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Working In These Times

Thursday, Sep 9, 2010, 3:07 pm

Will Voters Listen? Obama vs. GOP on $180 Billion Tax, Infrastructure Plan

BY Art Levine

In two major speeches this week, President Obama sharpened the contrast with the GOP's obstructionism over the economy with his proposals to spend $50 billion on infrastructure and provide as much as $130 billion in tax cuts and write-offs for businesses—on top of a $30 billion small business lending bill stalled in the Senate. 

Even though the President's tax proposals are drawn, in part, from the Republican playbook, the GOP leadership, predictably,  hit the proposals as not going far enough because the President opposes making permanent the Bush tax cuts for the wealthiest 2 percent of Americans. 

But with high unemployment, the prospect of an election disaster in November and the "Party of No"-driven political climate that has turned "stimulus" into a dirty word, President Obama's efforts to offer an economic way forward is ultimately a political maneuver to underscore GOP's opposition to any economic measures except tax-cutting for the rich.

Realistically, most observers believe, the $50 billion infrastructure plan has little to no chance of passing in this Congress, and the pro-business tax breaks are likely to be compromised in  Congressional horse-trading over extending the Bush tax cuts.

For many progressives pundits and advocates, it was heartening that the President used some of his toughest rhetoric yet in lashing out at House Minority Leader John Boehner and the GOP's insistence on making permanent all tax cuts. In his speech Wednesday, President Obama pointed out:

Make no mistake: he and his party believe we should also give a permanent tax cut to the wealthiest two percent of Americans. With all the other budgetary pressures we have -- with all the Republicans' talk about wanting to shrink the deficit -- they would have us borrow $700 billion over the next ten years to give a tax cut of about $100,000 to folks who are already millionaires. These are among the only folks who saw their incomes rise when Republicans were in charge. And these are folks who are less likely to spend the money, which is why economists don't think tax breaks for the wealthy would do much to boost the economy.

So let me be clear to Mr. Boehner and everyone else: we should not hold middle class tax cuts hostage any longer. We are ready, this week, to give tax cuts to every American making $250,000 or less. For any income over this amount, the tax rates would go back to what they were under President Clinton. This isn't to punish folks who are better off -- it's because we can't afford the $700 billion price tag... 

The President gave voice to the toughest shredding of the Republican's economic vision so far. As Steve Benen of The Washington Monthly points out:

The president has a habit of going out of his way -- perhaps even too far -- to give his detractors and opponents the benefit of the doubt. He'll characterize Republicans -- whom he'll often just call "some in Congress" or "the minority" -- as sincere but mistaken. He'll try to emphasize areas of agreement with his critics, and point to issues where he'd like to see bipartisan support.

Yesterday, however, the president's speech suggested that, at least for now, he's tired of unrequited outreach. This was a speech in which Obama talked about Republicans the way Republicans talk about him -- only his case had the advantage of being true.

Much has been made of the fact that the president mentioned House Minority Leader John Boehner (R-Ohio) by name, eight times. That was clearly a departure from the norm, and may have had something to do with Obama speaking in Ohio.

But the larger significance of the speech was the president carefully and thoroughly taking apart Boehner's party's discredited economic vision. In the process, Obama presented the electorate with a very clear choice for the short-term and long-term future. The New York Times editorial board argued it took the president "too long to engage this debate." Perhaps. But there can be little doubt that he's fighting hard now.

Yet the political reality is much harsher, in part because the President allowed an eagerness for bipartisanship to water down the original near-$800 billion stimulus bill.  So while saving or creating nearly two million jobs, the stimulus bill also allowed a high jobless rate to continue for too long -- and became demonized as a failure. Unfortunately, the permanent extension of the Bush tax cuts seems increasingly more likely, even if it's just for two years, while the President's proposals received a lukewarm reaction on Capitol Hill, including from some centrist Democrats in tough races.

As The Hill reported:

Momentum built Thursday for extending all of the Bush-era tax cuts after President Obama avoided a veto threat and a key Senate Democrat voiced support for the extension.

Sen. Ben Nelson (Neb.), a centrist who has been a key vote on several Obama administration initiatives, said Thursday he supports extending all of the George W. Bush-era tax cuts until the economic recovery has taken root. Raising taxes on wealthier taxpayers could hurt the economy, he said...

Earlier in the day, Obama refrained from promising to veto legislation that extends tax cuts not only for the middle class, but also for individuals with incomes of more than $200,000 and families with incomes of more than $250,000.

Equally troubling for the President's economic agenda, the Washington Post reported:

Obama's proposal for $180 billion in fresh infrastructure spending and business tax breaks is not satisfying many of the groups he needs on his side - not lawmakers on Capital Hill who are leery of raising the deficit by spending more, not economists who say the plan is too modest to create many jobs, and not business groups that say the tax benefits come with too many strings attached.

Even some vulnerable Democrats - who have been begging the White House for a jobs strategy to present to recession-battered voters - quickly condemned the president's latest proposal, suggesting that it bears an uncomfortable resemblance to last year's unpopular stimulus package..

In contrast to these relatively limited proposals that face long odds of passing, former SEIU president Andy Stern, now a senior research fellow at Georgetown's Public Policy Institute, offered an ambitious plan to create 12 million jobs in an economy that needs at least 17 million new jobs. But his package is more of a wish list than a realistic political platform for the Obama administration before the mid-terms, given the failures so far to energize the Democratic base and draw independents with a populist message.

Among Stern's sensible proposals:  a job-sharing program paid for by unemployment insurance funds;, an infrastructure bank drawn from taxing past foreign earnings of corporations;, and a massive expansion of  AmeriCorps to aid the nearly four million unemployed people ages 16 to 24.

Stern argues in his guest column in Ezra Klein's policy blog in The Washington Post:

To create 17 million jobs, we need big, bold ideas. So, let’s come up with a plan. And let’s force our leaders and employers to act. My opening bid is 12 million jobs and I want you to call or raise me.

The reality is that job creation will cost some money. But in my plan, taxpayers either won’t have to pay a dime up front or all of their investment will be paid back and then some. In any case, the numbers should not scare anyone. If we can afford to pay nearly $800 billion to bailout out a few Wall Street banks, we can afford one-sixth of that amount to create nearly 12 million jobs.

Unfortunately, given current political realities, such worthwhile ideas would face nearly impossible hurdles to overcome  -- and even more so after Republicans win back more seats or even take control of Congress.

Still, as a New York Times editorial points out, at least Obama is showing in the strongest language to date the difference between his administration's modest approach to economic revival and the GOP's do-nothing plan, which involves simply cutting taxes and freezing domestic spending:

Mr. Obama’s speeches were a robust effort by the president to rally Democrats for the election. It has been a long time coming. And we wish that Democratic leaders in Congress could show the same clear thinking and the same willingness to go head to head with the Republicans. Some commentators are likely to say that Mr. Obama should not have given a national stage to Mr. Boehner, a relative unknown despite his immense power in Congress and his ambition to be the next speaker of the House. But that is just what he needed to do.

For far too long, Mr. Boehner and others have been dominating the political debate with insincere sound bites, Jedi mind games and plain bad economics. How can they claim to care about the deficit and insist on more tax cuts?

The answer, unfortunately, is that they can, and they have, because Mr. Obama has sat on the sidelines and most Congressional Democrats have run for the hills. We are glad to see Mr. Obama fully in the fight.

Art Levine, a contributing editor of The Washington Monthly, has written for Mother Jones, The American Prospect, The New Republic, The Atlantic, Slate.com, Salon.com and numerous other publications.

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