StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between

It's not just the economy that's stagnant

03 Sep 2010
Posted by Edmund L. Andrews

    As Andrew Samwick says, today's job numbers are more of the same -- stagnant job growth that was too weak to to prevent the unemployment rate from edging up a tenth of a point to 9.6 percent.

    More depressing is the stagnation on the political front.   Even though the Obama White House is rushing  to come up with a package of tax cut and spending proposals, the chances of passing anything substantive are somewhere between zero and zero point zero.  In fact, the odds are pretty low that Congress won't even agree on extending any of the  Bush tax cuts before they expire at the end of this year.

    The Republicans have absolutely no reason for engaging. Obstructionism has been a winning strategy so far, and Republicans know they they will rack up more House and Senate seats in November.  If you  listen to political handicappers like Charlie Cook, the GOP  is poised to take back the House.  

     "Right now, the Republicans have no incentive to deal on anything,'' says Kenneth Kies, one of the top corporate tax lobbyists  in Washington and a one-time Republican tax staffer.  "They know their leverage is going to improve dramatically."

      But it's not obvious to me what the White House hopes to accomplish either. The Wash Post reports this morning that the White House is preparing a slew of business tax cuts, but the story mentions only two things: a payroll tax holiday and an extension of expiring business tax breaks, like the R&D credit.  Passing the "extenders,'' the second item, is hardly a new idea.  It's been on the Democratic agenda all year long.

     In theory, the looming expiration of the Bush tax cuts should galvanize both parties to act. Neither side wants the tax cuts to disappear for most people, so Republicans and Democrats are playing a game of chicken.  Dems want to make the tax cuts permanent for for all but the top two percent of earners. Republicans want to make them all permanent. If Congress doesn't pass anything, they all disappear.

    But in practice, Congress can easily punt until next year.  That's because the expiration of the Bush tax cuts doesn't become real until people have to file their 2010 returns in early 2011. 

     I wish the Democrats had been tougher about dealing with all these issues.  But the real delinquency in leadership has been with the Republicans, who tried to block the original stimulus bill and  every other initiative that could have added a little juice to the economy.   If the GOP had had its way, Congress would not have passed the original stimulus, or cleared the second half of TARP (which is turning out to be an amazingly cheap rescue), or passed extensions of unemployment benefits (42 percent of the 15 million jobless are now  long-term unemployed), Medicaid assistance to states or money to  prevent 100,000 teacher lay-offs.  

    When Republicans and business groups moan about the "uncertainty'' that's holding back investment, they ought to mention the incredible uncertainty that the GOP has created over the past decade.  Start with their decision to make the Bush tax cuts "temporary" in the first place.  Add to that the refusal to grapple with the Alternative Minimum Tax, a ruse that disguised the real cost of the tax cuts.  Add to that their refusal to engage on health care or financial reform.  To this day,  GOP leaders have provided virtually no alternative gameplan beyond providing more tax cuts without paying for them.

    I don't blame Republicans for blowing off the Democrats right now, with two months before the mid-term elections.  But why anyone would view them as a source of leadership is a mystery to me.













Obstruction has been a winning strategy so far, and they will clearly


November elections in August

Can we please stop the doomsday scenario talk in August? People who vote in Congressional elections actually do tend to look at the individuals in the election. They don't do this until the first week of October at the earliest. Pre-Labor Day polls measure how people will vote when they aren't thinking about an election. It's basic poppycock.

The Dems have put the Republicans on the "expectations roller coaster". If the Reps don't win majorities in both houses, you can expect the media spin to turn instantly towards the Dems. Heck, they probably financed those poll results so that the September and October horse-race story line would be "Democrats making comeback".

Obama is asking for Obstructionism

When he talks out both sides of his mouth, asking for bipartisanship and simultaneously attacking his opponents as being mean-spirited, he's not given the Republicans one reason to be helpful.

'Republicans' won't deal with the AMT 'fix'?`

The Democrats have controlled Congress (you know, the branch of government that actually passes the budget and would have to deal with making the AMT 'fix' permanent) for four years. I haven't read about any heroic efforts by them to pass this 'fix' either.

Both parties have been completely incompetent fiscally for many, many years. As this crisis has shown, both parties are controlled by the financial industry. Those who try to pin the blame primarily on either party look ridiculous, and are part of the problem.


Both parties are controlled by the financial industry ? LOL

Ed says that "... the

Ed says that "... the expiration of the Bush tax cuts doesn't become real until people have to file their 2010 returns in early 2011." The IRS has to change the withholding tables to match 2011 law, so higher withholding will start with the first 2011 payday. That's long before people have to file their 2011 tax returns.

I don't get it

The Dems should IMMEDIATELY put the "make the tax cuts permanent for everyone under $250k" up for a vote and ram it through. They have nothing to lose. The Republicans are on much firmer ground if the Dems do nothing - they can credibly claim that taxes are about to go up for everyone. If the Dems passed the <250k extension, it becomes much harder for the Republicans to sell the idea that we must incrementally cut taxes for JUST the top 2%. The current Congress, both parties, are incredibly disappointing. I'd be in favor of throwing ALL of the bums out if not for the fact that they'd probably be replaced by Tea Party wingnuts.

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