Robert Naiman wrote: > But the tax cut is temporary. Let it expire when the economy is not in > recession: that's a better time to have the argument.
The timing is interesting. Obama's proposed tax cut for the rich is supposed to expire right before the 2012 presidential elections. In theory, the Democratic Party can mobilize its troops at that point, yelling "we can't have more tax cuts for the rich!" while embarrassing the GOPsters by making them look like the millionaires' majordomos. In theory, this strategy would allow them to reverse the GOP tide in the elections. But the DP wimped out during the 2010 election season: instead of using this strategy, the DP leadership in Congress decided to delay votes on renewing the Bush tax cuts until after the election (presuming, I guess, that they would do okay in the contest, not losing a significant number of seats).[*] What's to keep them from chickening out again, two years from now? it seems unlikely that they would get any backbone from a president (BHO) who is more and more governing via a coalition with the GOP and right-wing "blue dog" DP politicians and seems more and more likely to be a lame-duck president (and thus weak). And remember the premise of the stated DP mobilization strategy is to mobilize voters. But in US elections, it's not voters that count as much as dollar votes, i.e., campaign contributions from the rich and the corporations (especially after the recent Supremes' Citizens United decision). Most likely a large part of the DP congressional delegation will shift further toward the GOP on economic issues (while some of them continue to support abortion rights, feminist causes, and other "social issue" positions which are popular with a big segment of the rich elite).[**] This would continue -- if not cement -- the transformation of the DP into what used to be the "liberal" wing of the GOP (John Lindsay, Nelson Rockefeller, Jacob Javits, Edward Brooke, _et al_), while being more conservative on economic issues than that now-defunct wing ever was. There might be a positive side here if those "progressive" parts of the DP that are left over, still holding onto their old soft social-democratic positions (and backed by urban labor and "minority" constituencies), join Bernie Sanders to form a new coalition -- even a new political party? -- against both BHO and the new DP. Dream on: it seems more likely that the DP will simply splinter, becoming even weaker in its organization. It seems unlikely to me that the economy will have recovered two years from now. It's possible that the unemployment rate will be above 9% in November 2012 (though no-one can truly make such predictions). State and local governments are still cutting services and wages and increasing taxes, counteracting the federal fiscal stimulus. The housing market is still collapsing, undermining the net wealth of the broadly-defined middle-class and the non-housing sectors of the economy further. The federal government's policies here seem like mere band-aids on a serious wound. Banks are still extremely hesitant to lend at the same time that individuals and small businesses do not want to accumulate more debt. Bigger business firms don't need loans, because so many of them (at least those who haven't bit the dust) have such abundant profits. But they won't use those profits to expand their operations when the rest of the economy is in such bad shape. Under these conditions, it seems likely that the Fed's "quantitative easings' (expansionary monetary policy) will continue to have weak impacts on real GDP and the availability of jobs (while likely causing asset-price inflation). On top of this, nothing in the political cards suggests that any effort will be made to reverse the decades-long trend of increasing inequality and stagnant wages and (low- and middle-level) salaries. That means that the underconsumption undertow will continue, so that only financial bubbles and/or fiscal stimulus (including wars) can promote temporary spates of "prosperity." Adding in the continuing world economic crisis and the rise of the Austerians (cf. Ireland), prosperity will continue to be far from being around the corner. If I am right that the US and world economies are going to be still in stagnation two years from now, we'll still see some people saying that the tax cuts for the rich should expire only when the economy is not in recession, i.e., 2014 or 2016, and that those times would be a better time to have the argument. Of course, the GOP and its allies will continue to yell that it's a big mistake to raise taxes (even on millionaires) during a recession, because it's a job-killer. BTW, the argument that even tax cuts for the rich create jobs could be applied to military spending. After all, the wars in Afghanistan and Iraq do stimulate the US economy (while directly creating jobs for a lot of soldiers). If the US were to end those wars now, the US economy would face a wave of unemployed ex-soldiers, just as with the ends of previous wars. So maybe we should delay the ends of those wars, leaving the debate about them for a more prosperous time. -- Jim Devine / "The conventional view serves to protect us from the painful job of thinking." - John Kenneth Galbraith [*] If so, they should burn their "political genius" licenses. [**] NB: just because a segment of the rich favor abortion rights, feminist causes, etc. does not mean that those causes are wrong. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
