  (yet).

      So, too, here.  Obama knows -- more than anyone -- that the debt limit and sequester are coming up soon, and I'm quite sure that this deal something that he sees as the first act in a three act play.  There's no way he would give up all his cards in part 1 -- that goes against his clear history of "playing the long game."

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