As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."

Friday, January 23, 2009

Amazingly, Negotiating With Ourselves Didn't Work

I know this is going to floor you, but the GOP is not satisfied with $300 billion in tax cuts in the economic recovery package, and Obama's extended hand of friendship was bitten off.

Just days after taking office vowing to end the political era of "petty grievances," President Obama ran into mounting GOP opposition yesterday to an economic stimulus plan that he had hoped would receive broad bipartisan support.

Republicans accused Democrats of abandoning the new president's pledge, ignoring his call for bipartisan comity and shutting them out of the process by writing the $850 billion legislation. The first drafts of the plan would result in more spending on favored Democratic agenda items, such as federal funding of the arts, they said, but would do little to stimulate the ailing economy.

Yep, the entire bill gives $800 billion to Robert Mapplethorpe, according to the GOP, and also the Dems are trying to beat up on those poor noble bankers (Republicans en masse voted against releasing TARP money to those same bankers, so I don't know how they'll pull off this "protect the bankers from tax-hiking libruls" trick, though consistency isn't their goal):

The House bill also would reverse a controversial change in tax regulations that the Treasury Department made last year at an estimated cost of $140 billion in lost revenue. The change, intended to encourage bank mergers, allows banks to shelter their own profits from taxes based on losses at companies they acquire. Treasury made the switch without public notice or congressional approval.

Here's the very sensible Republican alternative, that would just end taxes for a while and make everyone happy.

As expected, the GOP alternative focuses primarily on tax cuts over increased federal spending. After their meeting with the president, Republicans continued to express concern over the spending in the $825 billion package, even though Senate Minority Leader Mitch McConnell said Congress would likely meet Obama’s mid-February deadline.

Instead of a tax credit for individuals making $75,000 or less or families making less than $150,000, Republicans would like to reduce the tax rate by 5 percent on those Americans in the lowest tax brackets, from 15 percent to 10 percent and 10 percent to 5 percent [...]

If they had more of a say in the bill, Republicans would also like to allow small businesses to take a tax deduction equal to 20 percent of their earnings to "free up funds for small businesses to retain and hire new employees," according to talking points released after the meeting.

Republicans in the House would also like assurances in the bill that Congress will not raise taxes to pay down the $550 billion in federal spending laid out in the Democrats' bill.

In order to stabilize the housing market, Republicans would also like to grant a $7,500 tax credit to homebuyers who put down 5 percent on the purchase price of their home [...]

Boehner, in remarks on the White House driveway, warned that “government can’t solve this problem.”

I don't want to say that every tax break should be stricken from this package. Expanding eligibility for the child tax credit seems like a good idea, as does the higher education tax credit for tuition and textbooks. Getting money to those who will spend it is the point of a stimulus, and targeting funds at the low end of the income ladder makes some sense.

But when you start out saying that any bill must have 80 votes, OF COURSE the other side isn't going to leap at the first proposal. Going halfway at the beginning of the negotiation is a terrible strategy, not to mention the fact that the Republican caucus is far more conservative and unwilling to do anything but feed more tax cuts to their buddies when that's the worst stimulus multiplier there is.

Obama is still saying the bill will pass by President's Day, so it's possible he's seen the failure of extending the hand of friendship and will now just plow ahead. But we're still stuck with legislation that may be insufficient to get the economy going. Learning this negotiation lesson would be a plus, but it's an awful big price to pay. advice would be to offer the best possible plan that would get the votes needed necessary to pass instead of some fantasy of an 80-vote threshold, banking off the public goodwill with both the President and the concept of funding infrastructure, which even Frank Luntz recognizes the public is demanding and would pay higher taxes for.

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