Editore"s Note
Tilting at Windmills

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January 6, 2009

RATIONALE FOR REPUBLICAN OUTREACH.... We talked earlier about Barack Obama engaging congressional Republican leaders on how to shape an economic rescue package. Does Obama knows what he's doing, reaching out in good faith to opponents who don't believe in working in good faith? Noam Scheiber argues that the president-elect may very well have a plan.

By agreeing to channel up to 40 percent of the stimulus through tax cuts, Obama is essentially calling the GOP's bluff. He's saying, "You guys are making a principled argument that tax cuts can be a more efficient way to stimulate the economy. I'm accepting that argument in large part. So rather than spend a lot of money helping low- and middle-income people, I'm going to get that money to them via tax cuts."

At which point he's kind of backed them into a corner. If the GOP accepts, then great. If they turn around and say, "Well, when we said tax cuts, we actually meant tax cuts for wealthy people, not for low- and middle-income people," then it becomes blindingly obvious that they weren't making a principled argument at all. They were trying to shake Obama down on behalf of their rich cronies.

And, indeed, it looks like the GOP, while momentarily torn, can't resist the taking the bait. According to today's Post, Arizona Sen. Jon Kyl is responding by pushing for permanent cuts in corporate and capital gains taxes -- neither of which is likely to have much short-term stimulative effect.

That sounds relatively compelling, but I'm still skeptical. Obama meets Republicans half-way, offering $300 billion in tax cuts, in part to generate GOP support, and in part because there's only so many "shovel-ready" infrastructure projects he can invest in for short-term stimulus. Republicans respond, Scheiber says, by making ridiculous demands, which make them appear foolish and disinterested in economic growth.

On the other hand, Republicans don't care about appearing foolish; they care about tax cuts, whether they make sense or not. Likewise, GOP opposition to stimulus spending will also make the party appear stark raving mad, but again, that's never been a primary concern for the modern Republican Party.

Scheiber might be right, and maybe Obama has already helped back Republicans into a corner, but what does Obama get in return? Maybe a slightly bigger congressional majority in support of his economic rescue package, but given Obama's popularity, the state of the economy, and the merit of a stimulus bill, a few Republicans were probably going to vote for this package anyway.

Put it this way: what will the GOP congressional leadership do after they've been backed into a corner?

Steve Benen 2:30 PM Permalink | Trackbacks | Comments (35)

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Right now the simpler explanation is that the Obama team is making pleasing Republicans their top priority.

I suspect they have some game afoot, but right now it looks like the Repubs are being rewarded for being assholes. And it's whetting their appetites, not getting them to settle for what they got.

"...it becomes blindingly obvious that they weren't making a principled argument at all."

"becomes"? There should have been a deal worked out before any concessions. This tiny minority is driving the train, otherwise.

Why not treat them like Democrats treat liberals, if you really want to put some hurt on.


Posted by: AlphaLiberal on January 6, 2009 at 2:34 PM | PERMALINK

Most of Obama's proposed tax cuts come from his campaign. So this tax piece of the stimulus is completely consistent with his campaign and helping low and middle class citizens. The corporate piece is not, but that is the sop to the Republicans and while it is probably large over 2 years, it is probably small over 5 years (because it is paid back to the extent that it is only loss crry backs).

Posted by: rana on January 6, 2009 at 2:37 PM | PERMALINK

Dear Democrats:

Please develop the best plan you can for our country and then propose it. If the Republicans can offer improvements, let them.

Stop wasting time triangulating. It hurt Clinton. It hurt in Congress the past two years. It will hurt in the future.

Posted by: freelunch on January 6, 2009 at 2:38 PM | PERMALINK

"what does Obama get in return?"

A much less effective stimulus package, and, as well, give the Republicans equal footing on these discussions in the future.

Posted by: Gore/Feingold '16 on January 6, 2009 at 2:41 PM | PERMALINK

What AlphaLiberal said.

Posted by: Gore/Feingold '16 on January 6, 2009 at 2:44 PM | PERMALINK

I actually think there's a less Machiavellian reason for Obama to include tax cuts. From what I've read so far, the cuts will be retroactive for the past 1-2 years. Essentially, Obama is retroactively rebating past taxes, which could prove a very good stimulus if targeted to those who will actually spend the money and the cuts are temporary - not permanent cuts Kyle is suggesting. It's also a very quick way to get money in the hands of middle income taxpayers.

Oh, and it does call the R's bluff - so it's smart politically too.


Posted by: Bob on January 6, 2009 at 2:48 PM | PERMALINK

After they get backed into a corner, Obama style, they will be running as hard as they can to buy as many DEPENDS as they can .. standing in line, shuffling their feet, right behind Wolf Blizter, pleading for them ........

Posted by: stormskies on January 6, 2009 at 2:48 PM | PERMALINK
That sounds relatively compelling, but I'm still skeptical. Obama meets Republicans half-way, offering $300 billion in tax cuts, in part to generate GOP support, and in part because there's only so many "shovel-ready" infrastructure projects he can invest in for short-term stimulus.

The second point is, I would say, spurious; he could give the $300 billion to the states to expand aid services (many are looking at cuts to state public assistance benefits because the economic crisis has caused more people to qualify, which will work against any federal stimulus) and to maintain other services (many states are looking at cuts to workforces and services, because they can't borrow money as easily as the feds and are faced with falling revenues; this will also work against any federal stimulus). Relieving this pressure on the states would probably have a bigger, and quicker, stimulative effect than any conceivable tax cuts. (Also, it would probably have a bigger direct and immediate effect on those that are most affected by the economic crisis, outside of its stimulative effect that alleviate the source the problem.)

Scheiber might be right, and maybe Obama has already helped back Republicans into a corner, but what does Obama get in return?

A filibuster-proof majority in the Senate on the stimulus bill, presumably, is the goal.

Maybe a slightly bigger congressional majority in support of his economic rescue package, but given Obama's popularity, the state of the economy, and the merit of a stimulus bill, a few Republicans were probably going to vote for this package anyway.

I wouldn't bet much on that, particularly in the Senate.

Posted by: cmdicely on January 6, 2009 at 2:51 PM | PERMALINK

I'm not sure Obama doesn't need the votes. The Dems are presently three votes away from a successful cloture vote even if they get all 57. Several in their own caucus may be goosey. Robert Byrd is against screwing around with cloture in the first place and not exactly a flaming liberal in the second. There are some other Bluish-dogs in the Senate.

Obama did promise tax cuts and may be trying to build momentum for tougher fights than selling candy.

Finally, stimulus in the weekly paycheck could work a lot better than Bush's windfall checks. Nobody knows what's going to work, or if anything will.

Posted by: Steve High on January 6, 2009 at 2:52 PM | PERMALINK

The whole cap gains etc. thing is a fraud, as many have argued (for one thing, what good to reward mere trades when only true start-up capital provides money to the companies? It's amazing how few appreciate that traders buy and sell stock among each other.) So the Democrats have to push hard against that welfare for the rich posing as "stimulus" for all, and call out the Repubs on it. If they don't, we ahve to wonder whose side they're really on.

Posted by: Neil B ◙ on January 6, 2009 at 2:55 PM | PERMALINK

BTW, instead let's give a general rebate to every single American, including/especially homeless etc., not tax rebates or reductions. That gives the poor schmucks at the very bottom something to help themselves with.

Posted by: Neil B ☺ on January 6, 2009 at 2:58 PM | PERMALINK

Robert Byrd is against screwing around with cloture

Byrd is worse than Rockefeller IMO, but when I wrote to him about changing cloture rules, his office sent me an explanation of what would be needed to do this (even if he wanted to, which he didn't indicate one way or the other). It would take 2/3 of seated Senators (67% x 98 for now) to make a rule change.

Also, while I consider Nate Silver my guru on the subject, he has recently changed his opinion on how many Sens are required for cloture. He now says with 98 seated Sens, cloture would require 59. With 99 or 100, you would need 60 yes votes. He argues that this is one reason Dems want to confirm either both Burris and Franken, or neither (at least not Burris).

Posted by: Danp on January 6, 2009 at 3:06 PM | PERMALINK

As always on matters economic I turn to the experts, first among them Krugman. He did some back envelope number crunching and he thinks Obama's plan as it stands comes up short. He speculates that when the predictably weak results are in, the Repubs will use it as a crudgel against him and government spending.

That sound right to me.

Posted by: rege on January 6, 2009 at 3:07 PM | PERMALINK

I think Obama is giving them something of a rope-a-dope. If repubs decide to torpedo economic recovery, Obama will be able to turn and say, 'We tried to work with the republicans, but they wouldn't take yes for an answer. Until they get serious about digging us out of this hole, we'll move forward without them.'

Posted by: JoeW on January 6, 2009 at 3:08 PM | PERMALINK

Reaching out to the Republicans makes about as much sense as suggesting that the Israelis reach out to the Palestinians. Even if you make some sort of agreement with these kinds of people they won't honor them, so what's the point. Unfortunately, not everyone wants to get along. Some people just like to keep conflicts going just for the sake of keeping it going. Some people like to fight. It's hard for decent people to grasp that though.

Posted by: mike on January 6, 2009 at 3:12 PM | PERMALINK

On one level tax cuts make political sense. On another level I'm tired of the GOP blackmailing the country into yet more ineffective tax cuts. Sure I'd like the $500.00 tax rebate. I could pay some bills, etc. However, what I'd really like are:

--K-12 school systems not having to make cuts in programs and staff
--State university and community college systems not having to eliminate academic programs, staff positions, academic positions, and academic support systems while raising tuition and fees at the same time
--Mass transit systems like Atlanta's MARTA not contemplating the elimination of weekend service and the scaling back of weekday service
--States not cutting health and retirement benefits for employees and retirees

All of the above we pay for with our taxes. Many of these cuts are little more than "taxes" on the effected population--teacher pay out of pocket for classroom supplies, state employees and retirees end up paying more for health care, mass transit users pay with time loss or through increased fares, etc. The GOP has come to the conclusion that all taxes are bad and try to hoodwink people into thinking that this country was founded on the opposition to taxes. What the GOP fails to tell people is that the opposition was to taxation without representation.

Moreover, all of the above are the kinds of things we should be spending money on because they are the things that make us viable as a culture and economy. Additionally, they are the kinds of activities that the "market" doesn't do very well. There's a reason why all the private roads, utility systems, etc. ended up being government run or funded. The private sector realized it couldn't make a financial profit providing these essential services.

The idealist in me says we should stop the GOP blackmailing strategy in its tracks by refusing to legitimize the myth of tax cuts being effective. After all, if tax worked, why is our economy in the tank after eight years of massive tax cuts?

Posted by: idle crank on January 6, 2009 at 3:17 PM | PERMALINK

I think there's another reason for being nice to the congressional Republicans. The stimulus package isn't all that President Obama will try to do. He will also be working on thorny issues like healthcare and global warming, and will need to get at least a little cooperation from the Republicans over the next eight years. By working with them now, and showing them that there's a way they can lose, not get stomped into the dust and humiliated, and keep their principles at least a little bit intact, he might have an easier time of it in the long run.

Posted by: John Squier on January 6, 2009 at 3:18 PM | PERMALINK

Kyl had an op-ed in Sunday's Tucson Daily Star outlining his more of the last eight years approach to "stimulating" the economy. Most of today's letters to the editor slammed his proposals pretty hard.

Posted by: John P on January 6, 2009 at 3:21 PM | PERMALINK

steve b: Republicans don't care about appearing foolish; they care about tax cuts, whether they make sense or not.


check out mike spence goper from indiana on cspan's washington journal on 1/6/09...

a caller railed him and all republicans for setting records for deficits when they had all the power from jan. 2003 through jan. 2007..

..with a straight face, spence said that republicans had learned from their mistakes..

you don't say...

gop: any suckers left?

Posted by: mr. irony on January 6, 2009 at 3:25 PM | PERMALINK

Something else to consider-aside from whatever Obama proposes re spending and tax cuts, it's ultimately up to Congress and there is no doubt in my mind that they'll pass a bigger spending package than Obama proposes. They will not miss the opportunity to obtain funds for all the projects they have planned--that goes for many Republicans as well.
The tax cuts will be in there too--and if the Republicans turn around and oppose it, fine, they just voted against a huge tax cut.
I just don't see Congress going along with exactly what Obama wants when they know they can get a lot more--which as it so happens is what the country needs.

Posted by: Allan Snyder on January 6, 2009 at 3:25 PM | PERMALINK

Can we put away the political calculations and ask ourselves, What does this country really need? Do we really need to re-inflate some bubbles, "stimulate" consumers to go buy more junk they don't need when they're already up to their eyeballs in debt? We need to get our economy away from this mindless consumer mentality, and our obsession with Growth, Growth, Growth.

Posted by: Speed on January 6, 2009 at 3:27 PM | PERMALINK

Obama promised tax cuts for the lower and middle classes. What does this have to do with mollifying the Republicans? Screw them if they don't accept this. And if it makes them happy, so what?

But, I really don't know why he is considering this tax cut as part of the stimulus package. It won't be stimulating me to go out and purchase anything but necessities. A tax cut isn't going to be stimulating me out of my frugal mode. It will give me a better sense that some fairness is being input into the tax system. But that is about it. Just don't call it a stimulus.

Plus, he said today that we may have trillion dollar deficits for several years. Really, I mean if so, we are screwed, short term and long term. But, I thought this anyway, with or without Obama.

Posted by: lou on January 6, 2009 at 3:28 PM | PERMALINK

Following up on that previous post, I'll bet Obama knows that he'll get more on the spending side from Congress, but this way he keeps some Republicans willing to work with him on other issues down the road--and he maintains his "postpartisan" or bipartisan image.

Posted by: Allan Snyder on January 6, 2009 at 3:32 PM | PERMALINK

"Put it this way:" What will DEM congressional leadership do? Whatever Obama wants, the people holding the wrenches on the nuts and bolts still will be the Democratic congressional leaders. Off the last eight years, it's hard to be really optimistic.

Posted by: Greg Worley on January 6, 2009 at 3:38 PM | PERMALINK

Senator Byrd knows boocoo about Senate Rules--maybe more than the entire world--but wasn't he being disingenuous in his response to Danp? Can't the Dem. caucus use the "nuclear option" that the Reps threatened when they had the majority? Don't they write the Senate rules at the beginning of every session?

I, A, hope so, and B, wish they would. Maybe time-limit it to the first 100 days so Obama could get some stuff done, FDR-style. God knows the times justify it.

Posted by: Steve High on January 6, 2009 at 3:50 PM | PERMALINK

"On the other hand, Republicans don't care about appearing foolish; they care about tax cuts, whether they make sense or not."

They lost all credibility on this issue back in 2000 when Bush did a nearly instantaneous 180 degree turn from "The economy is so good that the rich deserve tax cuts" to "the economy is so bad that the rich deserve tax cuts". Admittedly, he didn't say "the rich", but that's who he engineered the cuts for.

Or was it when Bush the Slightly Less Awful did a similar 180 from attacking Reagan's voodoo economics to supporting it? Not that having Reagan's adoration of the Laffer curve replace Ford's asking us all to wear Whip Inflation Now buttons was much of a high point in its own right.

Posted by: N.Wells on January 6, 2009 at 4:04 PM | PERMALINK

Can't the Dem. caucus use the "nuclear option

The trick on the nuclear option, as someone pointed out on another thread some time ago, was that cloture votes are required for some things (assuming someone objects to a motion for unanimous consent), but not menial day-to-day motions (like maybe a quorum call). The Republicans' plan was to have the President of the Senate (Cheney) rule that confirming judges was in the latter category.

Posted by: Danp on January 6, 2009 at 4:22 PM | PERMALINK
what will the GOP congressional leadership do after they've been backed into a corner?

The same thing any cornered feral animal would do: attack.

Obama knows this as well as anyone. Republicans don't want bi-partisanship. They aren't interested in compromise. They want it all. Always. In or out of power.

Perhaps Obama figures if he offers the GOP an olive branch & they knock it out of hand, then Obama will look like he genuinely tried to play ball but the GOP behaved like the petulant children they are. If that is, indeed, Obama's strategy, I don't think it's a very good one.

Posted by: raff on January 6, 2009 at 4:34 PM | PERMALINK

And, not all of Obama's tax cuts, or even close to all of them, are for poor or even middle-class people.

Oops.

Posted by: SocraticGadfly on January 6, 2009 at 4:48 PM | PERMALINK

Expectations are high, but unfortunately all the miracles that are expected of Obama aren't going to happen even assuming he even really wants them to. Chances are with this Democratic leadership - Reid and Pelosi - the Rethugs and blue dogs will continue to run things, and the wealthy will be rewarded as the country takes a fatal trip down the toilet.

How much hardball is Obama willing to play? I hope a lot, but he needs to be a cross between FDR and LBJ to get that bunch of hacks kissing his ring.

Posted by: rich on January 6, 2009 at 5:49 PM | PERMALINK

What will Congressional Rethugs do, once backed into a corner? Wait for the Senate Dems to wimp out, then come out of their corner as winners.

We've seen this movie before. Someone I read somewhere put it very eloquently: if the Senate was 100% Dem, then Harry Reid, DiFi and the other wimp/collaborators would make a papier mache' Repthug and kiss its butt.

Posted by: wonkie on January 6, 2009 at 7:50 PM | PERMALINK

"How much hardball is Obama willing to play?"

Will he actually have to play all that much hardball to get tax cuts thru? Seems unlikely.

Posted by: civitas on January 6, 2009 at 8:59 PM | PERMALINK

When you have 59 in the senate you only need a slight majority to get 'r done. If he really wanted to stick the shiv in he could dedicate a few billion to cleanup of the coal mess in Tennessee and have Mitch McConnel try and filibuster that. That would be cute.

Posted by: bago on January 6, 2009 at 9:08 PM | PERMALINK

It's like a credit swap or hedge fund. The US is mired in public and private debt, and the gamble that a trillion dollar stimulus will do anything but increase debt and kill the dollar is such a long shot that Democrats would like hedge their credibility capital by pawning off half the risk to potential Republican scapegoats.

Posted by: Luther on January 6, 2009 at 9:51 PM | PERMALINK

Not "DISinterested," "UNinterested."

Posted by: Nancy Irving on January 7, 2009 at 6:17 AM | PERMALINK




 

 

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