Obama Ignores Own Expert Or Any Compromise, Refuses To Budge On Tax Cuts

The phrase “uncompromising radical ideologue” comes to mind.  As does the phrase, “the president of no.”

Barack Obama chose to ignore his own expert’s advice (which would explain why both of his top economic experts are leaving the Obama administration) and go his own way.  Given that Obama’s life experience basically consists in community organizing (i.e., Marxist-type fomenting of grievances rather than any actual business experience), that’s kind of scary.

Obama’s own budget director, his own party’s Senate Budget Committee chairman, and his own party’s moderates, are urging Obama to give ALL Americans tax cuts for at least a couple of years.  But Obama is determined that there should be no compromises with his socialist-redistribution class warfare agenda.  He says he’s not budging on ending tax cuts for the higher income tax rate brackets.

But have no fear: a president can always find a “yes man” to pitch whatever policy he wants.  That’s the advantage to having fewer officials with business experience than any other administration in history; the actual real world doesn’t matter.

First, outgoing White House budget director Peter Orszag, in his own words:

One Nation, Two Deficits
By PETER ORSZAG
Published: September 6, 2010

The nation faces a nasty dual deficit problem: a painful jobs deficit in the near term and an unsustainable budget deficit over the medium and long term. This month, the Senate will be debating an issue with significant implications for both — what to do about the Bush-era tax cuts scheduled to expire at the end of the year.

In the face of the dueling deficits, the best approach is a compromise: extend the tax cuts for two years and then end them altogether. Ideally only the middle-class tax cuts would be continued for now. Getting a deal in Congress, though, may require keeping the high-income tax cuts, too. And that would still be worth it.

Why does this combination make sense? The answer is that over the medium term, the tax cuts are simply not affordable. Yet no one wants to make an already stagnating jobs market worse over the next year or two, which is exactly what would happen if the cuts expire as planned.

Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt. And since financial markets don’t seem at the moment to view the budget deficit as a problem — take a look at the remarkably low 10-year Treasury bond yield — there is little reason not to extend the tax cuts temporarily. […]

Senate Democrats and Republicans almost never come together anymore. This month, they should fight the dual deficits rather than each other. Let’s continue the tax cuts for two years but end them for good in 2013.

I have to take issue with Orszag simply based on the obvious facts.  Orszag says, “Ideally only the middle-class tax cuts would be continued for now.” And then only moments later he proceeds to provide his reasoning for why we need to keep the tax cuts.  He says, “Higher taxes now would crimp consumer spending, further depressing the already inadequate demand for what firms are capable of producing at full tilt.”

But there’s an inconvenient truth that means, on Orszag’s very own reasoning, that we badly need to keep the tax cuts for the rich:

August 5, 2010, 12:27 PM ET
U.S. Economy Is Increasingly Tied to the Rich
By Robert Frank

Who cares how the rich spend their money?

Well, perhaps everyone should these days. Consumer spending accounts for roughly two-thirds of U.S. gross domestic product, or the value of all goods and services produced in the nation. And spending by the rich now accounts for the largest share of consumer outlays in at least 20 years.

According to new research from Moody’s Analytics, the top 5% of Americans by income account for 37% of all consumer outlays. Outlays include consumer spending, interest payments on installment debt and transfer payments.

By contrast, the bottom 80% by income account for 39.5% of all consumer outlays.

So you’ll have to explain why Orszag would say that we have to have tax cuts because “higher taxes now would crimp consumer spending,” and then proceed to abandon his own reasoning by even suggesting that we shouldn’t keep the tax cuts for the rich along with everyone else.  I submit it’s because Orszag – like everyone else Obama has appointed – is himself a liberal ideologue first, and an intelligent economist second.  And whenever the first contradicts the second, so much the worse for the second.

That said, Peter Orszag is still now on the official record advocating that we keep the Bush tax cuts.  All of them.  Including for the rich.  For at least the next two years.  That, he says, in his capacity as Obama’s chief handpicked expert in dealing with the budget and budget deficits, is the best course.

Unfortunately, Orszag’s boss is something of a fool.

I’m reminded of a quote about another disastrous presidency in regards to the ruining of the economy:

[Franklin Delano] Roosevelt’s string of business failures did not surprise those who knew him well.  One friend, Franklin Lane, Wilson’s secretary of interior, concluded, “Roosevelt knows nothing about finance, but he doesn’t know he doesn’t know.” Therefore, he [Roosevelt] tried one scheme after another, pursuing whims not research, always thinking the next idea would be a winner.  Henry Wallace, who would become Roosevelt’s vice president, liked his boss in politics but not in business…. “I reached the conclusion,” Wallace said after watching Roosevelt in action, “… that I would under no circumstances, ever have any business dealings with him” [Burton Folsom, Jr., New Deal or Raw Deal?, p. 27].

As I point out, we’ve got another FDR on our hands, and that definitely aint a good thing.  Unless you like living through Great Depressions that just go on and on, that is.

Obama isn’t listening to his budget director.  He isn’t going to compromise, like Peter Orszag begs him to do.  Nope.  “Compromise” isn’t the kind of thing ideologues do:

Obama Is Against a Compromise on Bush Tax Cuts
By JACKIE CALMES
Published: September 7, 2010

WASHINGTON — President Obama on Wednesday will make clear that he opposes any compromise that would extend the Bush-era tax cuts for the wealthy beyond this year, officials said, adding a populist twist to an election-season economic package that is otherwise designed to entice support from big businesses and their Republican allies.

What’s Obama’s plan?  Nothing but pure, simple demagoguery.  Obama plans to dig in and refuse to budge, and then demonize his opposition for digging in and refusing to budge.

But he’s playing chicken with the US economy, and with a lot of Americans’ livelihoods and lives.

Peter Orszag is hardly the only Democrat who is opposed to Obama’s hard-core ideological refusal to compromise:

Democrats unlikely to repeal tax cuts for the rich
By David Lightman | McClatchy Newspapers

WASHINGTON — Democrats in Congress are poised to play a leading role this month in thwarting their party’s effort to raise income tax rates on the wealthy.

Tax cuts enacted in 2001 and 2003 expire at the end of this year. President Barack Obama and Democratic congressional leaders have been eager to extend the breaks for individuals who earn less than $200,000 annually and joint filers who make less than $250,000. Those who earn more would pay higher, pre-2001 rates starting next year.

However, a small but growing number of moderate Democrats are balking at boosting taxes on the rich. Many face electorates that recoil at the mention of any tax increase. Some represent areas that are loaded with wealthier taxpayers. Further, some incumbent senators who don’t face voters this fall are reluctant to increase taxes on anyone while the economy remains sluggish.

Without their support, the push to raise rates on the rich probably will fail.

“The economy is very weak right now. Raising taxes will lower consumer demand at a time when we want people putting more money into the economy,” said Sen. Evan Bayh, D-Ind., who isn’t seeking re-election.

[snip]

Rep. Gerald Connolly, D-Va., represents the northern Virginia suburbs of Washington, one of the nation’s wealthiest districts. Median family income there in 2008 was $117,892, well above the national average of $63,211. He said that repealing the top rates would have political consequences.

“Sometimes we forget how we became the majority. We did it by winning some affluent districts,” he said.

The bigger problem for Democrats looms in the Senate, where Majority Leader Reid’s immediate problem is getting the 60 votes needed to cut off debate on the measure. Democrats control 59 seats, and at least three of them — Bayh, Ben Nelson of Nebraska and Kent Conrad of North Dakota — have signaled that they won’t back a permanent repeal of the tax cuts for the wealthy.

They suggest a way out of a stalemate — temporarily extending all the expiring tax rates — but so far the leadership isn’t going along.

Sean Neary, a spokesman for Senate Budget Committee Chairman Conrad, said the senator backed such an extension “for now.”

“The general rule of thumb is that you do not raise taxes or cut spending during an economic downturn. That would be counterproductive,” Conrad said.

Nelson also offered what’s become the centrist Democratic mantra. He, too, said he’d back extending the tax breaks for the wealthy “for at least a period of time because raising taxes in a weak economy could impair recovery.”

That stand could be even more popular with Democratic candidates for the Senate who aren’t incumbents. The hottest races are in conservative states, such as Kentucky, where Republican Rand Paul and Democrat Jack Conway are battling for the seat now held by Republican Sen. Jim Bunning.

Of the expiring tax cuts for the wealthy, Conway spokeswoman Allison Haley said that he “believes we should extend them now, especially when so many Kentucky families and small businesses are struggling under this recession.”

In Missouri, Republican U.S. Rep. Roy Blunt and Democrat Robin Carnahan are in a tight race. Despite a welcoming embrace with Obama at a Kansas City fundraiser in July, Carnahan said last week that she wanted to extend the Bush tax cuts for everyone.

“Now is not the time to raise taxes,” she said.

In Indiana, U.S. Rep. Brad Ellsworth, D-Ind., who’s seeking to replace Bayh, told the Evansville Courier & Press this summer that all the Bush-era tax cuts should become permanent.

That position makes sense, said Brian Vargus, a professor of political science at Indiana University-Purdue University Indianapolis, because Indiana is “an overwhelmingly Republican state … and there is never support for taxes or public goods.”

Here we go again.  Just like the stimulus boondoggle that is so unpopular that no Democrat in over 230 races is campaigning on having passed it; and just like ObamaCare which is so unpopular that no Democrat in over 230 races is campaigning on having passed it; the only actual bipartisan compromise is all on the Republicans’ side.

The moderate Democrats, and the bipartisan vote, are siding with the Republicans.  That is a fact.

But that doesn’t stop Barack Obama from demonizing Republicans.  Because he’s a demagogue and an ideologue, and that’s just what he does.

I recently expressed the same point in another article, along with pointing out other critical facts that make that article worth reading.  But the same rationale for keeping the taxes low on the middle class and the poor demands that we also keep the taxes low for the rich.  And if we don’t cut taxes for the rich, then let’s tax the bejeezus out of everyone.  Let’s start taxing the 47% of Americans who pay no federal income taxes whatsoever.  Let’s tax them out of their homes and into the poorhouse, and then let’s tax them out of the poorhouse and onto the street.  And then let’s impose a street tax.

Either that, or force Democrats to be consistent.  For just once in their lives.