Bill Black: No, Mr. President, you did not negotiate a winning tax dealhttp://www.nakedcapitalism.com/2010/12/bill-black-no-mr-president-you-did-not-negotiate-a-winning-tax-deal.html">naked capitalism
By Bill Black, Associate Professor of Economics and Law at the University of Missouri-Kansas City and a former senior financial regulator
This the third column in a series about President Obama’s decision to agree to support the extension of Bush’s tax cuts for the wealthiest Americans. The
http://www.huffingtonpost.com/william-k-black/what-aspect-of-dealing-wi_b_793707.html">first column explained why the President folded on a winning hand on taxes. The
http://www.huffingtonpost.com/william-k-black/the-effort-to-claim-that-_b_794862.html">second column showed that four of the five economists the administration was citing as supporting its plan were virulent opponents who were delighted that the President was capitulating to the Republicans and making them and their wealthy clients far richer. This column analyses Obama’s claim that he got the better of the Republicans in the negotiations.
The administration claims that it negotiated a winning deal with the Republicans on taxes because the Republicans gave up more than did the Democrats in the deal — a better deal than Obama thought possible. Austan Goolsbee’s (Chairman of Obama’s Council of Economic Advisors) white board presentation claims that the administration received concessions by the Republicans that are over twice as large as the concessions that the administration made on reducing taxes for the wealthiest two percent of Americans ($238 v. $114 billion in 2011). The administration (implicitly) argues that its claim of extraordinary negotiating success represents a miraculous accomplishment given the facts that the Republicans were holding all legislation hostage to their non-negotiable demand that the Bush tax cuts for the wealthiest of Americans be extended and the administration’s irrevocable decision that it could not call the Republican’s bluff because the economy would likely sink back into recession unless tax cuts for the middle class were immediately passed.
The first problem with Obama’s claimed tax miracle is that if you accept Goolsbee’s claims, then it takes a political miracle in America for a political party, pledged to ending the tax cuts for the wealthy, controlling the Presidency and with strong majorities in both Houses to get 98% of the citizens 67% of the benefits while giving the wealthiest two percent of the citizens 33% of the benefits. If Goolsbee is correct, then Obama’s tax miracle vastly increased America’s already record income inequality and ensures that the ultra wealthy will have even more dominant political power in the future to ensure that there are no new miracles. If Goolsbee is right, then things are so bad that our miracles are now disasters that further imperil our democracy.
The second problem with Obama’s claimed tax miracle is that it is too good to be true. If the Republicans really had total negotiating leverage and really opposed Obama’s plans then they would not have made any meaningful concessions to Obama. The material tax reductions for the non-wealthy and modest increased spending that the Republicans were willing to agree to prove that the Republicans could not have had total negotiating leverage and have been opposed to Obama’s proposals.
The third problem is that no element of the claimed miracle is true. The Democrats had overwhelming negotiating leverage, the Republicans did not oppose, and often strongly favored, Obama’s proposals on taxes compared to their alternative — no tax cuts. Obama capitulated to Republican demands and negotiated a deal that harmed the nation. He capitulated in a manner than guarantees that the Republicans (and the surviving Blue Dogs) will increase their tactics of bullying and holding Americans hostage to their political demands. The Republicans have confirmed (again) that Obama can be bluffed even where the bluff is taken right out of the movie Blazing Saddles (because it is facially absurd). The President compounded his failure by folding his winning hand when he would have been on the cusp of victory had he not undercut through secret surrender negotiations his Party’s big win in the House. Obama then engaged in his characteristic attack on his strongest supporters, channeling Republicans’ favorite diatribes about progressive Democrats. As my second column explained, the administration descended so low that while it was excoriating its supporters it gloried in the praise it received for capitulating on tax reductions for the wealthy from the banks representing (and the bankers who are among) the wealthiest two percent of Americans.
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