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Once again the White House cut a deal and once again we liberals are outraged at Obama's cave, capitulation, poker fold, Jedi mind-fail. I understand the frustration. It can be difficult to watch your political leader compromise on a core position like the $250,000 threshold for tax rates.

But I think everybody is ignoring a few aspects of the fiscal curb negotiations: 1) we got more in the deal then you may think; and 2) even if we had went over the fiscal curb, taxes going up only for incomes above $250,000 was never guaranteed. Follow me above the orange symbol thingy and I'll tell you why.  

1) First, I think it's important to look at how far the Republicans caved. At the beginning of this they wanted the Bush tax cuts to remain intact completely, plus dramatic changes to Medicare, Medicaid and Social Security, essentially gutting the social safety net. Then it was tax hikes only on incomes above $1 million, but only in exchange over an increase in the Medicare age, chained CPI for Social Security, and other changes to Medicaid. Then in the negotiations between Reid and McConnell, it was tax hikes only on income above $650,000 and chained CPI for Social Security. Then in McConnell's last offer to Biden, it was tax hikes only for income above $550,000. Finally, the Republicans agreed to tax hikes of incomes above $450,000 with no changes whatsoever to entitlements and no promises whatsoever to how big the spending cuts will be in 2 months. The White House got the Republicans to agree to $600 billion in new revenue over the next 10 years in exchange for nothing, when less than 2 weeks ago the Republicans would only agree to $800 in new revenue if it included the essential dismantling of our entitlement programs. That looks like some pretty good negotiating to me.

Then look at how far the White House moved. They went from $250,000 to $450,000 for tax hikes, and moved the estate tax from 45% to 40%. That's it. In exchange for that small movement, the White House got a permanent AMT fix; another year of tax credits for alternative energy (a huge job creator & win for the environment); 5 year extension of the EITC, Child Tax Credit, & American Opportunity Tax Credit; limits on tax exemptions & deductions for incomes above $250,000; the Medicare "doc fix" for another year; another year of unemployment insurance that will not be offset; a 9-month farm bill fix that will keep milk prices from rising; and a 2-month delay in the spending part of the fiscal curb. Also like I said before, no guarantees or promises of how big the spending cuts will be, or of any changes to entitlement programs. Plus, there is nothing stopping the President from including tax hikes on incomes between $250,000-$450,000 in the negotiations in 2 months.

2) As everyone knows, all tax rates were going to go up if we went over the fiscal curb. The liberal blogosphere fantasy was that by going over the fiscal curb, Democrats would be in a very strong position and the President could just send a bill to Congress cutting taxes for those making less than $250,000, effectively raising taxes on the top 2%. The idea was that Republicans wouldn't dare vote against this tax cut and thus we would finally get the higher taxes on the rich that we have been wanting and needing since Obama's election.

But here's the part that everybody seemed to forget or ignore: Republicans still control the House in January. The Republicans would not have just simply agreed to the new tax cuts of incomes under $250,000. That is a fantasy that we liberals believed in that was never going to come true. Instead, the first thing House Republicans would have done with the tax cut bill would have been to amend it, raising the income threshold to $800,000 or $1 million or even $5 million. So the Senate would have passed a bill cutting taxes for those making less than $250,000, and the House would have passed a bill cutting taxes for everyone under a much higher threshold. So we would have been in the exact same boat we have been in for the past 2 months, albeit with tax cuts rather than tax hikes: with the Democrats negotiating with the Republicans over the income threshold.

In this circumstance, if a bill came to the Senate from the House with a tax cut threshold at say $600,000, and the Democrats don't have 60 votes to amend it down to $250,000, what are the Dems' options? They can either vote for it or let taxes go up on everybody, including the middle class. And as we all know, the Democrats are the only people in D.C. who give a damn about the middle class. Republicans don't give a damn about the middle class. All they care about is the tax cuts on the upper income levels. So in that situation, the Democrats would probably vote for the higher income threshold bill rather than allow all tax rates to go up. This would give us even less new tax revenue than the current deal gives us.

Overall, I think we are letting the perfect be the enemy of the very good. I think this deal is a good deal: we pocket $600 billion in new tax revenue without giving up a dime in spending cuts or entitlement changes. And there is nothing stopping us from going after another $200-400 billion in the next round of negotiating.

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Comment Preferences

  •  Tip Jar (15+ / 0-)

    "The only thing I would trust Dick Cheney on is if I had a dead hooker in my hotel room." --Jon Stewart

    by DemBrock on Tue Jan 01, 2013 at 09:57:34 AM PST

  •  GOP concessions on spending... (6+ / 0-)
    Recommended by:
    Addison, Armando, bear83, shenderson, Lovo, wu ming

    are irrelevant as long as the debt ceiling still looms.

  •  What are the Dem options? (2+ / 0-)
    Recommended by:
    bear83, wu ming

    Let the tax cuts expire for everyone.

    Don't give on the $250k limit.

    Make Repubs vote against a tax cut on all income for all taxpayers, including billionaires, under $250k.

    Watch Repubs blink and cave or get blamed for voting down this tax cut.  Or have tax rates go back to what they were under Clinton years for everyone.  During which time the economy was pretty good and we were running surpluses.

    Seems like a win-win situation for Dems if we don't cave on the $250.

    •  Only Dems can take a win-win situation (2+ / 0-)
      Recommended by:
      lippythelion69, merrily1000

      and end up losing.

      No deal was better than this bad deal.

      Filibuster reform now. No more Gentleman's agreements.

      by bear83 on Tue Jan 01, 2013 at 10:24:55 AM PST

      [ Parent ]

    •  The Republicans control the House (3+ / 0-)
      Recommended by:
      Jerry056, SingularExistence, FG

      You seem to think Obama controls what bills go to the floor in the House. Obama can't make them vote against a tax cut on all income under $250K. The House Republicans can easily amend the bill to raise the threshold to well above $250K and send that back to the Senate. Then it will be up to the Democrats in the Senate to vote up or down on a tax cut. Then the Republicans can easily blame the Dems for voting down the tax cut.

      "The only thing I would trust Dick Cheney on is if I had a dead hooker in my hotel room." --Jon Stewart

      by DemBrock on Tue Jan 01, 2013 at 10:27:12 AM PST

      [ Parent ]

      •  You raise a distinction without a difference. (0+ / 0-)

        It doesn't matter if they send a bill to the House  Their failure to send a bill to the floor is in essence a "vote against a tax cut on all income under $250k."

        All the public will know is that because of Repubs there would be no tax cut on income below $250k.  They don't care whether it is because the Repubs voted against such a bill or because they refused to put up such a bill for a vote.

        No tax cut because of Repubs.  That is all that would matter.  What bills go to the floor is irrelevant in the realm of public opinoin.

        Dems could easily vote down a bill for a tax cut for income up to $500k and say that Repubs refused to vote for a tax cut for income up to $250k.  Who do you think would win that argument?  There are a lot more voters who make less than $250k than who make between $250k and $500k.  And the public opinion polls prove that the Dems had a winning hand on this issue.

        Dems stood firm on no continuation of the Bush tax cuts in their entirety and the Repubs couldn't convince anybody that a tax increase effective Jan 1 was the Dems fault.  Obama had a royal flush on the $250k limit and folded it.

  •  Did an email go out (0+ / 0-)

    from OFA this morning?

    The diary list is becoming a conveyer belt of these 'it really is OK diaries'

    Who wrote the talking points?

  •  This was little more than kicking the can down the (2+ / 0-)
    Recommended by:
    bear83, merrily1000

    road with the added bonus of give republicans more leverage 2 months from now.

    "I smoke. If this bothers anyone, I suggest you look around at the world in which we live and shut your fuckin' mouth." --- Bill Hicks

    by voroki on Tue Jan 01, 2013 at 10:17:41 AM PST

  •  Fix the economy, create jobs (2+ / 0-)
    Recommended by:
    bear83, merrily1000

    Then the problem goes away permanently.  

    As long as we allow the GOP and Wall Street to keep unemployment high, as long as we keep shipping jobs overseas and watch our trade deficit grow larger and larger, we'll have to keep revisiting this problem.

    I realize the new corporate fad is to reject long term planning, but we need to bring it back.

    We need a 5 or 10 year plan for this country with goals to be achieved every single month.  That's the only way we'll get ourselves out of the never-ending cycle of moving from one artificially created crisis to another.

    Democratic Leaders must be very clear they stand with the working class of our country. Democrats must hold the line in demanding that deficit reduction is done fairly -- not on the backs of the elderly, the sick, children and the poor.

    by Betty Pinson on Tue Jan 01, 2013 at 10:18:07 AM PST

  •  What happens in 60 days? (2+ / 0-)
    Recommended by:
    bear83, merrily1000

    When Pres Obama "has no choice" but to give in to draconian cuts to Social Security, Medicaid, Medicare and other spending line education, R&D, etc?

    President Obama would have been a Republican in the 1980's.

    by Jacoby Jonze on Tue Jan 01, 2013 at 10:19:37 AM PST

    •  Exactly (1+ / 0-)
      Recommended by:
      merrily1000

      The expiration of the tax cuts is the only thing Republicans care about. With that safely (and permanently) out of the way, they are free to return to their demands to cut S/S and Medicare and everything else.

       

      Filibuster reform now. No more Gentleman's agreements.

      by bear83 on Tue Jan 01, 2013 at 10:23:33 AM PST

      [ Parent ]

    •  Yeah because that's obviously going to happen. (1+ / 0-)
      Recommended by:
      NewDealer

      A Democrat President and 55 Democrats in the Senate are just going to let our social safety net crumble. I've heard this doomsday scenario many times before. I imagine you were ready for the world to end on Dec. 21, 2012 too.

      "The only thing I would trust Dick Cheney on is if I had a dead hooker in my hotel room." --Jon Stewart

      by DemBrock on Tue Jan 01, 2013 at 10:38:42 AM PST

      [ Parent ]

      •  Obama always folds. Always. (1+ / 0-)
        Recommended by:
        merrily1000

        If he wasn't willing to stand firm over the fiscal curb, how can you possibly imagine him not caving on the debt ceiling?

        President Obama would have been a Republican in the 1980's.

        by Jacoby Jonze on Tue Jan 01, 2013 at 10:56:26 AM PST

        [ Parent ]

        •  So because he compromised a little (1+ / 0-)
          Recommended by:
          WineRev

          on the tax rates, moving $200,000 toward the Republicans' position when the Republicans moved several millions toward Obama's position, Obama is suddenly going to cave on everything in a debt ceiling deal? Please. There will not be dracionian cuts to entitlements. It didn't happen when Republicans controlled every branch of govt and it's not gonna happen today.

          "The only thing I would trust Dick Cheney on is if I had a dead hooker in my hotel room." --Jon Stewart

          by DemBrock on Tue Jan 01, 2013 at 01:15:00 PM PST

          [ Parent ]

    •  Which passes the Senate how? (4+ / 0-)
      Recommended by:
      Lawrence, DemBrock, dragonlady, NewDealer

      And remind me if I missed it, but does 2013 on the calendar mean the President no longer has veto power?

      Just asking.

      Shalom.

      "God has given wine to gladden the hearts of people." Psalm 104:15

      by WineRev on Tue Jan 01, 2013 at 10:44:40 AM PST

      [ Parent ]

      •  Very easily. (0+ / 0-)

        45 Republicans plus Landrieu, Manchin, Tester, Baucus, Pryor, Warner and Heitkamp.  

        President Obama would have been a Republican in the 1980's.

        by Jacoby Jonze on Tue Jan 01, 2013 at 10:55:15 AM PST

        [ Parent ]

        •  IIRC it is the power (0+ / 0-)

          of the Majority Leader of the Senate to control the calendar of the body (much like the Speaker of the House) and decide what bills come before the body.
               Now Harry Reid has been showing signs of spinal presence, particularly on Social Security, Medicare and Medicaid, so why would he flinch in 60 days?

          Oh, and the House bill (the "Leave Government Except for Defense a Smoking Crater Act") would need Senate Committee hearings, yes?
               Naturally Stabenow (MI) as Chair of Agriculture will abandon all efforts to write a 5-year farm bill, right, and return to $7/gallon milk and make sure food stamps/SNAP are never heard from again, since starvation is a core Democratic value?
               Murray (WA) who just ran the table electing a NET GAIN of Democratic Senators, will simply roll over and die as chair of the Budget Committee, huh?
              I can see Wyden (OR) as head of Energy licking his chops to agree to repeal the extension of green energy credits (like just passed last night) because no one in Oregon cares about that stuff.
              Naturally, in light of his NO vote last night, you are assuming Harkin (IA) will look forward to gutting Social Security, cutting the minimum wage, ending Pell Grants, rolling back unemployment benefits to "3 weeks, take it or leave it" (because the 1 year extension just voted by the Senate is expendable, just a bargaining chip) and making IRAs and 401ks illegal when he swings the gavel as chair of Health, Education, Labor and Pensions?
               And finally, Nelson (FL! Florida...where a slice of the population has a passing concern about Social Security and Medicare) as the new, incoming chair of the Senate Aging Committee, will be looking to raise the eligibility age of both to 87...because that will save so much money, right?

          Get a grip.

          Shalom.

          "God has given wine to gladden the hearts of people." Psalm 104:15

          by WineRev on Tue Jan 01, 2013 at 12:07:19 PM PST

          [ Parent ]

      •  He won't use it (0+ / 0-)

        The senate will pass it because it will be part of the debt ceiling deal.

        The president will sign it because it is part of the debt ceiling deal.

        The same diarists will tell us to clap loudly because we got the debt ceiling raised.

        Every flower that you shatter; we will plant again!

        by merrily1000 on Tue Jan 01, 2013 at 11:42:10 AM PST

        [ Parent ]

  •  This is largely useless (1+ / 0-)
    Recommended by:
    WineRev
    another year of tax credits for alternative energy (a huge job creator & win for the environment);
    since utility-scale wind and solar projects take much more than a year to plan, get financed, get permits, and get built.

    We needed a 5-10 year extension to have a real impact. This is just a band-aid - and another hostage to be taken a year from now.

    Filibuster reform now. No more Gentleman's agreements.

    by bear83 on Tue Jan 01, 2013 at 10:20:04 AM PST

    •  Agreed. (1+ / 0-)
      Recommended by:
      bear83

      This helps stave off the fossil fuel industry backlash, but a 5 or ten year extension would be much better.

      Shalom.

      "God has given wine to gladden the hearts of people." Psalm 104:15

      by WineRev on Tue Jan 01, 2013 at 10:45:45 AM PST

      [ Parent ]

    •  You're right, a long-term extension (0+ / 0-)

      would obviously be the best thing for the wind energy industry and for the country. But a 1-year extension isn't useless because it does help projects with initial financing and getting projects off the ground. Since the stimulus there have only been 1-year extensions of the tax credits every year and the wind energy industry has expanded greatly in this country partly because of it.

      "The only thing I would trust Dick Cheney on is if I had a dead hooker in my hotel room." --Jon Stewart

      by DemBrock on Tue Jan 01, 2013 at 10:53:31 AM PST

      [ Parent ]

  •  60 votes to pass an amendment (2+ / 0-)
    Recommended by:
    Mayfly, NewDealer

    Here's the basic flaw in your reasoning:

    and the Democrats don't have 60 votes to amend it down to $250,000
    Senate Democrats don't need 60 votes to pass an amendment to a bill.  On the floor, they need 50 (plus Biden).  In the Finance Committee, they just need a majority.

    So they receive the tax-cut bill from the House, amend it down to the $250K level, and then dare Republican Senators to filibuster the bill, as amended.  Republicans filibuster a tax-cut bill?  If they tried, they'd look stupid.

    So the bill passes the Senate and goes back to the House.

    There the GOP has to either accept it or take the politically embarrassing step of amending it again to cut taxes for rich people (and increase the deficit).

    Thus the "deficit reduction" mask would have been torn off, and the true GOP cut-taxes-for-the-rich agenda exposed.

    •  The cut-taxes-for-the-rich agenda (0+ / 0-)

      of the Republicans has been exposed for years now and they don't care. Hell the past 2 months have been about protecting tax cuts for the rich at the risk of less deficit reduction. They're districts are so gerrymandered that they don't care how they look, they're heroes in their districts for standing up for "job creators."

      "The only thing I would trust Dick Cheney on is if I had a dead hooker in my hotel room." --Jon Stewart

      by DemBrock on Tue Jan 01, 2013 at 10:50:08 AM PST

      [ Parent ]

    •  But that's true about the amendment (0+ / 0-)

      I'm so used to Republicans filibustering everything that I forgot they can't filibuster in committee or on an amendment.

      "The only thing I would trust Dick Cheney on is if I had a dead hooker in my hotel room." --Jon Stewart

      by DemBrock on Tue Jan 01, 2013 at 10:57:41 AM PST

      [ Parent ]

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