Thursday, September 30, 2010

Political Theater Alert: The Democrats Could Have Passed Middle Class Tax Cuts Through Reconcilliation

Austan Goolsbee, a top economic advisor to the Obama Administration, claims that Congressional Republicans are "holding the middle class tax cuts hostage" (hat tip to Mark Thoma)

Goolsbee is not telling the whole truth.

First, the Democrats could have made middle class tax cuts part of the reconcilliation process used to pass healthcare reform as part of this year's concurrent resolution on the budget. It's not like the Democrats didn' see it coming.

Second, it appears that the Democrats had until today to revise the concurrent resolution on the budget to include the middle class tax cuts. At least that's my reading of 2 USC Sec. 635, which states:

At any time after the concurrent resolution on the budget for a fiscal year has been agreed to pursuant to section 632 of this title, and before the end of such fiscal year, the two Houses may adopt a concurrent resolution on the budget which revises or reaffirms the concurrent resolution on the budget for such fiscal year most recently agreed to
The current fiscal year ends today, September 30, 2010, which means the Democrats had until today to revise this year's concurrent resolution on the budget, which included health care reform.

As I read  2 USC Sec. 641, the Democrats were allowed to use the reconcilliation process of Sec. 641 to pass a revised concurrent resolution under Sec. 635. 

They didn't. 

Why not?

You can answer that question any way that makes you comfortable. 

For me, the answer begins with the obvious: the Democrats want to make middle class tax cuts a big issue for the 2010 mid-term elections.  And isn't that exactly what they're trying to do, with agents of the White House leading the way? 

But my answer doesn't end there: I firmly believe that Obama and the Democratic leadership are completely aligned with the Republicans in seeking an extension of all the 2001 Bush income tax cuts, including those that go to the wealthiest households.  The problem is that the Democrats cannot achieve this goal when they are in control of the presidency and both houses of Congress.  The Democratic base would not stand for it.  The good news for Obama and the Democratic leadership is that, in all likelihood, the Republicans will recapture the House this year and "force" Obama and the Democratic Senate to extend all of the Bush tax cuts.  That will be the narrative, anyway, you can count on it, if the Democrats don't hold both houses of Congress.

Am I accusing Obama and the Democratic leadership of engaging in a "conspiracy theory?"  Leaving aside the fact that, as a political movement, they must "conspire" to agree on common objectives and coordinate their resources to achieve those objectives, no, I am not accusing Obama and the Democratic leadership of engaging in a conspiracy theory. 

Am I accusing Obama and the Democratic leadership of being stupid?  No.

I'm accusing Obama and the Democratic leadership of being venal.  I'm accusing them of saying they want one thing while they actually want another.  I'm accusing them of lying to their base.  Big difference.

In What’s the Matter With Kansas Thomas Frank detailed how Republican get elected because of cultural wedge issues that are important to their base, yet Republicans never manage to solve those issues because they must persist in order to ensure reelection.  If you think it through, you'll recognize that Obama and the Democrats are engaged in exactly the same type of cynical politics the Republicans are accused of, but they tailor the politics to their base.  In addition to the middle tax cut issue, one need look no further than "Don't Ask Don't Tell" to see more Democratic cynicism on display: the DADT law leaves enforcement of the policy to regulations set by the executive.  Obama is the executive.  He does not even have to consult with Congressional Republicans to suspend DADT.

The bottom line is that, on both sides of the aisle, what we're witnessing is a morality play staged for our benefit, but the people putting on the play don’t really share that morality.

UPDATE:  Over at Firedoglake, a commenter argued that, if I were right about the Democrats' intentions, they would have been better served to capitulate before the mid-terms in extending all of the Bush tax cuts, and then run on being "forced" into it "class warfare" as part of the narrative for the mid-terms.  This makes no sense.   Obama wants a second term.  To get it, he needs to lose the House in the mid-terms, be "forced" into extending the Bush tax cuts in their entirety (what he really wants), and then he can use the "class warfare" meme to secure his second term.  The game is all about pitching a double truth to the masses and the elites that convinces them both to elect you.  The sad thing is that most of the masses and most of the elites don't get that.  They actually take what politicians say at face value.