Supply-side economics prevailed-at least politically-late Thursday,
as the US House grudgingly approved President Obama's deal with
congressional Republicans to extend Bush-era tax cuts for billionaires,
creates broad estate-tax exemptions for millionaires and shapes economic
policies based on tax cuts rather smart investment in job-creating
infrastructure projects, schools and an engaged public sector.
The House vote ended two weeks of wrangling over the deal that was
generally popular with Republicans who almost giddy at prospect that a
Democratic president would make tax cuts so central to his economic
agenda, but was sharply criticized by leading Democrats and
Vermont Independent Bernie Sanders as a reanimation of Reaganomics that
would widen the gap between rich and poor, starve federal, state and
local programs of needed resources, expand deficits and potentially
undermined Social Security.
Some of the tax cuts White House included in the agreement were
beneficial to working families, and the deal also includes an extension
of unemployment benefits. That, and pleas from Obama that a defeat of
the package could end his presidency, secured sufficient Democratic
support to clear the House-where opposition had threatened the measure.
"I applaud President Obama for his side of the ledger," a restrained
House Speaker Nancy Pelosi, D-California, said after the House voted
277-148 for the measure . "I'm sorry the price that had to be paid for
it is so high."
What was the price?
"This basically concedes the argument to the supply-side Republican failed economic policies," explained Oregon Democrat. Peter DeFazio, a prime mover in efforts to block the bill's tax cuts for the wealthy.
DeFazio's allies, and there were many of them (even among the
Democrats who ultimately voted for a bill after their party's president
pleaded for support), argued that the measure would do little to help
the hardest hit Americans while returning to the unsustainable defficit
spending of the Reagan era.
"Wake up and listen to the sirens," California Congressman Sam
Farr shouted on the House floor. "I can't believe you talk about this
bill as fiscal sanity. It's fiscal insanity."
The fiscal insanity is likely to spread, as Senate Democrats on
Thursday abandoned efforts to pass an omnibus spending bill to fund the
federal government in the coming year. That move, in the words of
veteran Washington observer and Politico Capital Hill writer David Rogers has
the effect of "pushing major spending decisions into the next Congress
and giving Republicans immense new leverage to confront President Barack
Ultimately, most Democratic leaders in the House recognized that threat.
Pelosi did not vote on the measure that she steered to approval in
one of the last acts of her speakership, while most members of her
leadership team cast "no" votes.
Only Majority Leader Steny Hoyer, of Maryland, backed the final
measure. Majority Whip James Clyburn, of South Carolina, opposed the
deal, as did Democratic Caucus chair John Larson of Connecticut, Caucus
vice chair Xavier Becerra, of California, and Assistant to the Speaker
Chris Van Hollen, of Maryland.
Ultimately, 112 House Democrats, most of them members of the
Congressional Progressive Caucus and the Congressional Black Caucus but
with a smattering of Democrats from across the party's ideological
Thirty-six Republicans, led by Tea Party-tied conservatives such as
Minnesota Congresswoman Michelle Bachmann and Iowa Congressman Steve
King, also opposed the deal. But there was sufficient Republican support
so that Republican Whip Eric Cantor, of Virginia,at one point offered to help Hoyer whip support for the deal if a boost was needed from the GOP caucus that will soon control the chamber.
While Thursday's House vote ended the fight over this particular
deal. It also set up the next round of fights over essential questions
regarding Social Security.
"I think it's a bad deal," explained DeFazio as he outlined flaws in
the package. "It will add $858 billion to our deficit over the next two
years. This is done under the premise that these sorts of tax cuts,
trickle down tax cuts-on estates over $10 million, incomes over
$250,000, and 100% expensing for wealthy corporations who are sitting on
huge piles of cash-are necessary to put Americans back to work. I think
we could have taken many more effective measures at much less cost to
put Americans back to work."
But, the Oregon Democrat added, "one of the worst aspects of this
bill is that it will take $112 billion from the Social Security Trust
Fund and require that we borrow money, probably from China, to replace
that money to make Social Security whole. It's the first time in 75
years, since President Roosevelt created Social Security that opponents
of the program are poised to undo the New Deal and turn it into a raw
deal for America's seniors, the taxpayers and working men and women. At
the end of 2011, the Republicans will insist on extending the payroll
tax holiday because the expiration of the holiday would increase taxes
on working people. And to pay for the extension, it's likely they will
demand cuts in Social Security benefits."
DeFazio's right when he
says: "That's not the kind of security the American people who are
dependent upon Social Security, or who will be dependent upon Social
Security, need. This is a raw deal for seniors, taxpayers and working
men and women."