President Barack Obama’s
negotiations with Republicans over extending both the Bush tax cuts and
unemployment benefits reminded me of an episode of The Apprentice. In week 11, the Octane team of Clint and Steuart
was matched against the Fortitude team of Brandy and Liza. The task was to meet
with QVC officials and pick a product to sell on television. The team with the
highest sales would be declared the winner and the losers would have to face
Donald Trump in the board room.
On the helicopter ride from
New York City to QVC headquarters in Westchester, Pa., Clint concocted a
strategy to trick the women. Although Clint and Steuart wanted to sell purses
on TV, they pretended to want the watches as their first choice. In the
negotiations with team Fortitude, they allowed the women to select the watches
as their product; in a concession to the men, Octane was allowed to have a more
favorable second time slot. In the end, the men got exactly what they had
wanted all along.
In the negotiations between
President Obama and Republican leaders, President Obama was similarly duped.
Republicans played him by saying federal unemployment benefits would be
extended only if Obama agreed to extend the Bush tax cuts for all people,
including families earning more than $250,000 a year.
Instead of standing up to
Republicans who have already declared their top priority is to deny him
re-election in 2012, Obama wimped out. And he wimped out when he had the
overwhelming majority of the public on his side.
On the campaign trail, Obama
promised to extend the Bush tax cuts only for individuals earning less than
$200,000 and couples making less than $250,000. That would cover 98 percent of
all taxpayers. Even John Boehner, the incoming Speaker of the House, said he
would support a measure that did not include the tax breaks for the top 2
percent if that were his only choice. Under pressure from his Republican
colleagues, Boehner retracted his comment.
Extending the tax cuts for
the rich makes no sense. At a time when both Democrats and Republicans claim to
be concerned about the $1.4 trillion deficit, it will cost at least $80 billion
over the next two years to extend cuts for the wealthy. If they stay in place
for 10 years, the figure would rise to almost $700 billion, according to the
Congressional Budget Office.
More than half of the Bush
tax cuts of 2001 and 2006 will go solely to the richest 5 percent of Americans.
According to the Census Bureau, the gap between the richest and poorest
Americans is at its largest level since the government began tracking household
income in 1967.
Obama said he did not want to
risk damaging an already frail economy by standing up to the GOP on the tax
extension for the rich. He said in order to get an extension of unemployment
benefits, he had to compromise with Republicans and extend the cuts to everyone.
That was an enormous mistake.
Obama should have borrowed a page from Ronald Reagan and dared Republicans to
make his day. Let Senator Mitch McConnell and Rep. John Boehner explain to 98
of percent of Americans why they opposed legislation that would extend the tax
breaks to them but not the top 2 percent of earners. Let the GOP leaders
justify why those making $1 million or more should continue to get a tax break
averaging $100,000 a year.
See how far “the Party of No”
would get by denying additional unemployment benefits to the jobless in their home
districts. Republicans don’t mind playing a game of chicken with Obama because
they know they can count on him running off the road, usually before they even
start the engine.
Extending tax breaks to the
wealthy, which the Congressional Budget Office said is the least effective way
to stimulate the economy, was bad enough. But to cave in to “hostage-takers” --
Obama’s words, not mine – on the estate tax is even more indefensible.
Under current law, the first
$3.5 million of an estate ($7 million for couples) is exempt from taxes, with
the maximum rate of 45 percent on the remainder. The deal with Republicans
increases the estate exemption to $5 million ($10 million for couples) and sets
a maximum tax rate of 35 percent for the remainder. According to the Tax Policy
Center, this will provide $25 billion in tax reductions over the next two years
to the top 1 percent of estates.
The compromise with
Republicans wasn’t totally one-sided. In addition to a 13-week extension of
federal unemployment benefits, the package continues for two years the American
Opportunity Act that helps low- and middle-income families pay for college and
improvements in the Earned Income Tax Credit. It also contains a one-year
reduction of the Social Security payroll tax from 6.2 percent to 4.2 percent on
the first $106,800 in wages.
Many believe Obama could have
gotten those concessions without giving away the store.
Rep. Jesse Jackson, Jr., one
of Obama’s presidential co-chairs in 2008, said of his fellow Democrats: “…We
capitulated too much in the majority, and now we’re capitulating as if we’re
already in the minority. We’re acting like inexperienced poker players who fold
with a winning hand.”
George E. Curry, former editor-in-chief of Emerge magazine and the
NNPA News Service, is a keynote speaker, moderator, and media coach. He can be
reached through his Web site, www.georgecurry.com You can also follow him at www.twitter.com/currygeorge.
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