Playing Taxes Hold ’Em

The Fiscal Cliff Just Around The CornerA few years back, there was a boom in poker television, shows in which you got to watch the betting and bluffing of expert card players. Since, however, the viewers seem to have lost interest. But I have a suggestion: Instead of featuring poker experts, why not have a show featuring poker incompetents, people who fold when they have a strong hand or don’t know how to quit while they’re ahead? On a second thought, that show already exists. It is called budget negotiations, and it’s now in its second episode. (source: Paul Krugman – NYTimes – 21/12/2012)

The first episode ran in 2011, as President Barack Obama made his first attempt to cut a long-run fiscal deal, a so-called Grand Bargain, with John Boehner, the speaker of the House. Obama was holding a fairly weak hand, after a mid-term election in which Democrats took a beating. Nonetheless, concessions he offered were breathtaking: He was willing to accept huge spending cuts, not to mention a rise in the Medicare eligibility age, in return for a vague promise of higher revenue without any increase in tax rates. This deal, if implemented, would have been a huge victory for Republicans, deeply damaging both programs dear to Democrats and Democratic political brand. But it never happened. Why? Because Mr. Boehner and the members of his party couldn’t bring themselves to accept even a modest rise in taxes. And their intransigence saved Mr. Obama from himself.

Now the game is on again, but with Mr. Obama holding a far stronger hand. He and his party won a solid victory in this year’s election. And the legislative clock is very much in their favor, too. All the Bush tax cuts are scheduled to expire at the end of the month. A brief digression: I’ve become aware of a new effort by G.O.P. to bully reporters into referring only to “Bush-era” tax cuts, probably in the hope of dissociating those cuts, which they want to preserve, from a president voters now regard with disdain. But George W. Bush and his administration devised those cuts and rammed them through the Congress, and it’s deceptive to suggest otherwise. Back to the poker game: The president doesn’t hold all cards, there are some things he and fellow Democrats want, like extended unemployment benefits and infrastructure spending, that they can’t get without some Republican cooperation. But he is in a very strong position. Yet earlier this week progressives suddenly had the sinking feeling that it was 2011 all over again, as the Obama administration made a budget offer that, while far better than the disastrous deal it was willing to make last time around, still involved giving way on issues where it had promised to hold line, perpetuating a substantial portion of high-income Bush tax cuts, effectively cutting Social Security benefits by changing the inflation adjustment. And this was an offer, not a deal. Are we about to see another round of president negotiating with himself, snatching policy and political defeat from jaws of victory? Well, probably not. Once again, Republican crazies, the people who can’t accept the idea of ever voting to raise taxes on wealthy, never mind either fiscal or economic reality, have saved the day. We don’t know exactly why Mr. Boehner didn’t respond to the president’s offer with a real counteroffer and instead offered something ludicrous, a “Plan B” that, according to the nonpartisan Tax Policy Center, would actually raise taxes for a number of lower- and middle-income families, while cutting taxes for almost half of those in top 1%. Effect, however, has to have been to disabuse the Obama team of any illusions that they were engaged in good-faith negotiations.

Mr. Boehner had evident problems getting his caucus to support Plan B, he took plan off the table Thursday night; it would have modestly raised taxes on really wealthy, top 0.1%, even that was too much for many Republicans. This means any real deal with Mr. Obama would be met with mass G.O.P. defections; so any such deal would require overwhelming Democratic support, a fact that empowers progressives ready to bolt if they think the president is giving away too much. As in 2011, then, the Republican crazies are doing Mr. Obama a favor, heading off any temptation he may have felt to give away the store in pursuit of bipartisan dreams. There’s a broader lesson here: This is no time for a Grand Bargain, because Republican Party, as now constituted, is just not an entity with which the president can make a serious deal. If we’re going to get a grip on our nation’s problems, of which the budget deficit is a minor part, the power of G.O.P.’s extremists, and their willingness to hold the economy hostage if they don’t get their way, needs to be broken. And somehow I don’t think that’s going to happen in the next few days. 


Acerca de ignaciocovelo
Consultor Internacional

4 Responses to Playing Taxes Hold ’Em

  1. walterrhett: Vote! Let the names of each member of Congress be recorded for history–for all to see in the names whose ideological positions ignore the deep damage their obstructionism is doing to the American Promise. Vote! Why does the Speaker hide his hordes of dissenters and obstructionists as he shines light on the President without addressing specifics, numbers, or reasons; substituting instead taunts, blame, and misdirection. The Speaker, by his failure to call for a vote on his plan by the members from the floor, has demeaned the House’s tradition as a body in which individual members faced the public, not hidden and herded into an ineffectual party caucus, unable to reach consensus, unwilling to demonstrate that its majority has become a minority. Debt? Before someone screams,”Greece!” (the size of Greater Ft. Worth!), look closer to home, at Brasil, in the world’s Top Five (passing Britain, only a few billion away from Russia for number four). With high taxes and excessive regulation, it ranks 17th globally in millionaires. There, tax agents have their own police force; the debt to GDP ratio is 66%. and the country’s President is a woman socialist who won her first election. Yet in America, the Party that suppressed the vote now blocks the votes of its own members, withdraws its own leader-written bills, all in the name of democracy, when it is simply the tyranny of politics. Vote! As the founders signed, we should not have a government that rules without votes and names.

  2. Professor Uziel Nogueira says: Despite recent progress, Brazil is far from being the best case practice of fiscal policy, debt management and income distribution in the Western Hemisphere. However, one must recognize that the US on the question of income distribution (the 1% versus the 99% ) is becoming a Latin American country. Macroeconomic stability is a recent phenomenon in Brazil. The country went bankrupt several times in the last century due to huge fiscal deficits being financed by borrowing in dollars and monetary emission. The latter, similar to the current monetary quantitative easing of Ben Bernanke’s FED.

    Besides, Brazil being ranked 17th in the number of millionaires is not something to be proud of. The country continues to be one of the most unequal and unjust societies in the world. Mexico, for example, has the richest man in the world, Carlos Slim, and millions of miserable and hungry Mexicans seeking jobs in the US. Efficient economic management and social justice do not rhyme with Brazil and Latin America.

  3. walterrhett: Brasil also moved 31 million out of $2-day poverty in 10 years, and has made great leaps in reducing inequality in a country founded on the idea of wealth and exploitation and virtually ruined, as you cite, by corruption and military dictators. Moreover, Brasil’s Bolsa Familia program of family aid tied to children’s education is consistently successing, and being reviewed as a model by the UN. Problems? Yes, many! Are they beginning to be addressed in Brasil? Yes.

    Social change is never a fast track, unless it’s a collapse. Development takes time to build (China, Russia) and is uneven. Inequality is a global issue, within and between countries and regions.

    As you know, in South Carolina we have a corridor of shame, a series of 12 counties with mass generational poverty, illness, and crumbling schools. I drew attention to Brasil not to tout its progress but to refute the GOP talking point that we will soon be Greece, If the world’s 5th largest economy overcame 2000+% inflation only a few decades ago, the US stands in little danger of the oft-cited dire warnings of “Greece!”

    And like Brasil, the US needs to begin to seriously address its inequality, rather than protecting the status quo by misplaced fear and stalemate.

  4. If Friday’s memorial service for one of this country’s long-serving senators was a somber recollection of a bipartisan era that once was, the rest of the day was a frenetic reminder of the political gridlock that now grips the capital. At the National Cathedral, the nation’s political leaders eulogized Senator Daniel K. Inouye of Hawaii, who died this week at 88 after more than 50 years in Congress. President Obama said he learned from Mr. Inouye “how our democracy is supposed to work.” Across town, democracy was, at best, showing its gritty side as it ground along angrily, noisily and slowly: A weary Speaker John A. Boehner admitted failure in his efforts to avert a fiscal crisis with a bill to increase taxes on millionaires but asserted that his job was not at risk; a top National Rifle Association official bluntly challenged Congress to embrace guns at schools, not control them; and Mr. Obama bowed to the reality that Republicans had blocked his first choice to be the next secretary of state.

    Though it has been 45 days since voters emphatically reaffirmed their faith in Mr. Obama, the time since then has shown the president’s power to be severely constrained by a Republican opposition that is bitter about its losses, unmoved by Mr. Obama’s victory and unwilling to compromise on social policy, economics or foreign affairs.

    “The stars are all aligning the wrong way in terms of working together,” said Peter Wehner, a former top White House aide to President George W. Bush. “Right now, the political system is not up to the moment and the challenges that we face.” House Republicans argue that voters handed their members a mandate as well, granting the party control of the House for another two years and with it the right to stick to their own views, even when they clash strongly with the president’s. And many Republicans remember well when the tables were turned. After Mr. Bush’s re-election in 2004, Democrats eagerly thwarted his push for privatization of Social Security, hobbling Mr. Bush’s domestic agenda in the first year of his second term. New polls suggest that Mr. Obama’s popularity has surged to its highest point since he announced the killing of Osama bin Laden. In the latest CBS News survey, the president’s job approval rating was at 57 percent. But taken together, events suggest that even that improvement in the polls has done little to deliver the president the kind of clear authority to enact his policies that voters seemed to say they wanted during the election (…..)


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