Thursday, December 9, 2010

Inconvenient Compromise on the Millionaire's Tax Relief: Negotiating out of perceived weakness of Democrats?

Someone is about to give taxpayers' money to the millionaires among us and well meaning Democrats and patriots of this nation are saying: H*ll No! Democrats are raising hell because it is absolutely necessary. If the President does not know how to negotiate with bullies, how to deconstruct aggression, and how to hold tight against all odds, some well meaning Democrats are ready to stand up and be counted.

It is not enough to assume that Americans are unwilling to allow the Bush’s Tax cut to elapse at the end of the year because they do not want to take home a smaller check. If taking home a smaller check will make us be classified as purist, idealist or boneheads, so be it. Many of us in the poor and middle classes are hardly taking home anything as of now; by my last count, close to fifteen million Americans, except you consider the pittance unemployment insurance compensation, a huge check! Notice I used the term, compensation, not transfer payments. The huge tax break that the millionaires are about to receive through the negotiated agreement with the President, is probably going to be one of the hugest transfer payment of all time, considering that the wealth of the rich has increased in astronomical terms and values; and the multiplier effect of huge tax savings for the rich would quadruple with an improving commerce. Trading meager unemployment compensation for billions of dollars that the rich will continue to write off, if the Obama’s negotiated deal with Republicans is allowed to hold, does more disservice to the national debts and deficits than whatever contribution or job creation to the economy that is being touted by this Whitehouse. The impending doom from this negotiation can only be described in three words: an inconvenient compromise.

Too many times in the past two years, we have watched Republicans stand up as obstructionists to all that is in the interest of the middle- and low--income Americans. We virtually fought them for the health care reform law, we had to hose them down for the financial reform law, we had to bring them to their senses on the pollution impact of the BP’s oil spill; now, they want to arm string us and delude the public that compromising on the millionaire’s tax relief is good for us and the nation’s deficit. They want us to believe that Republicans have our welfare at heart and that if in the future, they ask for more, the President will use his veto power, a power he has refused to use at this time, when it is very crucial and expedient. This is about to lead to a Democratic Lawmaker mutiny in the house; a mutiny against the tyranny of unrepentant bullies. The Republicans are involved in blackmails and threats to get their way; and, many of us in the left are saying: Not this time, Jose! It is wise to halt the mould before it spreads over your roof!

The frustration with the negotiated arrangements with the Republicans on the extension of the Bush Tax cut comes out of the perception gap between what the President and Democrats in congress perceives to be in the best interest of the nation. Many Democrats appreciate that there is need for income mobility; however, the negotiation with Republicans on the extension of the Bush’s tax cut is not the way to go at this time. The Perception gap between some Democrats, majority in the left, and the President on the extension of the Bush’s Tax cut suggests that the President and his advisers are incensed and probably overstating the perceived contribution to job creation and the economy from extending the tax cut to the wealthy for two years or permanently.

The nation is hugely in debt and the negotiation or the framework for extending the Bush’s tax cut is about to add, another 700 billion dollars to the debt. Are we serious about the deficit and debt reduction as is being proclaimed by Republicans? Are Republicans actually seeing what this arrangement is going to net for the nation? It seems plausible that the negotiated deal will offer some reprieves for the unemployed in the short-term; but at what expense: billions of dollars to the rich? Wow, what is America turning out to be? Is our Democracy about to turn to a heartless and debt-ridden inconsiderate nation of 1% billionaires, with fat bank accounts, luxurious yachts, and 95% pauper homes or colonies, seeking the crumbs from the rich men and women tables, courtesy of Uncle Sam?

Besides the extension of unemployment benefits, real estate tax write-offs, paltry earned income credit, what else is in this negotiated arrangement for the middle and poor classes? There is no reason to believe that when the rich take their largesse from the continued tax cut from the Bush era, they will reinvest their loot or money in this economy. Rich people invest in enterprises that will give them the maximum yield or returns for their money. If the nation goes bankrupt from giving off money to the rich, the banks, the insurance companies and other foreign countries, except the majority of Americans, who is being hurt?

It is wise to understand the extent of the problem that this negotiated arrangement is about to bring on America. There should be a procedure for the ordinary man to measure the impact of the current arrangement on jobs creation, future taxes, social security and Medicare taxes, vis-à-vis, the survival of the welfare state, vis-à-vis, social security program reduced benefit payments to the elderly and the Republicans avowed intention to privatize the social security benefit program. To believe that Republicans mean well in their negotiations, is to believe the sky is purple! How on earth, can anyone guarantee how a rich man will spend his money in the future? This looks more like the misery of the thirteenth kind! Are we just to assume that the rich will do the right thing by reinvesting in America? Who can stand by this pronouncement? This is why the arrangement with Republicans by the President highlights the distributional and possible volatility effect on the welfare of the lower and middle class; and this is why many Democrats are against it.

The imposition of the President’s negotiated deal with the Republicans, either through a cautious deference to the office of the Presidency by the Democratic lawmakers in the coming days, may help a few middle and low income Americans in the short-run. However, in the long run, the rich will benefit far more than the two earlier income classes; either through higher returns from investment in human capital in a weak labor market, if in fact they end up putting money in job creation, or through political investments in politicians willing to extend the tax cut permanently, i.e., beyond the two- year time frame being touted as the arrangement with President Obama. The value of the arrangement with the Republicans seems very spooky. This is the same group of lawmakers who vehemently fought against reform to the financial system that nearly brought the economy down?

If I could leave you with one thought today it will be this: Even though the President of the United State meant well in negotiating this deal with the Republicans, it is the duty of free men and women in this Democracy to stand up against the blackmail from the Republicans. We cannot always depend on the President to hold brief for us in all cases; the elapsing Bush tax cut maybe one of those cases. Ordinary men and women fought against the King of England and won their independence in the dark ages; the rich, who have replaced the tyranny of the monarch in a representative Democracy, are doing the same obnoxious things that made us fight for independence: seek wealth from the poor, shift it to the rich and their cohorts, while attempting to convince the poor that they are getting a better deal than is possible come January; simply because the Republicans are going to be in the majority in the congressional house of representatives hardly justifies rolling over for them umpteenth time. The current arrangement with Republicans by President Obama is hardly palatable or tenable in this time of austerity.

So as those Republicans celebrate on winning some for their rich folks, it may be wise they realize that America belongs to us all; it hardly belongs solely to the rich. If the economy continues to tank, there wouldn’t be further wealth creation or taxes paid by the underclass so we can feed the greed of the rich; the human behavioral instincts for survival will set in and for those who have read the history books, you understand what went on with the tenant Uprisings in 1766, Shay's Rebellion in 1786 and the Whiskey Rebellion in the 1790s. These are events in American History and those who are familiar with the 1894 Coxey’s Army of unemployed workers and the Workingmen’s movement of 1830 probably appreciates the benefits of listening to the deprived and underclass at this time.

Post a Comment