Tuesday, December 7, 2010

More Games In Washington: But Is It "Let's Make A Deal"? Or Chess?

As we began gathering items for today's edition yesterday, there was a flurry of activity in Washington, as news leaked out. A short time later, those leaks were confirmed when President Obama announced that a deal between the White House and Congressional Republicans on extending the Bush Tax Cuts is nearly complete.

You can probably assume - and rightly so - based on Monday's commentary, that we're not entirely pleased with the results of those negotiations. It continues to seem like our politicians are playing political games with the futures of Americans while we can't afford to do anything but watch.

For what it's worth, the President outlined the deal Monday evening, and there are at least a few valuable things most pundits didn't see coming.

Yes, the Bush tax cuts, for ALL income levels, would be continued for another two years. As some GOP leaders telegraphed over the weekend, Republicans also finally caved on extending unemployment benefits for all jobless Americans, for an additional 13 months. Something almost no one saw as being added to this compromise is the inclusion of a two percent, one year payroll tax reduction, nearly identical to one that President Obama got passed in his 2009 stimulus bill.

Some other sops to both Republicans and Democrats have also been added to this tentative deal, including business investment deductions, as well as college, child, and income-dependent tax credits.

Persons from nearly every political faction can find consolation that their rivals are also unhappy. Liberals thought the President should fight Republicans harder. Progressives and old-fashioned fiscal conservatives bemoaned that this deal, like the Bush Tax Cuts before it, remain unpaid for. Far-right wing conservatives weren't happy because it looks like the unemployed will get some assistance after all. Even President Obama displayed a clear dislike for this compromise.

There appears to be at least a small glimmer of hope still alive, however, as President Obama in his announcement made it clear that these new tax cuts WILL expire in two years as part of major deficit reductions.

In two years - just in time for fiscal hypocrites in Washington to have to defend unaffordable tax cuts for the rich, in a Presidential election year, with an incumbent President.

There are those who've already said this may be President Obama's first move in the 2012 political election cycle. That could be, and if it is, we think it's the kind of wise move from him we've seen too little of these last two years.

For too many Americans, however, this economic gamesmanship is still a game that only the rich and corporate America can afford to play in the long term.

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