President Barack Obama announced the “framework” for his unilateral surrender betrayal of core principles deal with Republicans on extending the Bush tax cuts today. It’s worse than I expected, which is saying something. Republicans get tax cuts for all income levels extended for two full years (we’re supposed to believe Obama will stand up for letting them expire during a presidential election year). They agreed to extend some unemployment benefits, but only for 13 months. Although long-term unemployment is at historically high levels, the “99-ers” (people who have exhausted 99 weeks of unemployment benefits) will get nothing out of this framework. To sweeten the deal for Republicans, the estate tax will be reduced to 35 percent, and it will apply only to estates exceeding $5 million in assets. That’s very costly and not at all stimulative. To provide more disposable income for working people, the payroll tax on employees will be cut by two percentage points for a year. That’s good as long as it doesn’t become an excuse later to cut Social Security benefits. UPDATE: David Dayen reports that a senior administration official told him the payroll tax cut “would be paid for out of general revenue through a credit, and so would not impact Social Security and Medicare finances in any way.”
It astounds me that Obama could think he will gain politically from this bargain. How many videos like this one are floating around? October 30, 2008: “Why would we keep driving down this dead-end street? […] At a moment like this, the last thing we can afford is four more years of the tired old economic theory that says we should give more and more to billionaires and corporations and hope that prosperity trickles down on everybody else.”
After the jump I’ve posted some Iowa politicians’ reactions to the deal. I’ll update as more statements become available.
UPDATE: Late on Tuesday afternoon, the offices of Representatives Bruce Braley (D, IA-01), Dave Loebsack (D, IA-02) and Leonard Boswell (D, IA-03) have not responded to my requests for comment on the tax deal. How hard is it to express an opinion about the major decision of the lame-duck session? U.S. Senate conservadem Mary Landrieu of all people came out guns blazing today against the “moral corruptness” of the deal.
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