Maybe the deal isn’t as bad as I thought.

Chess Master or Pawn?

Chess Master or Pawn?

So I went and watched a silly movie (and thoroughly enjoyed it). I calmed down and decided to get back online for a bit. I read some reactions to the fiscal cliff deal from a different perspective, and now I think maybe I was wrong. Sure it’s a lousy deal, but it’s not over yet and at Obama did manage to preserve the social safety net programs, extend unemployment benefits, hold onto the earned income tax credit and child credits, and got some minimal revenue increases.

Look, I’m poor, but I’m not on unemployment. I was willing to go “off the cliff” in order to force the Republicans’ hand. But there are millions of poor and working class people out there would would really suffer if they lose their unemployment and those tax givebacks. Now those have been extended for a year at least. Yes, there will be another fight in two months, but there was going to be a battle royal in two months anyway. Now they will kill two birds with one stone–the debt limit and the sequester will be wrapped up in one fight.

Have I drunk the Koolaid? No, but I admit I really do want to hang onto some hope for the future. So beat me up in the comments all you want. I’m going to hold off judging this deal for two more months. Then if Obama completely sells out the poor and elderly, I’ll admit I made a big mistake. But for now, I’m willing to give Obama a chance.

My changed perspective came from reading a couple of diaries at DailyKos (so shoot me!) and then rereading pieces by Paul Krugman and Noam Scheiber. First up, a Kos diary by ban nock: “Obama’s Deal From a poor Person’s Perspective.”

As usual Obama looked out for us fairly well. All you folks in the financial industry who are weeping and wailing can just pound sand, cash in some stock options, sell your Lincoln, cry me a river.

The biggest thing is earned income tax credit and medicaid, neither of which were touched. Looks like we lost 2% on Social Security contributions but that is more than made up by the earned income credit (EIC)

I should do more to define poor. By poor I mean lower than median income down to, well, to really really poor. Median is around 40K.

The earned income credit is the thing that pulls the greatest number of people out of poverty in the USA. It’s an alternative to raising minimum wages.

You take your adjusted gross income and if you’re a family with a coupla kids making between $13K and $22K Uncle Sam is going to either reduce your taxes by around $5K or reduce them as much as possible and send you a fat check for the remainder. How cool is that? Chart to figure what you get here.… What is Adjusted Gross Income? That’s how much money you make, but it could come down for things like IRA contributions.

And then, as ban nock points out, there’s unemployment, which is the only thing between millions of Americans and abject poverty.

Now when I first read ban nock’s diary, I was somewhat skeptical. My point of view was that Obama is just warming up for the big kill, “entitlement reform.” But wait a minute. The Republicans were screaming for that in 2011 and again in this last fight. But they didn’t get it. In fact Harry Reid even took the Chained CPI off the table and Obama and Biden didn’t put it back on.

Then I moved on to this diary by Alexander Dukes AKA “Game Guru”: “Umm… We’re playing chess, not checkers. And we’re winning.” You really need to read the whole thing, but the gist is that Obama has been dealing with people who are utterly intractable–they’re actually buttfuck crazy!–so what Obama has done is to keep kicking the can down the road while each time getting something for nothing and at the same time preserving the social programs most needed by the poor and unemployed. Here’s an

First off, lets establish that we’re playing chess, not checkers. Our objective is not to win more battles than the Republicans, its to win the war. In this case its a war against the Republican objective to effectively dismantle Medicare, Social Security, Obamacare, the EPA and every other part of the government that doesn’t leave the people to the whims of the 1 percent. This is chess, so we can afford to lose a few pieces so that we draw our opponent in for the final blow. With every turn we attempt to move toward our ultimate goal, even if that means we take some blows along the way. Chess is a thinking man’s game, it takes a long time to play. Similarly, in these budget fights, Obama’s thinking about the long haul.

Lets examine the President’s strategy: In the first budget fight, Republicans wanted to extend the Bush tax cuts for everyone. The Democrats wanted to extend unemployment benefits and renew the START treaty. There was a great deal of debate… and something happened. What did we end up with? We got START, the unemployment extension, and what else…. what else… oh yeah, DADT was repealed! All for maintaining the tax status quo at the time. Essentially, we offered nothing, and the Republicans got nothing.

Okay, so we gave up the hope for more revenue from taxing the rich, but as Republicans keep pointing out, that new revenue won’t even keep the government going for very long. It’s mostly a symbolic effort to restore some fairness to the tax system.

After that was the debt ceiling fight. Well, Obama almost got to a deal back in 2011, but to no avail. So to raise the debt ceiling congress created the sequester. Nothing for nothing there. Not a bad or good deal, because there wasn’t really a deal at all. But in the sense that there was a deal, both sides agreed to a lame duck rematch, betting that their side would win the election and have the leverage in the sequester fight. Obama won the election, so he had the leverage.

Again, Republicans basically got nothing–just a fake deadline that everyone knew all along was just kicking the can down the road.

Lets discuss what happened (and is still happening) today. Yesterday, Mitch McConnell and Obama reached a deal that did 3 main things: It ends the Bush tax cuts for those making over $400K, it raised the estate tax for those with estates greater than 5 million, and extends unemployment benefits for another year. For this, the Republicans gained… nothing.

That’s right, nothing. Yes, the sequester is extended for only 60 days, but that bumps right up against the debt ceiling… something the Republicans were going to fight over anyway. The media common wisdom is that the Republicans gained “leverage” in this deal. How so? Obama just combined two potential clusterf*cks into one! He gained a years worth of unemployment benefits, tax hikes on the 1%, and an estate tax hike; all for making his job easier in the long term.

Next time Obama may have to cave on the Chained CPI, which would be horrible, but better than privatization of Social Security. But maybe he won’t have to give that up, who knows? All we know for now is that Social Security hasn’t been changed yet.

Obama wanted the debt limited to be raised with the elimination of the sequester. This is essentially raising the limit along with eliminating the sequester, only now he’s getting more of what he wants when the debate starts because he’s already got the tax hikes and the unemployment extension!

Not only that, but now he has two major speeches between now and then to set the debate squarely in his favor.

It makes sense to me. Frankly, I buy it for now. And you know why I’m willing to string Obama along for another two months? Because of what happened in his second debate with Mitt Romney:

Please proceed, Governor.

Please proceed, Speaker.

Maybe I’m nuts, but maybe I’m not. I’m going to wait two months and find out. Now let’s look at what Krugman had to say about the upside of the deal:

To make sense of what just happened, we need to ask what is really at stake, and how much difference the budget deal makes in the larger picture.

So, what are the two sides really fighting about? Surely the answer is, the future of the welfare state. Progressives want to maintain the achievements of the New Deal and the Great Society, and also implement and improve Obamacare so that we become a normal advanced country that guarantees essential health care to all its citizens. The right wants to roll the clock back to 1930, if not to the 19th century.

There are two ways progressives can lose this fight. One is direct defeat on the question of social insurance, with Congress actually voting to privatize and eventually phase out key programs — or with Democratic politicians themselves giving away their political birthright in the name of a mess of pottage Grand Bargain. The other is for conservatives to successfully starve the beast — to drive revenue so low through tax cuts that the social insurance programs can’t be sustained.

The good news for progressives is that danger #1 has been averted, at least so far — and not without a lot of anxiety first.

Romney lost, so nothing like the Ryan plan is on the table until President Santorum takes office, or something. Meanwhile, in 2011 Obama was willing to raise the Medicare age, in 2012 to cut Social Security benefits; but luckily the extremists of the right scuttled both deals. There are no cuts in benefits in this deal.

And Scheiber’s take on the upside:

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.

In other words, we are dealing with insane people–the Republicans in the House and Senate–and so far we haven’t given away the real farm, the social safety net. Unfortunately we don’t have enough revenue for a real stimulus either, but we go back to the table in two months and the Republicans are scoring that as a win for them.

But what if it’s not? What if dealing both issues at once–the debt ceiling and the sequester–and sooner, is an advantage for Democrats and the White House? We can’t know for sure until the next fight.  But Obama did get a year of unemployment, those tax givebacks, and some symbolic concessions from the super-rich.  And he does have the State of the Union and Inauguration speeches to call out the Republicans and make his case.

So that’s why I’m going to give this deal a chance for now. It’s not a great deal, but the important stuff has been protected for the time being. Now go ahead and hammer me in the comments, I don’t mind.

47 Comments on “Maybe the deal isn’t as bad as I thought.”

  1. bostonboomer says:

    Obama isn’t a genius, but he’s crafty and he can be ruthless. On the other hand IMO, he’s smarter than Boehner and the tea party gang are idiots.

    • ecocatwoman says:

      Personally I agree with the chess analogy. I saw that during debates 2 & 3. Still wondering if debate 1 was intentionally – giving Rombot & Co. a false sense of security?????

      • bostonboomer says:

        You know that pep rally Obama held yesterday afternoon? I’m pretty sure he was deliberately taunting the Republicans. Maybe he thought that would light a fire under McConnell.

        I won’t go so far as to say the first debate was on purpose. I think Obama got overconfident or distracted, but he more made up for it in rounds 2 and 3. And he definitely knocked Romney off guard.

      • Fannie says:

        Could be true, fooled me.

  2. ecocatwoman says:

    No hammer here, not even a heavy ladle. I’m with you on this. I would’ve preferred that Repugs slinked out with their prehensile tails between their legs after having been neutered, but that’s a pipe dream. Plus – what’s going to happen in the House? Can Boehner pull a rabbit out of a hat? Will enough congress critters out vote the Teabaggers and pass a version of the Senate deal?

    Someone on NPR today said Biden brokered the final deal after Obama had angered the Repugs with his comments during his press conference yesterday.

    • bostonboomer says:

      Biden was already brokering the deal long before the press conference. Obama knows Biden is a hell of a good schmoozer and Obama isn’t.

      I don’t know what will happen in the house, but Politico says they’ll pass it because the Senate vote was so overwhelming. Sometimes I forget that politics is a game of inches, just like baseball.

  3. bostonboomer says:

    And I forgot that Obama got a wind power tax credit and a small increase in capital gains taxes. Keep in mind, the Republicans got nothing except the thrill of making Obama cave on the $250,000 line in the sand. And they caved on the Chained CPI, which is worth a lot more.

    • RalphB says:

      You won me over. I’m going to agree with everything you wrote and be happy, for at least the next couple of months. You made my day. Thanks.

      • bostonboomer says:

        What have we got to lose? Let’s face it, we were never going to get everything we wanted. Now I think Obama gave in on taxes because that would hurt the most vulnerable people least. I was serious about the “Please proceed governor” thing too. That was chess.

      • Fannie says:

        Count me in too, I was ready for long break from all this freaking stressing. What’s a couple of months………..I have heard his speeches, and the last one was his best, maybe the bestie is yet to come.

        There’s lots involved, and we are hashing over the highlights – what I don’t understand about the poor guy’s statement (how does he get it?), I don’t get %2 social security contributions, as social security (comes out of your paycheck) has nothing to do with Eearned Income Credit (which is how much you make) gets connected. I am sorry pound on me, I don’t get it.

        Thanks BB…………I needed to see the second debate, cause I had Denver on my target.

        I am gonna make a pound cake just for the occasion.

    • Riverbird says:

      Thanks, BB. I feel better after reading your post and comments.

      • bostonboomer says:

        Thanks Riverbird. I have a tendency to freak out, but I think I’ve got a better perspective now.

      • I hope you are right about the next showdown over the debt ceiling, but y’all know I don’t put any faith in Obama standing up for Social Security and the other programs so many people rely on, I think we have a lot to lose in the coming months. What I really don’t like about all this is the feeling like these gov cliffs are becoming normal, to the point that all the work is just hostage negotiating….nothing more, and nothing is getting done. I am so very sick of it all.

  4. bostonboomer says:

    The Hill reports:

    The deal would extend for five years the American Opportunity Tax Credit, Child Tax Credit and Earned Income Tax Credit, which are all tax breaks geared toward lower- or middle-income taxpayers.

    The AOTC allows more taxpayers to qualify for tax credits to pay for college, expanding the threshold for a full $2,500 credit to individuals making $80,000 or less. A full $1,000 Child Tax Credit is available currently for each child of a couple making $110,000 or less. The EITC is specifically designed to help low-income earners. Making the tax cuts “permanent” is bad, but nothing is really permanent in the long run.

    The deal would extend bonus depreciation for one year, an important tax break for businesses that allows companies to write off 50 percent of investments in capital equipment. The break is set to expire in January.

    It includes a permanent indexing of the Alternative Minimum Tax to inflation so that it no longer threatens to raise taxes on the middle class.

    The tax portion of the agreement also extends a slew of corporate tax provisions, including for clean energy production such as wind energy.

    There’s more at the link, and from what I can see, the only win for Repubs is extending the Bush tax cuts on most Americans.

    • bostonboomer says:

      Plus….we’ll have more Dems in both Senate and House when the next deal goes down and more liberal Dems too.

      I’ll shut up now because everyone seems to be busy.

      • RalphB says:

        Here’s hoping we can count on those more liberal Dems to press for better outcomes!

      • bostonboomer says:

        Elizabeth Warren instead of Scott Brown. That’s a big change.

      • Beata says:

        We also have Donnelly instead of Lugar. Donnelly’s a social conservative but he will be a Dem on economic issues. That’s a plus. Changes in the new Congress may be small but significant. I am optimistic.

      • Beata says:

        Very good post, BB! Thank you for this.

      • Fannie says:

        Oh snap, fuckin Allen West won’t be there, that’s a huge plus.

  5. dakinikat says:

    Cantor says he’s not supporting the Senate Bill. Issa isn’t either. Boehner is being silent. I’m not sure the house is going to go for this without amendments.

    • RalphB says:

      Heritage and FreedumbWorks are scoring the votes on the deal. Teahadists may have a hard time voting for it. 🙂

      • bostonboomer says:

        If they don’t go for it, the White House can go back to Plan A. Go over the cliff and then lower taxes and maybe not all the way up to $450K.

        • dakinikat says:

          But like you said, there’s a lot of other things in this including the extensions of unemployment.

          This bill won’t pass the house as is …

      • bostonboomer says:

        All we can do is wait and see. From what I’ve read, it will pass with mostly Dem votes if it goes to the floor. It will depend on whether Boehner has the guts to let them vote.

    • RalphB says:

      Our Congress in action. Cherish it. From The Hill:

      Senate Democrats will reject House changes to tax bill, aides say

      Senate Democratic leaders say they will reject any House effort to amend a fiscal cliff deal that passed the upper chamber with overwhelming support on New Year’s Day.

      “The House Republicans have two choices: cut their losses and pass the deal now, or else put up a fight they cannot win and pass the same deal a few days now after being further humiliated,” said a Senate Democratic leadership aide.

      Another senior Democratic aide said Senate Majority Leader Harry Reid (D-Nev.) will not reconsider the bill, which passed by a vote of 89 to 8.

      “We’re done,” said the aide.

      • bostonboomer says:

        Good. That means if the House refuses to pass the bill, all of the blame will be theirs. McConnell agreed to this and he has a lot riding on it. I heard that the House leadership were kept informed at all times too.

      • RalphB says:

        I’m sure they weren’t surprised by any of it but, their leadership is so weak, they can’t get the members to vote for anything. I’m not sure if that makes them more or less dangerous to the country.

      • ANonOMouse says:

        I think what we see going on in the House at this moment is a Cantor power grab. If Boehner allows this bill to go to the floor without amendments, Cantor will become Speaker. If it gets amended, I’m not sure it will get the votes necessary to get through the House, but if it does get through the House it will likely be so watered down our Senate will reject it. My family understands the importance of Unemployment Insurance, we’ve been there several times within the last 6 years, but the question must be asked, AT WHAT PRICE? We all know the GOP’s real goal is SS/Medicare/Medicaid/ObamaCare/Food stamps/Pell Grants and a total dismantling of all social safety net programs.The last time the Bush tax cuts were extended it was UI that was used as the bargaining chip to force Obama to sign the bill and look where we are 2 years later. I believe that we’re going to end up seeing who can hold their breath the longest and in circumstance the DEMS win. It might mean retroactive Unemployment Insurance payments, but we can’t sacrifice the Safety Nets for UI or UI for the Safety Nets when neither should be on the negotiating table.

  6. RalphB says:

    Steve Benen has excellent analysis of the possible outcomes in the House.

    • dakinikat says:

      I’m hearing that there’s calls going out to CEOs and Bankers to put pressure on the House Republicans.

      • bostonboomer says:

        If they don’t vote on it, the new Congress comes in on Thursday. Would they be able to vote on the same bill? If not, then they’ll have to start over.

      • RalphB says:

        I wonder if this isn’t the start of Cantor’s palace coup? Boehner committed to bring the bill up on the floor. That doesn’t help him with the more nihilistic members.

      • RalphB says:

        This bill is null, void, and dead at the end of this Congress.

      • bostonboomer says:

        Right now, it depends on if Boehner puts it up for a vote, because it would pass. That puts all the onus on Boehner to face the wrath of business leaders and Americans whose taxes will go up.

        And here’s something I hadn’t thought of. Universities and researchers all over the country would lose their funding from NIH, etc. That would bring out some big guns.

      • RalphB says:

        Orange Julius is likely dogfood either way. He’s a terrible speaker so what the heck.

      • ANonOMouse says:

        This is a coup by Cantor, no doubt about it.

  7. Fannie says:

    Up to this point, the tea party says no we ain’t gonna vote.

  8. Silent Kate says:

    The only thing that stands out for me is how many senators voted for it. When they listed the ones that didn’t vote for it I didn’t see Sen. Bernie Sanders on the “no vote” list. This gives me some hope. I wold like to hear what he has to say about it. Rep. Boehner looks to be having a hell of a time with Cantor nipping at his heels.

    • ecocatwoman says:

      I too was surprised that Sanders voted for it. And, again from NPR today, an analyst said that Rubio’s NO vote was his “announcement” of his intent to run for prez in 2016. I can’t bear the thought of Rubio running for prez.

  9. ecocatwoman says:

    MSNBC just reported that the rumor is the House didn’t have the votes for an amended bill with spending cuts so there will be an up or down vote on the Senate bill. They are predicting it will pass the House.