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Barack Obama speaking during a press conference on New Year's Eve. Later, he called the Senate passage of the bill a victory. Progressives had a different view, calling it a 'lousy deal' and excoriating the president for his negotiating habits. (Photograph: Rex Features)
Despite loud warnings from many quarters that 'no deal, was better than a bad deal' the US Senate passed a fiscal agreement two hours after midnight in order to meet a self-imposed deficit deal deadline masquerading as a financial crisis.
With bipartisanship evidenced in the 89-8 vote, the agreement was interpreted as a "lousy one" by economist Robert Reich, who had been among those publicly advising Senate Democrats and President Obama to avoid making unnecessary concessions to Republicans in a fight that was contrived to protect the nation's wealthiest from tax increases in the New Year.
Nobel economist and New York Times columnist Paul Krugman--who spent much of New Year's Eve excoriating President Obama for the direction of developments and calling him the 'world's worst poker player'--argues the deal is less bad than it could have been (given the Obama's earlier willingness to concede much in terms of cuts to social programs), but said the real problem with the deal was the path taken to achieve it.
"[Obama] kept drawing lines in the sand, then erasing them and retreating to a new position," said Krugman in response to the Senate deal. "And his evident desire to have a deal before hitting the essentially innocuous fiscal cliff bodes very badly for the confrontation looming in a few weeks over the debt ceiling."
Enumerating the negative aspects of the deal, Reich explains:
1. Republicans haven't conceded anything on the debt ceiling, so over the next two months - as the Treasury runs out of tricks to avoid a default - Republicans are likely to do exactly what they did before, which is to hold their votes on raising the ceiling hostage to major cuts in programs for the poor and in Medicare and Social Security.
2. The deal makes tax cuts for the rich permanent (extending the Bush tax cuts for incomes up to $400,000 if filing singly and $450,000 if jointly) while extending refundable tax credits for the poor (child tax credit, enlarged EITC, and tuition tax credit) for only five years. There's absolutely no justification for this asymmetry.
3. It doesn't get nearly enough revenue from the wealthiest 2 percent -- only $600 billion over the next decade, which is half of what the President called for, and a small fraction of the White House's goal of more than $4 trillion in deficit reduction. That means more of the burden of tax hikes and spending cuts in future years will fall on the middle class and the poor.
4. It continues to exempt the first $5 million of inherited wealth from the estate tax (the exemption used to be $1 million). This is a huge gift to the heirs of the wealthy, perpetuating family dynasties of the idle rich.
Noam Scheiber, writing at the New Republic, echoes some of these concerns, but also comes down with Krugman when it comes to putting emphasis on the "strategic dimension" of how the deal developed and the manner in which Obama continues to negotiate. Scheiber writes:
[the deal] will reinforce the convictions that have made the GOP such a toxic presence in Washington. If Obama will cave even when he's got all the leverage, when won't he cave? Never, the Republicans will assume. If Obama's too scared to stop bargaining and let the public decide who's right in this instance, when the polls appear to back him, then he must think our position is more popular than he lets on. Suffice it to say, these are not sentiments you want at the front of Republicans' mind as they prepare to shake him down over the debt limit in another two months. The White House continues to maintain that it simply won't negotiate over the limit. After this deal, why would any Republican ever believe this? I certainly don't, and I desperately want to.
As in previous rounds of Obama-GOP negotiations, a lot of liberals are surely hoping that the lunacy of the House Republicans will save us from Obama's overly generous offers. And, it's true, House Republicans can normally be relied upon to reject a deal that's absurdly generous by any objective measure but falls short of their virtue-police standard of purity. They may well do so again tonight, inshallah. But that doesn't solve the broader strategic problem. Obama has already shown his cards on the parameters that will define his negotiations with Republicans throughout his second term. And there's no one to save us from that.
For a summary of what the deal included, the Washington Post's Suzy Khimm provides this rundown:
______________________________
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Despite loud warnings from many quarters that 'no deal, was better than a bad deal' the US Senate passed a fiscal agreement two hours after midnight in order to meet a self-imposed deficit deal deadline masquerading as a financial crisis.
With bipartisanship evidenced in the 89-8 vote, the agreement was interpreted as a "lousy one" by economist Robert Reich, who had been among those publicly advising Senate Democrats and President Obama to avoid making unnecessary concessions to Republicans in a fight that was contrived to protect the nation's wealthiest from tax increases in the New Year.
Nobel economist and New York Times columnist Paul Krugman--who spent much of New Year's Eve excoriating President Obama for the direction of developments and calling him the 'world's worst poker player'--argues the deal is less bad than it could have been (given the Obama's earlier willingness to concede much in terms of cuts to social programs), but said the real problem with the deal was the path taken to achieve it.
"[Obama] kept drawing lines in the sand, then erasing them and retreating to a new position," said Krugman in response to the Senate deal. "And his evident desire to have a deal before hitting the essentially innocuous fiscal cliff bodes very badly for the confrontation looming in a few weeks over the debt ceiling."
Enumerating the negative aspects of the deal, Reich explains:
1. Republicans haven't conceded anything on the debt ceiling, so over the next two months - as the Treasury runs out of tricks to avoid a default - Republicans are likely to do exactly what they did before, which is to hold their votes on raising the ceiling hostage to major cuts in programs for the poor and in Medicare and Social Security.
2. The deal makes tax cuts for the rich permanent (extending the Bush tax cuts for incomes up to $400,000 if filing singly and $450,000 if jointly) while extending refundable tax credits for the poor (child tax credit, enlarged EITC, and tuition tax credit) for only five years. There's absolutely no justification for this asymmetry.
3. It doesn't get nearly enough revenue from the wealthiest 2 percent -- only $600 billion over the next decade, which is half of what the President called for, and a small fraction of the White House's goal of more than $4 trillion in deficit reduction. That means more of the burden of tax hikes and spending cuts in future years will fall on the middle class and the poor.
4. It continues to exempt the first $5 million of inherited wealth from the estate tax (the exemption used to be $1 million). This is a huge gift to the heirs of the wealthy, perpetuating family dynasties of the idle rich.
Noam Scheiber, writing at the New Republic, echoes some of these concerns, but also comes down with Krugman when it comes to putting emphasis on the "strategic dimension" of how the deal developed and the manner in which Obama continues to negotiate. Scheiber writes:
[the deal] will reinforce the convictions that have made the GOP such a toxic presence in Washington. If Obama will cave even when he's got all the leverage, when won't he cave? Never, the Republicans will assume. If Obama's too scared to stop bargaining and let the public decide who's right in this instance, when the polls appear to back him, then he must think our position is more popular than he lets on. Suffice it to say, these are not sentiments you want at the front of Republicans' mind as they prepare to shake him down over the debt limit in another two months. The White House continues to maintain that it simply won't negotiate over the limit. After this deal, why would any Republican ever believe this? I certainly don't, and I desperately want to.
As in previous rounds of Obama-GOP negotiations, a lot of liberals are surely hoping that the lunacy of the House Republicans will save us from Obama's overly generous offers. And, it's true, House Republicans can normally be relied upon to reject a deal that's absurdly generous by any objective measure but falls short of their virtue-police standard of purity. They may well do so again tonight, inshallah. But that doesn't solve the broader strategic problem. Obama has already shown his cards on the parameters that will define his negotiations with Republicans throughout his second term. And there's no one to save us from that.
For a summary of what the deal included, the Washington Post's Suzy Khimm provides this rundown:
______________________________
Despite loud warnings from many quarters that 'no deal, was better than a bad deal' the US Senate passed a fiscal agreement two hours after midnight in order to meet a self-imposed deficit deal deadline masquerading as a financial crisis.
With bipartisanship evidenced in the 89-8 vote, the agreement was interpreted as a "lousy one" by economist Robert Reich, who had been among those publicly advising Senate Democrats and President Obama to avoid making unnecessary concessions to Republicans in a fight that was contrived to protect the nation's wealthiest from tax increases in the New Year.
Nobel economist and New York Times columnist Paul Krugman--who spent much of New Year's Eve excoriating President Obama for the direction of developments and calling him the 'world's worst poker player'--argues the deal is less bad than it could have been (given the Obama's earlier willingness to concede much in terms of cuts to social programs), but said the real problem with the deal was the path taken to achieve it.
"[Obama] kept drawing lines in the sand, then erasing them and retreating to a new position," said Krugman in response to the Senate deal. "And his evident desire to have a deal before hitting the essentially innocuous fiscal cliff bodes very badly for the confrontation looming in a few weeks over the debt ceiling."
Enumerating the negative aspects of the deal, Reich explains:
1. Republicans haven't conceded anything on the debt ceiling, so over the next two months - as the Treasury runs out of tricks to avoid a default - Republicans are likely to do exactly what they did before, which is to hold their votes on raising the ceiling hostage to major cuts in programs for the poor and in Medicare and Social Security.
2. The deal makes tax cuts for the rich permanent (extending the Bush tax cuts for incomes up to $400,000 if filing singly and $450,000 if jointly) while extending refundable tax credits for the poor (child tax credit, enlarged EITC, and tuition tax credit) for only five years. There's absolutely no justification for this asymmetry.
3. It doesn't get nearly enough revenue from the wealthiest 2 percent -- only $600 billion over the next decade, which is half of what the President called for, and a small fraction of the White House's goal of more than $4 trillion in deficit reduction. That means more of the burden of tax hikes and spending cuts in future years will fall on the middle class and the poor.
4. It continues to exempt the first $5 million of inherited wealth from the estate tax (the exemption used to be $1 million). This is a huge gift to the heirs of the wealthy, perpetuating family dynasties of the idle rich.
Noam Scheiber, writing at the New Republic, echoes some of these concerns, but also comes down with Krugman when it comes to putting emphasis on the "strategic dimension" of how the deal developed and the manner in which Obama continues to negotiate. Scheiber writes:
[the deal] will reinforce the convictions that have made the GOP such a toxic presence in Washington. If Obama will cave even when he's got all the leverage, when won't he cave? Never, the Republicans will assume. If Obama's too scared to stop bargaining and let the public decide who's right in this instance, when the polls appear to back him, then he must think our position is more popular than he lets on. Suffice it to say, these are not sentiments you want at the front of Republicans' mind as they prepare to shake him down over the debt limit in another two months. The White House continues to maintain that it simply won't negotiate over the limit. After this deal, why would any Republican ever believe this? I certainly don't, and I desperately want to.
As in previous rounds of Obama-GOP negotiations, a lot of liberals are surely hoping that the lunacy of the House Republicans will save us from Obama's overly generous offers. And, it's true, House Republicans can normally be relied upon to reject a deal that's absurdly generous by any objective measure but falls short of their virtue-police standard of purity. They may well do so again tonight, inshallah. But that doesn't solve the broader strategic problem. Obama has already shown his cards on the parameters that will define his negotiations with Republicans throughout his second term. And there's no one to save us from that.
For a summary of what the deal included, the Washington Post's Suzy Khimm provides this rundown:
______________________________