I think when all is said and done, Liberals are going to see this deal in a better light than they do currently. Obama and the Democrats managed to secure significant cuts in defense spending, while leaving entitlements intact (who in their right mind ever thought such a thing was possible?). Even though preserving entitlements will come at massive costs to just about every other domestic program that Liberals hold dear, if one measures success by protecting the Big 3 (Medicare, Medicaid, Social Security), then by all means, the Democrats have done so.
It is no secret to reasonable people, I think, that this bill should’ve contained more revenue increases. America is one of the least-taxed nations in the world. Our State and Local tax system, in real terms, is actually regressive. Nearly every time we have raised taxes in the past, predictions of gloom and doom for the economy were patently false. Repeatedly. And studies show that the rich do not, in fact, flee high-tax states. And cries that the rich are paying too much already are laughable:
Yet today, America has the lowest corporate tax burden in the developed world. Many of our largest corporations pay nothing in taxes to the Federal government. Many more pay very little. Wealthy Americans are paying a lower average tax rate than at any time in recent history. 18,000 Households making over $500,000/year paid zero Federal income taxes in 2010. And if there is such a thing as shared sacrifice, then returning to Clinton-era tax rates should not be such a Shibboleth for the Right, given the fact that Clinton-era rates had no demonstrable negative impact on growth. If anything, the deficit reductions that Clinton-era rates facilitated gave global markets more confidence in the fiscal fortitude of the United States.
The idea of killing record deficits with no tax-increases and only spending cuts is ludicrous. Even Britain’s infamous 2010 austerity budget increased taxes by making a temporary bank tax permanent, and raising the nation’s Value-Added Tax by 2.5%.
What’s more: the private ratings agencies, on which both domestic and global credit markets turn, are expecting the Bush tax cuts to expire. And rightfully so, given that the Bush tax cuts are the largest contributor to the Federal deficit, even when you take the negative revenue impact of the recession into account:
And this is where the silver-lining of the Debt Deal may rest: Obama came out of this looking weak to his base, but he also looked like he was more willing to compromise than the GOP. Obama’s political purpose here may very well have been to give the GOP what they wanted in spending cuts now, in exchange for vetoing an extension of the Bush tax cuts later. This by itself would result in the revenue increases that most Liberals were looking for out of a debt deal:
So even though many of Obama’s supporters view this Debt Deal as a capitulation, the reality is that this may very well be a win down the road. Giving the GOP what they want now gives Obama the moral authority to finally put an end to the Bush tax cuts later, and help us get back on the road to fiscal sanity.
You may well be right. I certainly hope you are correct. I do think that President Obama has the best interest of the nation at heart - though I wish he were a better/harder negotiator. And were a little more progressive and less centrist. Even while acknowledging he has to work with the Congress we give him. Guess, we’ll see.