What happened to the global economy and what we can do about it
with 5 comments
By James Kwak
President Obama is enjoying something of a political resurgence, at least among the commentariat. Ezra Klein points out that his approval ratings remain higher than those of his Congressional opposition, as opposed to Clinton in 1994 and Bush in 2006. In The New York Times, Michael Shear says the lame-duck session of Congress could be a “big win” for Obama, and Matt Bai hails the tax cut compromise as “responsible governance” and says it could lead to a successful presidency.
Obama is certainly in a decent position politically, and I would bet on him to be reelected comfortably in 2012. First off, his opponents in Congress are deeply irresponsible (admittedly: “The single most important thing we want to achieve is for President Obama to be a one-term president.”) and face a huge political problem within their own party: a significant portion of the conservative base really does want lower deficits, yet the only thing the Republican caucus knows how to do is cut taxes. Klein points out that the Republicans will eliminate House rules that spending increases or tax cuts have to be offset elsewhere, and will instead say that “tax cuts don’t have to be paid for, and spending increases can’t be offset by tax increases.” Second, the Tea Party and Sarah Palin mean that Obama is likely to face an opponent who has been pulled dangerously close to the lunatic fringe during the primary (or, even better yet, Palin herself). And third, there’s triangulation.
Bai basically parrots the Obama administration’s line: they did the tax cut deal because it was good policy, it would stimulate the economy, and they got a good deal. In other words, it’s not a cynical political tactic, it’s good governance. And as I’ve said before, I think the Obama team may actually believe that, because their idea of good policy was centrist to begin with.
Did you notice that their key talking point on the tax cut issue was about not raising middle-class taxes in the middle of a recession? Well, this conveniently overlooks one key fact: they wanted to preserve the Bush tax cuts regardless of economic conditions. Even I forgot (until Klein reminded me in a post on something completely different) that the administration wanted to make the middle-class tax cuts permanent. Remember, these “middle-class” tax cuts go up to $250,000–around the 98th income percentile. And for true ordinary American households, they are negligible, because those households don’t pay much income tax; as of 2009, according to the Tax Policy Center, middle-quintile households have an average income tax rate of 2.3 percent. (They pay much more in payroll taxes.) So even Obama’s preferred policy — killing the tax cuts on the super-rich (over $250,000) and keeping them for the upper-middle class and the moderately rich — is a regressive policy: it lowers the tax burden on people making more than average, thereby forcing the government to cut services that benefit everyone.* And it increases the pressure to cut Social Security and Medicare, which do benefit ordinary people.
So no, I don’t think Obama is abandoning his principles for political advantage; I think these are his principles. And while I’m upset at him, I’m upset at him for being wrong on the policy level, not for abandoning anything or selling out. I think a lot of the bitterness on the left comes from people who thought he was more progressive than he is, and now feel betrayed. As I said in January, I always thought Obama was a moderate who looked like a progressive (certainly the most moderate of the three main 2008 primary candidates), and, as Nate Silver said, “what Obama has wound up with is an unpopular, liberal sheen on a relatively centrist agenda.” What’s happening now, if his good run continues, is he is shedding the liberal sheen and getting a centrist sheen on a centrist agenda. And politically, that’s all good for him. Combine that with his obvious political skills, and the future looks bright for him.
* I know that the administration also supported extending other tax cuts and credits that are more progressive, but those were mainly intended to be temporary, such as the tax cuts in the 2009 stimulus bill. Share this: Email Facebook Print Share Digg Reddit StumbleUpon
Written by James Kwak
December 17, 2010 at 1:52 pm
Posted in Commentary
Tagged with politics, President Obama
“Obama is certainly in a decent position politically, and I would bet on him to be reelected comfortably in 2012.”
I beg to differ! It’s a long time, anything can happen. And we have not even begun to stop the downfall…
However, if you extrapolate from today, Obama would lose. Today, Obama HAS NO BASE LEFT, and the Republicans could bring either McCain or Romney…
via fCh
December 17, 2010 at 2:25 pm
My take for 2012 after realizing change I can’t believe it: If Obama’s 2012 re-election strategy is to move left to re-energize the dispirited hopeful voters who got him elected, he is going to have to buy his liberal support with a repudiation of the right who played him, and got him to call it “compromise.” The damage done to the middle class and progressives over the past three years will take a generation or more to fix and it has to start in 2012 with or without Obama. If he can’t be the change we hoped for, we can retire him as a one time failed president.
taylorbad
December 17, 2010 at 3:06 pm
Obama is certainly in a decent position politically… Only because he has managed to lie low while the buffoons in congress draw all of the negative attention away from him. America doesn’t necessarily like Obama; it just hates congress more. 2009 to June 2010 was about Obama. He was the instrument of hope and change and America’s collective focus was (unrealistically) on what HE would do to make things better. The second half of 2010 was about congress. Now that the mid-terms are over, the attention will slowly shift back to the office of the Presidency over the next 6 to 12 months.
… and I would bet on him to be reelected comfortably in 2012. Fair or not, the president owns the economy; and the state of the economy dictates the presidental election. If things improve by November 2012, you may be correct. But if they do not, his chances of reelection will be slender, regardless of opponent.
Blunt Instrument
December 17, 2010 at 3:22 pm
the super-rich (over $250,000) Does making $250,001 per year really count as “super-rich”? High-earner, certainly. It is quite a bit above the median, but I always imagined “super-rich” as someone like Thurston Howell III. I know many people who make over 250K, and none of them call their spouse “Lovie.”
Blunt Instrument
December 17, 2010 at 3:30 pm
So if you made 250,001 your taxes would have gone up by a horrible… 3 cents. It’s a MARGINAL rate.
Tom Bavis
December 17, 2010 at 4:00 pm
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