A Reality Check on Obama's Wish List

[AnthemZ]

A Reality Check on Obama's Wish List
Michael Barone
Saturday, October 25, 2008




What will an Obama administration and a Congress with increased Democratic majorities do? That's a relevant question, given the Democrats' leads in the polls. And it's a little hard to answer, given the financial crisis that has been raging and the recession that seems to be ahead.

One thing they will certainly do is raise taxes on high earners. The Bush tax cuts are scheduled to expire in 2010, and congressional Democrats will gleefully allow the top rates to rise. Left-leaning Democrats, like Barack Obama himself, want to "spread the wealth around," as the candidate told Joe the Plumber in October. Blue Dog Democrats want to reduce the budget deficit and will welcome the additional revenue that the Congressional Budget Office's static-analysis models will promise. Raising taxes when the economy is weakening is not the medicine prescribed by Keynesian economics, and it is probably not what Obama's economic advisers would prescribe if they were starting from scratch today. It is what Herbert Hoover and Congress did in the early 1930s, and it helped to produce the Great Depression. But it is baked into the pie.

So is a slide toward trade protectionism. The breakdown of the Doha Round and House Speaker Nancy Pelosi's refusal to bring the Colombia Free Trade Agreement to a vote mean that both multilateral and bilateral trade liberalism channels are clogged. Obama may or may not try to renegotiate NAFTA, as both Canada and Mexico have center-right governments satisfied with current arrangements. But the trend will be toward less free trade.

The prospects are cloudier for two other issues on which Obama has made big promises. Much of the next Congress's time and psychic energy will be taken up with refashioning financial regulation -- a subject of considerable difficulty. And the looming recession will make it politically risky for Democrats to push big spending programs.

This means that Congress in the next two years may not pass Obama's national health insurance plan. The weakening economy and the enraged reaction earlier this year to $4-a-gallon gasoline also make it less likely that Congress will pass carbon reduction legislation -- certainly not a carbon tax and probably not a cap-and-trade system.

Regional impact. In any case, health insurance and carbon reduction will be heavily lobbied, despite all the denunciations of lobbyists issued by Obama (and John McCain). Any one-size-fits-all healthcare bill affects various regions differently, because we have many healthcare delivery and finance systems across the country. The same goes for carbon reduction legislation, as the economies of some regions depend more heavily on coal than do others; it may be hard to convince voters there that we have to impose burdens on them today to achieve promised benefits in 2050. These disparities cut across party lines and helped defeat the Clinton healthcare proposals in 1994. They will probably come into play again if far-ranging bills are pressed forward.

Two issues pushed by Democrats in this Congress have no budgetary costs. One is the "fairness doctrine," which is intended to shut down talk radio, the one communications medium in which conservative voices are dominant. The other is the so-called card check bill, which requires employers to bargain with unions when

their organizers secure signatures on cards from a majority of employees; secret-ballot unionization elections, required now, would be a thing of the past. The aim is to vastly increase union membership, pumping money into a Democratic pressure group.

What might happen in the unlikely event McCain is elected and faces a Democratic Congress? Presumably he would try to hold tax rates down, but to do so he might have to embrace the kind of bipartisan tax reform enacted in 1986, with low rates and fewer preferences. Democrats might be willing to bargain if they could get rid of the alternative minimum tax, which threatens their core constituencies. McCain's plan to end the tax preference for employer-provided health insurance could be the basis of compromise with a similar plan advanced by Democratic Sen. Ron Wyden that has bipartisan support. McCain might also seek a bipartisan carbon reduction bill.

Much depends, whoever wins, on whether Democrats elect enough senators to overcome filibusters. Even more may ride on the course of the economy and the depth of the recession, which could scotch either candidate's proposals.

[deepsepia]

Originally Posted by AnthemZ

One thing they will certainly do is raise taxes on high earners. The Bush tax cuts are scheduled to expire in 2010, and congressional Democrats will gleefully allow the top rates to rise.

A little history. When George Bush & Cheney decided that since Reagan "proved deficits don't matter" and chose to cut taxes and start wars without any revenues to pay for them, a lot of people were pretty skeptical, most notably a contingent of "deficit hawks" -- fiscally conservative Republican congressmen.

In fact, their own budgetary forecasts showed massive deficits resulting (and these forecasts turned out to be accurate).

So Congress, in a faint gesture of fiscal responsibility, had a sunset clause for Bush's revenue cuts-- bear in mind that this was a Republican Congress in 2001! They made the tax cuts temporary, because they knew that they were unpaid for. They could have written the tax cuts as permanent-- that's how its almost always done- but they didn't, because they knew that they were irresponsible and would lead to massive deficits

That was a bit of prudence by the fiscal conservatives in Congress; the expiry of these tax cuts was written into the law, by Republicans. A new Congress might decide to enact new tax cuts, they might not. The current tax law returns the income tax to where it was in 2000 with the expiry of the temporary Bush cuts in 2010-- that's how the Republicans wrote it. I'd note that the fact that the tax cuts were only temporary was relied upon by the Administration in their budgetary presentations, earlier in the decade . . . they'd claim that the Budget would be balanced again sometime around 2012 (eg, after the tax cuts had expired).

[Tinysmasher]

Agreed, tax cuts without associated social spending cuts is a bad idea.

Deep, why do you always try to deflect attention from bad ideas from democrats by always talking about bad ideas from republicans? You consistently do this

[AnthemZ]

Originally Posted by Tinysmasher

Agreed, tax cuts without associated social spending cuts is a bad idea.

Deep, why do you always try to deflect attention from bad ideas from democrats by always talking about bad ideas from republicans? You consistently do this

That's because the Democrats do no wrong!

Democrats were both directly and indirectly responsible for the financial crises, and benefited from the spoils! But only the Republicans are responsible! The Dems. have been high-fiving each other over the projected gains in both houses they will get because of the punishment by the people on the Reps. But it's more like the same stupidity that's promoting Obama in the first place!

But we always have people out there who are smarter then inexperienced novices like Michael Barone, who can set everyone straight!

[deepsepia]

Originally Posted by Tinysmasher

Agreed, tax cuts without associated social spending cuts is a bad idea.

Deep, why do you always try to deflect attention from bad ideas from democrats by always talking about bad ideas from republicans? You consistently do this

In this case, I'm identifying that the OP makes a claim which is highly deceptive. The Bush tax cuts of 2001 were temporary-- that's how they're written.

Allowing them to expire is not a "tax increase" by Obama-- its what the Republican Congress enacted in 2001, and what the Republican President George W. Bush signed into law.

As for the rest of either candidate's "wish lists" -- its irrelevant. On another thread, I've posted the latest from AIG-- they've already blown through $90 billion; nothing much that Obama or McCain might want to do matters-- we're darn near broke, and taking on water faster than we can bail. Our next President will have one and only one job: cleaning up the mess that W has made. Whatever he might have wanted to do is of very little importance-- there's no money.

As to why I focus on the Republicans, or rather this Administration, its because that's who we've got now, and because I consider it to be the worst Administration in American history.

I am a fiscally conservative moderate. I believe in limited government, investment in American infrastructure and competitiveness, and limited intervention abroad. I believe in markets, but also that without government regulation and transparency, markets will turn into casinos and do damage to all. Sometimes I vote for Democrats, sometimes for Republicans (I thought Bush 41 was almost as good as his son is bad).

[wizzo]

Originally Posted by Tinysmasher

Agreed, tax cuts without associated social spending cuts is a bad idea.

Deep, why do you always try to deflect attention from bad ideas from democrats by always talking about bad ideas from republicans? You consistently do this

Originally Posted by AnthemZ

That's because the Democrats do no wrong!

Democrats were both directly and indirectly responsible for the financial crises, and benefited from the spoils! But only the Republicans are responsible! The Dems. have been high-fiving each other over the projected gains in both houses they will get because of the punishment by the people on the Reps. But it's more like the same stupidity that's promoting Obama in the first place!

But we always have people out there who are smarter then inexperienced novices like Michael Barone, who can set everyone straight!

[deepsepia]

Originally Posted by AnthemZ

But we always have people out there who are smarter then inexperienced novices like Michael Barone, who can set everyone straight!

Is what I pointed out not true?

The so-called Obama tax "increases" are what the Republican Congress passed in 2001, and which Bush signed into law. That's what the Congress passed-- had nothing to do with Obama. According to the law passed in 2001, taxes go up in 2010.

Barone slides over this point, and its an important one.

I'd also note that when Administration officials presented their future budget forecasts, they relied on the expiration of the 2001 revenue reductions in order to present their plans for a balanced budget

[wizzo]

Originally Posted by Tinysmasher

Deep, why do you always try to deflect attention from bad ideas from democrats by always talking about bad ideas from republicans? You consistently do this

Originally Posted by deepsepia

The so-called Obama tax "increases" are what the Republican Congress passed in 2001, and which Bush signed into law. That's what the Congress passed-- had nothing to do with Obama. According to the law passed in 2001, taxes go up in 2010.

Deeps, sometimes you're a parody of yourself.

[deepsepia]

Originally Posted by wizzo

Deeps, sometimes you're a parody of yourself.

Where's the "parody"?

The law was written to expire. Most people don't know that-- I'm just pointing it out. The people who wrote it that way were Republican fiscal conservatives, who knew that Bush's plans were going to explode the deficit.

What I find odd is that when a tax cut is labeled as being "temporary", and has an explicit "sunset" provision, not extending it is somehow "raising taxes" -- its not. Its exactly what the 2001 law said would happen. Here's what it says:



source: http://frwebgate.access.gpo.gov/cgi-...z:ub l016.107

[farbeyonddriven]