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Obama Tax Cuts Compromise: GOP Leaders Negotiate Like Terrorists and Win

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President Obama caves into Republicans, corporations, businesses and the rich -- again

President Obama gave Republicans a political victory and announced a tax cuts compromise on December 6th. The compromise validated the manner in which Republicans had held middle class tax cuts, jobless benefits, and other agenda items that would benefit Americans hostage until they were able to get President Obama and Democrats to extend tax cuts for all Americans, including the top 2%.

In his announcement on the deal, Obama declared, "We have arrived at a framework for a bipartisan agreement." Anyone who heard that should have known what was to follow wouldn't be good. Like comedian George Carlin said, "The word bipartisan means some larger-than-usual deception is being carried out."

Obama detailed, "For the next two years, every family will keep their tax cuts." That meant wealthy families across the nation would be able to get as much caviar as they wanted for the Christmas holiday. There would be no need to cut back on any holiday gluttony.

Obama added, "In exchange for a temporary extension of the tax cuts for the wealthiest Americans, we will be able to protect key tax cuts for working families -- the Earned Income Tax Credit that helps families climb out of poverty; the Child Tax Credit that makes sure families don't see their taxes jump up to $1,000 for every child; and the American Opportunity Tax Credit that ensures over 8 million students and their families don't suddenly see the cost of college shooting up." This effectively demonstrated complicity toward the Republican idea that the rich should not have to face increased taxes if working and middle class Americans are going to enjoy tax cuts or receive "government handouts."

Obama indicated that jobless benefits would be extended for 13 months and would provide relief for 2 million Americans. This was to be celebrated until Obama indicated a kind of poison pill solution had been proposed to gain support for including jobless benefits in the deal. A 2 percent employee payroll tax cut for workers next year would be included.

Brian Wingfield of wrote, "Instead of seeking a two-year extension of the Making Work Pay tax credit, which benefits middle class families, the administration agreed to a one-year, 2% reduction in Social Security payroll taxes for all Americans. The Making Work Pay credit, part of the 2009 stimulus bill, phases out for individuals making more than $75,000 per year ($150,000 for couples). But there's no income limit for the payroll tax holiday. In other words, the rich get a benefit where they didn't enjoy one before."

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Reducing payroll taxes certainly will have some effect in decreasing the perceived solvency or health of Social Security. Cutting payroll taxes will undermine the Social Security Trust Fund. Tax relief for Americans by cutting Social Security taxes is not what Americans want. As AARP reported on the 75th anniversary of the program, "Americans place a high value on Social Security and support more revenue for it even in a time when concerns about the federal deficit and government spending are high." Americans would be willing to pay more payroll taxes to ensure the program can continue to pay out benefits to retired Americans.

The deal was disappointing, but the explanation for why the deal was necessary was more infuriating. Obama utilized a narrative the press had created. He outlined the difference in views and said he (and Democrats) only want to extend tax cuts for the middle class while Republicans think tax cuts for the wealthiest 2 percent of Americans should be made permanent. He then proceeded to claim that there was no willingness to give on both sides, despite the fact that Democrats had been open to dealing for the past month especially since he had called for a compromise after the midterm election.

Obama stated, "I'm not willing to let working families across this country become collateral damage for political warfare here in Washington," and refused to risk a "stalemate." This is bad politics that further emboldens Republicans and weakens the Democrats. And, it's further indication that Obama is no more than a corporatist Democrat who is in the pockets of bankers, bond sellers, and hedge fund and investment managers on Wall Street.

Democratic leaders in Congress should follow economist and columnist for the New York Times Paul Krugman and reject the proposed deal. He wrote "giving in to the G.O.P. now suggests that saying no, and letting the Bush tax cuts expire on schedule, is the lesser of two evils."

Bear in mind that Republicans want to make those tax cuts permanent. They might agree to a two- or three-year extension -- but only because they believe that this would set up the conditions for a permanent extension later. And they may well be right: if tax-cut blackmail works now, why shouldn't it work again later?

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America, however, cannot afford to make those cuts permanent. We're talking about almost $4 trillion in lost revenue just over the next decade; over the next 75 years, the revenue loss would be more than three times the entire projected Social Security shortfall. So giving in to Republican demands would mean risking a major fiscal crisis -- a crisis that could be resolved only by making savage cuts in federal spending.

And we're not talking about government programs nobody cares about: the only way to cut spending enough to pay for the Bush tax cuts in the long run would be to dismantle large parts of Social Security and Medicare.

In fact, that may be the scheme that is afoot. Obama's cave-in to Republicans, his granting them another victory over tax cuts, his allowing them to continue the blackmail and extortion they began on tax cuts under the Bush Administration in 2001, might be an indication of how much power Obama will be giving to the so-called "deficit reduction" agenda throughout the next two years.

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Kevin Gosztola is managing editor of Shadowproof Press. He also produces and co-hosts the weekly podcast, "Unauthorized Disclosure." He was an editor for

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