New Year’s Day Reads: The Lousy Deal

First Night fireworks against the Boston skyline

First Night fireworks against the Boston skyline

Good Morning and Happy New Year!!!

Sorry to be late with this post. I got so discouraged last night with our dysfunctional government that I went to bed completely disgusted. After a good night’s sleep, I’m feeling slightly more optimistic, if not truly hopeful. If I have any hope, it’s that perhaps the American people will rise up and let the president and Congress know what a horrible job they are doing.

So, what’s happening this morning? We officially went over the fiscal cliff at midnight even though the Senate approved a half-baked, crappy “deal.” Politico reports:

Congress lost a mad, New Year’s Eve dash to beat the fiscal cliff deadline, cinching a deal with President Barack Obama to raise taxes on the wealthy and temporarily freeze deep spending cuts but failing to get it through both chambers before midnight.
So over the cliff the country went — though perhaps for only a day or two and, assuming no snags, without incurring the double whammy of another recession and higher unemployment.

The measure, which would raise tax rates for families making more than $450,000 and delay deep across-the-board spending cuts for two months, cleared the Senate by an overwhelming 89-8 vote shortly after 2 a.m. The Republican-controlled House could take up the pact in a rare New Year’s Day session, though the timing of that chamber’s vote was not clear.

The $620 billion agreement was a major breakthrough in a partisan standoff that has dragged on for months, spooking Wall Street and threatening to hobble the economic recovery. It turned back the GOP’s two-decade-long refusal to raise tax rates, delivering a major win for the president.

The bill also canceled pay raises for members of Congress and averted an expected hike in the price of milk by extending expiring dairy policy.

Wow, they cancelled their own pay raises? That was big of them–not. They probably did that out of fear of an angry populace. And of course, we still have to watch the shameful spectacle of the tea party House wrangling over a deal that basically give them everything they wanted and more than they ever dreamed of.

From TPM, the Senators who voted against the deal:

The eight senators voting no were Michael Bennet (D-CO), Tom Carper (D-DE), Charles Grassley (R-IA), Tom Harkin (D-IA), Mike Lee (R-UT), Rand Paul (R-KY), Marco Rubio (R-FL), and Richard Shelby (R-AL).

Robert Reich calls it “A Lousy Deal on the Edge of the Fiscal Cliff.” I’m thinking that could be the new logo for this administration–”The Lousy Deal” as opposed to Roosevelt’s “New Deal.” Reich writes:

Details of the agreement reached by the president and congressional Republicans are still forthcoming, but from the look of it, Obama gave ground where he need not have.

What else is new?

Yes, the deal finally gets Republicans to accept a tax increase on the wealthy, but this is an inside-the-Beltway symbolic victory. If anyone believes this will make the GOP more amenable to future tax increases, they don’t know how rabidly extremist the GOP has become.

The deal also extends unemployment insurance for more than 2 million long-term unemployed. That’s important.

But I can’t help believe the president could have done better than this. After all, public opinion is overwhelmingly on his side. Republicans would have been blamed had no deal been achieved.

More importantly, the fiscal cliff is on the president’s side as well. If we go over it, he and the Democrats in the next Congress that starts later this week can quickly offer legislation that grants a middle-class tax cut and restores most military spending. Even rabid Republicans would be hard-pressed not to sign on.

I hate to say it, but it really looks like Obama pushed for this so he could give more away that he would have had to if we had just gone over the cliff without all the fake deal making.

Noam Scheiber writes at The New Republic: Democrats’ Cliff Compromise Is Bad; But the Strategic Consequences Are Disastrous.

I think the president made a huge mistake by negotiating over what he’d previously said was non-negotiable (namely, the expiration of the Bush tax cuts on income over $250,000). Then the White House compounded that mistake by sending Biden to “close” the deal when Harry Reid appeared to give up on it. As a practical matter, this signaled to Republicans that the White House wouldn’t walk away from the bargaining table, allowing the GOP to keep extracting concessions into the absolute final hours before the deadline….

I think a reasonable person can defend the bill on its own terms. The fact is that nudging up the tax threshold to $450,000 only sacrifices $100-200 billion in revenue over the next decade (against the $700-800 billion the administration would have secured with its original threshold), while allowing unemployment benefits to lapse would cause real pain to both the 2 million people directly affected and, indirectly, to the economy. Yes, Obama could have gotten the latter without giving up the former had he just waited another few days—at which point what the GOP considers a tax increase suddenly becomes a tax cut. But these things are always easier to pull the trigger on when you, er, don’t actually have to pull the trigger. I can’t begrudge Obama his wanting to avoid some downside risk for only a marginally better deal.

My far bigger gripe with the whole fiscal-cliff exercise has always been the strategic dimension—how it affects the next showdown with the GOP, and the one after that. Coming into the negotiation, Obama had two big problems: First, no matter how tough he talked, Republicans always assumed he’d blink in the end, for the simple reason that he pretty much always had. (This is one of the major themes of my book about his first term.) Second, despite the results of the most recent election, in which Obama won a fairly commanding victory on a platform of raising taxes on wealthy people, the GOP continued to believe that public opinion was mostly on its side. House Republicans cited the preservation of their majority—never mind that their own candidates received fewer total votes than House Democratic candidates—and polls showing most Americans still think government is too big.

No kidding. And I disagree that we shouldn’t begrudge Obama for not sticking to his promise to hold the line at $250,000. As I’ve written previously, Obama should not be involved in negotiations, because he either wants to lose to the Republicans or his need to please the people who hate him is just too strong. I don’t know which is the real problem, and it really doesn’t matter for practical purposes. He’s just a horrible negotiator, period. Now we have to watch another repulsive display of childish squabbling in a couple of months. Is this going to be the extent of what happens in Obama’s second term? With this incompetent, useless Congress, it’s entirely possible.

And of course we still have to wait and see what Boehner and his gang do.

In a joint statement late Monday, House GOP leaders promised to keep their commitment to act on the measure if it passes the Senate. But they say they won’t decide whether to accept the measure or to amend it and send it back to the Senate until lawmakers and their constituents have a chance to review the legislation.

Give me a frickin’ break! I’m going to end here, because there doesn’t seem to be much other news. What are you reading today. I look forward to clicking on your links.

Whatever else happens, I hope everyone has a great day today and a very happy new year in spite of the idiocy in Washington DC!!