Progressive Democrats are throwing down the gauntlet, angered that President Barack Obama has approved a two year extension of the Bush tax cuts to America's wealthiest 2% income earners. But his acquiescence, in exchange for extended unemployment benefits and other goodies, averts a painful political battle just in time for the holiday season.
There is a lot not to like in the Obama compromise. First and foremost, tax cuts to the wealthiest Americans will add $70 billion to the burgeoning national deficit each year. In effect, America is borrowing $70 billion dollars each year from the Chinese government and handing it to this country's richest citizens.
Most economists point out that, when it comes to creating new jobs, this is the least effective way of lowering unemployment. Nonetheless, conservative Democrats feared that allowing the Bush tax cuts to lapse for incomes above $250 thousand, or even $1 million, would enable Republicans to claim to voters that Democrats raise taxes.
Of course, neither party can be accused of fiscal responsibility. If hypocrisy is not the highest form of American politics, it may be close. The full impact of extending the unfunded Bush tax cuts an additional four years is another $4 trillion dollars added to the deficit.
Since their enactment nearly a decade ago, these unfunded tax cuts have already caused the deficit to balloon while creating very few jobs in return. Therefore, that Republicans would insist on offsetting the costs of extending unemployment benefits for 2.5 million needy Americans is almost inhumane. Especially since this money will immediately be plowed back into the ailing economy by its recipients.
Democrats were so fearful of the potential political fallout of dealing with this tax issue prior to the Midterm elections that they deferred it until the lame duck session. Nonetheless, Democrats suffered a "shellacking" on Election Day and found their negotiating position on a myriad of issues weakened. President Obama campaigned in 2008 on ending the Bush Tax Cuts for the richest Americans. But failing to compromise on the tax extension would have had devastating consequences on the millions of Americans in need of unemployment benefits.
Since taking office, President Obama has enacted historic health care reform, meaningful financial reform, consumer protection and his stimulus package kept many state governments afloat, gave tax breaks to Americans and helped avoid an economic depression. This is a record for which Democrats should be proud.
This latest compromise may not be ideal for Democrats. But it gives most struggling Americans some economic certainty for another year. And it includes a payroll tax deduction, which should help spur the anemic economy. It may also clear way for Congress to deal with ratification of the START Treaty, the "Dream Act" and "Don't Ask, Don't Tell" this lame duck session.
Democrats will be better served to accept the compromise and come together. Their message to voters can be "we stand for 98% of all Americans." The Republicans have once again shown that they are fiercely loyal to the wealthiest Americans and big business.