Tuesday, December 7, 2010

Let's Make a Deal

Before I begin, let me direct you to 2010 NPR Exit Polls.  The result that I will focus on is the question, "Highest Priority for Next Congress?"  The results were: 39% for "Reduce Budget Deficit," 37% for "Spend to Create Jobs," and 18% for "Cut Taxes."

Having a little background information on what the ruled want, let's examine the recent deal struck by President Obama and Republican Congressional leaders.  In it, the President agreed to a two year extension of ALL Bush administration tax cuts, and in return, the GOP agreed to a thirteen month extension of unemployment benefits.  Additionally, the proposal includes a one year reduction of Social Security payroll taxes from 6.2% to 4.2%.

This begs the question, "WHAT?!?"  Did they not get the message that was for all intents and purposes stapled to their foreheads on November 2?

Deficit reduction - I don't exactly have an economics PhD, so maybe I'm incapable of understanding how this proposal can avoid adding to the deficit.  We are managing to add new spending that isn't being paid for.  Additionally, we're willing to remove funding for an already woefully underfunded program without talking about reducing benefits.  Am I missing something here?  If not, our elected officials have shown they don't have the same concerns about the deficit as the people that hired them.

Spending to create jobs - The only spending being added here is the extension of unemployment benefits.  The rationale is that the unemployed (a staggering 9.8%...although that doesn't include those who have quit looking for work) will spend more money which will increase demand for labor and thus reduce unemployment.  If we take a break from living in Fantasyville, we'll see that what's really going on is that we are paying people to not work!  That seems like a foolproof way to reduce unemployment.  The point of unemployment insurance is to help someone through a brief time of unemployment, and employers pay a premium to buy this insurance for their employees.  At the end of this extension (and I'd bet my left nut it won't be the last...there have been five already), there will be people who will have collected unemployment checks for over three years.  At this point, let's call it what it is...Subsidizing the act of not working.  This spending doesn't create jobs, so that voter concern is ignored by this portion of the compromise either.

That about covers ignoring or disregarding the top wishes of 76% of the voters.

Cutting taxes - Well, they did this.  For the record, the only taxes that were cut are the payroll taxes.  The other taxes were simply not raised.  However, that's a topic for another day.

What we've really witnessed is that each party is so concerned with implementing a small number of its policy initiatives so it can claim political victory.  Unfortunately, neither cares about the cost of the concessions it has to make.  Republicans are willing to increase the deficit and maintain higher unemployment if the prize is the preservation of tax cuts.  Democrats are willing to balloon the deficit so long as they can say that they're "helping" the unemployed.  The end result of this intense politicking is that we, the voters, have the same tax levels, higher unemployment, and more debt piled on.  Pardon me if I'm not giddy.  Why is it that each time a party gets a win, the American people lose?

Would you support a package that included a tax increase and spending cuts?
Yes - The deficit is cause for worry...like the Roseanne Barr
No - The deficit is a myth...like Roseanne Barr
pollcode.com free polls



  1. The 4th turning is here - it's time for some change. Our generation (Millenials) needs to step it up and take charge to fix this disaster created by the Boomers.

  2. Will,

    While the situation hasn't been helped by the baby boomers (and has arguably been exacerbated by them), the problems were set in motion well before that generation.

  3. Maximum unemployment benefits are capped at 99 weeks between unemployment benefits in most states. The link below has details (just add the numbers). So you can't get 3 years of unemployment.


    Greg Mankiw has a really good post on this on his blog.


  4. BREAKING NEWS: House Democrats voted Thursday against considering the tax package that President Obama negotiated with Republicans, raising questions over the president's influence in his own party