The problem with the deal

I suppose the deal isn’t that bad.  Though, I actually think it is an absolutely horrible idea to take the unduly low Bush tax rates (i.e., that clearly cannot finance the spending the American people clearly want), where expired yesterday, and make them permanent for all but the smallest portion of Americans.  The evidence is super clear that the economy can thrive (albeit not right now) under Clinton-era rate, but Obama and Democrats have chosen to tie us long term to tax rates that just cannot bring in enough revenue to accomplish progressive goals for government.  In exchange, they got a lot of temporary (though, fairly long term) concessions.  Okay, maybe the deal is that bad.  Other problem… Obama clearly got rolled again.  Do not draw a line in the sand of you are just going to back up and draw another line.  Obama drew a line at raising rates on those over $250K, but then backed down.  Basically, if you are Republicans, you can be pretty sure that no matter what Obama actually says, in the end he’ll give in.  An absolutely horrible position when there are continued negotiations to be had over the next two years.  Obama has said there’s no way he’s bargaining on the debt ceiling this time.  Right.  Who’s going to believe him now.  Drum:

So let’s tote up the winners and losers. On the deal itself, despite my misgivings yesterday, I guess I’d score it a short-term win for Obama. He had to give up a few things he wanted, notably the $250,000 income cutoff that he campaigned on, but he did wring a tax increase out of congressional Republicans. In the longer term, I’d score it a win for the GOP. Their backs were against a wall, since the Bush tax cuts were all going to expire anyway on January 1, and they managed to do two things. First, they kept the size of the deal limited. Second, they showed that Obama, as usual, isn’t serious when he lays down a line in the sand. No matter how firmly he insists on something, he’s always willing to deal. This is going to make Part 2 of the fiscal cliff negotiations very, very dangerous. [emphasis mine]

Tomasky is much more charitably-inclined:

While most liberals were stewing at Barack Obama yesterday for his “capitulation” on tax rates, I confess that I was feeling philosophical about it, and even mildly defensive of him. He is negotiating with madmen, and you can’t negotiate with madmen, because they’re, well, mad. I also spent part of yesterday morning re-reading a little history and reminding myself that rascality like this fiscal-cliff business has been going on since the beginning of the republic. So now I’d like to remind you. It’s always the reactionaries holding up the progressives—and usually, needless to say, it’s been the South holding up the North—and always with the same demagogic and dishonest arguments about a tyrannical central government. We’ll never be rid of these paranoid bloviators, and if no other president could stop them I don’t really see why Obama ought to be able to.

You know, in the end, I think it is just too easy to write Republicans off as irrational mad men, as much as they seem to act that way.   I just finished reading an excellent book, Don’t Shoot by David Kennedy (hopefully, more on that later this week) and he talks extensively about how everybody is convinced that drug dealers are irrational and will not respond to rational incentives.  Turns out nobody was using the right rational incentives, but once you do, you can make an enormous difference.   I suspect that in this regard, Republican Congress members are far more like drug dealers than Tomasky gives them credit for.

About Steve Greene
Professor of Political Science at NC State

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