Well, the outcome of the November midterm elections could have been worse—not much worse, but somewhat. According to an analysis published by the New York Times on October 24, nine days before the election, 68 Democratic candidates for seats in the House of Representatives were described as “most vulnerable.” According to final election returns, the Republicans have gained 62 seats, bringing their total up to 242, or 56 percent of the House. The last remaining undecided seat in Congress was that of Tim Bishop, an incumbent Democrat on the east end of Long Island, who was challenged by a very rich Republican, Randy Altschuler. Altschuler made the maximum amount of trouble in the counting of ballots, but in the end, he was forced to concede (with very bad grace).
As for the Senate, the Republicans needed to win 7 seats to gain a majority, and succeeded in picking up only 5, while Democrats triumphed over aggressively-campaigning Republicans in California, Connecticut, Delaware, Nevada, West Virginia and Washington State (as well as winning re-election in some states, such as New York, where the overall majority is traditionally Democratic). This means that the Democrats still have a slender majority of 51 votes — plus two nominal “independents.” One, Bernie Sanders of Vermont, votes Democratic except when he thinks the Democrats are being too conservative, and the other, Joe Lieberman of Connecticut, votes Democratic except when he thinks the Democrats are being too liberal, so the two of them tend to cancel each other out. This Democratic majority isn’t large enough to cut off filibustering, so the outlook is for stagnation in the Senate, any time the Democrats want to get anything meaningful done. The good news is that the Republicans don’t have enough votes to override a Presidential veto. That requires a two-thirds majority in both House and Senate of all voting members, which is to say (assuming that everybody has been rounded up to vote) 290 votes in the House, and 67 in the Senate.
Given the handsome majorities that the Democrats enjoyed just 2 years ago, the question arises, where was the slippage? Why did the Republicans do so well? In a story by Jim Rutenberg and Jeff Zeleny published in the NYTimes on November 4, the Republicans owed their victory to their carefully choreographed 2-year comeback program, but as I see it, the truth lies deeper. I’ve written before now of how the leftist component of the electorate has been undermined over the past half-century by the shift of an older & more affluent population into occupations that normally vote for the right; this phenomenon suggests that the Democratic victories of 2006 and 2008 were due to special circumstances, not long run or underlying tendencies. But beyond that, in 2010, were two other considerations. First, there was the continuing bad state of economy, and the high rate of unemployment, factors that have for decades and maybe even centuries played against the party in power. Second is the fact that the Democrats lost the election, as opposed to the Republicans winning it. This is a loss for which Barack Obama, above all else, can claim responsibility, since more than anything else what kept potential Democratic voters away from the polling booth was disenchantment with him and his policies. By his continued insistence on compromise, he showed himself not radical enough for the left, whether we’re talking health care reform, policing of the financial markets, or stimulus spending. At the same time, even in their eviscerated forms, these newly enacted acts came across as too radical for the right.
Alienating the left impacted primarily upon younger voters, many of whom had taken up Obama as a noble cause in 2008. The Times ran two stories, during the 2010 campaign, on how fewer younger voters were seeing themselves as Democrats this time around (September 3) and how younger voters felt less involved, even “abandoned” (November 1). But many older voters, especially among the aging flower children of the ‘60s, just couldn’t work up the enthusiasm to get out there and campaign, either (the Times didn’t do any individual stories on this that I noticed, but it’s so, nonetheless). The fact that Obama also came across as not conservative enough for the right undermined his standing with moderates and/or independent voters who had voted for conservative Democrats, the so-called “Blue Dogs.” These Democratic Congressmen & Senators therefore often chose to campaign on a platform of renouncing their own party’s leadership—a policy which seems to have led voters to think well, hell, if I’m going to vote against the Democratic leadership, I might as well vote Republican. When the final votes were counted, the carnage in the Democratic party in Congress was bloodiest among the Blue Dogs. On November 9, Matt Bai reported in the NY Times that the Blue Dog Caucus, which had been comprised of 54 Democrats, was instantly reduced by half, and the two top leaders of the caucus, Representatives Stephanie Herseth Sandlin of South Dakota and Baron P. Hill of Indiana, were among those who’d lost their seats in Congress.
Meanwhile, the Republicans, represented at their most extreme by Tea Party candidates, were out there hustling eagerly for votes. The last time that the Times reported on a survey of the Tea Party, way back on April 15, its members were more likely to be male, white, 45 or older, upper income, and college-educated, than the population as a whole (the survey was conducted by the Times & CBS). Yet when a later Times/CBS poll was conducted, this one of the electorate as a whole, and the Times published its results on October 28, it found that Republicans were making headway among women, lower income Americans and people in the age brackets of 30 to 44, too. More disquieting, 57 percent of registered voters surveyed indicated they’d be more willing this year to take a chance on a candidate with little previous political experience, and more than a quarter said they’d go with a candidate whose views they considered “extreme.” The Times, in its accompanying story by Jim Rutenberg and Megan Thee-Brenan, described these attitudes as representative of a nation “politically disquieted and disappointed in its current trajectory,” a phrase that suggested dissatisfaction with both the economy and the reigning Democrats. But the Republicans were doing everything they could to enhance this dissatisfaction, aided by vast quantities of corporate funds channeled through the anonymous “non-profit” organizations that have been newly sanctioned by the Roberts Supreme Court, and appealing particularly to seniors with a blizzard of ads that accused the Democrats of voting for billions of dollars in cuts to Medicare. This claim was not only grossly distorted (as Jennifer Steinhauer explained in a piece in the NYTimes for October 31), but also (I add) hypocritical in the extreme, since the Tea Party is the one that is calling for putting Medicare and Social Security either out of business entirely, grossly cut back, and/or privatized. Privatizing, of course, would render such benefits both more expensive & more unreliable (as Steinhauer pointed out, most of the recent increases in Medicare expenses have come about through the Medicare Advantage plans that are administered by private insurance companies: in 2010, they cost the government 9 percent more than traditional, single-payer fee-for-service treatment would have).
Another clever trick that the Republicans employed was to fan the flames of religious bigotry, attacking a plan to build a mosque near Ground Zero in New York, and, in Oklahoma, proposing a state constitutional amendment outlawing the use of Islamic law in the courts. Islamic law, of course, has never been used in any court in Oklahoma, but fear of it drove a high Republican turnout to the polls in Oklahoma, enacting the proposed amendment by a 70 percent majority, giving Republicans veto-proof control of the state legislature and electing a Republican governor for the first time. According to a NY Times editorial for November 29, Republicans in other states are now talking of enacting similar measures, even though a judge has already issued a restraining order against Oklahoma’s blatant disregard of the First Amendment. “The voters of Oklahoma were badly misled by demagogues into passing a profoundly un-American measure,” the Times editorial said. “Now it is up to the federal courts to prevent the hatred from spreading further.”
WHO REALLY VOTED FOR WHOM?
Once the dust had settled, the Times published a mop-up survey on November 7, telling who–upon the basis of exit polls– had actually voted for whom (this survey was conducted by a firm paid by a consortium of ABC News, CBS News, CNN, Fox News, NBC News and The Associated Press). The headline for the page of charts was, “Rightward, March: sometimes by margins not seen since 1982, Democrats lost a long list of voters: Catholics, independents, voters 60 and older.” Certainly, the 47 little charts themselves made very sorry reading for a loyal Democrat like myself, yet when I started to analyze them, I realized that there was more to be said. In every chart, the little blue lines denoting the percentage of the vote received by Democrats over the past four elections trended downward in 2010, while the little red Republican line trended upward, but in 19 out of the 47 charts, Democratic votes still outnumbered Republican ones, suggesting that the percentages indicated by the lines were not the entire story. The text block summarizing the charts, by Marjorie Connelly, said that “Republicans received a majority of women’s votes,” but, if one looked at the chart, the margin of Republican victory was only 51 percent to 49. “Catholics, independents and voters age 60 and older also sided with Republicans by margins not seen since 1982,” Connelly continued.
However, looking a little further, these margins were amplified by the fact that larger percentages of voters participated in certain categories and smaller percentages in others. This showed up particularly in the age breakdowns: 11 percent of the voters belonged in the category of men and women aged 18 to 29, and 58 percent of them had voted Democratic, but the total number of men and women in that age bracket constitutes 14 percent of the U.S. population—in other words, the young didn’t turn out to vote in proportion to their numbers. On the other hand, 34 percent of the total voters polled belonged in the age bracket of 60 plus, where 58 percent had voted Republican, but persons in that age bracket constitute only 17 percent of the population. Truly, this was a vote of age against youth, with age upset enough to turn out en masse, while a goodly number of the young didn’t see that their interests were affected. It was also an election in which Republicans turned out slightly more often than Democrats or independents did, and a year in which proportionately more men voted than women—Republicans and men both being categories of voter more likely to opt for Republican candidates.
WHERE DOES THIS LEAVE US NOW?
Much as I hate to admit it, the election returns do indicate a substantial degree of disenchantment with Democratic programs & elected officials, and an equally substantial degree of support for Republican campaign slogans & shibboleths, however misguided I may consider them. And I do consider their economic proposals not only misguided but downright stupid, the kind of pandering to wish fulfilment that denies the fundamental facts of economic life and adds up to Know Nothingism. The talk of phasing out Social Security, unemployment insurance and Medicare is not only evidence of gross selfishness on the part of people who are wealthy enough so they don’t need these programs, but also the surest guarantee of economic disaster. Listen to David Frum, an online political commentator allowed to expound in the NY Times Sunday magazine for November 14. “Even from a conservative point of view,” he argues, “the welfare state is not all bad.” Specifically, the income guarantees put into place in the 1930s and again in the ‘60s act as “automatic stabilizers,” ensuring that although people may have lost jobs or otherwise encountered expenses they can’t afford, they will still have enough money to buy food and clothing, and this means that to at least a minimal degree, the economy will continue to function—“unlike in 1929-33, when the whole economy collapsed upon itself.” Frum cites the teachings of Milton Friedman, a conservative economist, as well as John Maynard Keynes in support of this position.
Even these Draconian – and misguided — measures, however, are not enough to satisfy the most selfish & reactionary members of the Republican right. According to Jeffrey Rosen, writing in the NY Times Sunday magazine two weeks later, one newly elected Tea Party senator, Mike Lee of Utah wants to dismantle both the Department of Education and the Department of Housing and Urban Development, on the grounds that they’re unconstitutional (and besides, their programs help a lot of poor people who vote Democratic). He would also repeal the 16th Amendment, enacted in 1913, which authorizes the progressive federal income tax, and the 17th Amendment, also enacted in 1913, which allows senators to be elected by direct popular vote, instead of the state legislatures. One wonders why he doesn’t want to repeal the 13th Amendment, abolishing slavery in 1865, or the 19th Amendment, giving women the right to vote in 1920—after all, if he is really serious about taking the Constitution back to the 18th century, why be so selective? Or is it only those issues that appeal to 21st century voters that he’s really enthusiastic about—and if so, is he prepared to admit that 21st century voters are different from 18th century ones? It’s the inconsistency here that I find particularly pathetic.
Alas, the Democratic response to all of this is equally depressing. Even they are talking about cutting back on government expenditures — even in the midst of a deep recession — and trying to reduce the deficit—while at the same time, equally inconsistently, avoiding the issue of whether or not to renew the Bush-era tax cuts for the wealthy, scheduled to expire at the end of 2010. Permitting the tax cuts for the wealthy to be extended will increase the deficit, while at the same time doing little if anything to stimulate demand, as millionaires already have more than enough money to spend. If they aren’t spending it, giving them yet more to hoard is not going to help matters.
The President's leadership on this whole issue has been at least as much as, if not more than, what Republicans applaud, as opposed to what would make his own party happy (or anyway, its liberal wing). On Monday, November 29, he declared a two-year pay freeze for civilian federal workers. Now that will cut into the money that the labor force has to spend (and incidentally outrage union workers, who have been among the Democrats’ most faithful supporters). Its only rationale was that it might help with deficit reduction. Yet only days later, the President announced that he'd made a "deal" with the Republicans to settle the issue of the Bush-era tax cuts---in a way that, on the face of it, will expand the deficit.
Obama proposed that all the Bush-era tax cuts be extended, both those for the middle class (which he has long favored) and those for the upper class (which he has said in the past he opposed). In return, he expected that the Republicans will agree to continue unemployment insurance, which the Democrats want but the Republicans have been resisting. Further features of the proposal include favors for the very rich in the matter of estate taxes, and further favors for the middle class through other forms of tax abeyance. Purists like Paul Krugman are still bitching that the stuff the Republicans are getting will last longer than the stuff that the Democrats would get under the terms of this deal, but hey, the Democrats in Congress have had all year to work out a solution to the tax-cut dilemma, and they simply haven't done it. Moreover, any "solution" that might take place after January 1, when the Republicans are in control of the House and able to filibuster in the Senate, is going to be worse than what Obama is offering now.
WHAT WILL HELP?
Actually, the only thing that is really going to help with deficit reduction is if the economy picks up—which in turn will mean that the income from taxes will increase. This was really what enabled Bill Clinton to reduce the deficit when he was in office. And – hold on to your hats, folks – but it looks to me as though there were a few hopeful signs on the horizon. To be sure, the Federal Reserve Bank continues to project a 9 percent unemployment rate for the entirety of 2011, nor is the stock market making me feel optimistic, this time around. Although it has had some good days, it’s also had some bad ones, spooked on many recent occasions by the debt problems of Ireland and Portugal so that on the whole, it has been oscillating between 11,000 on the Dow and let-us-say 11,400. Still, on the plus side, corporate profits broke all records for the 3rd quarter of 2010, according to a Commerce Department report covered by Catherine Rampell in the NY Times for November 24, and the economy as a whole (according to the Commerce Department at the same time) grew at a slightly faster pace than originally estimated– 2.5 percent a year in inflation-adjusted terms, as opposed to the 2 percent originally estimated and 1.7 percent in the preceding (second) quarter. Consumer spending, wages and salaries also rose in the third quarter, leading retailers to hope for a merrier Christmas season than in the previous two years. And, according to stories in the Times by Stephanie Clifford, Verne G. Kopytoff and Liz Robbins, on November 29th and 30th, the Thanksgiving weekend did encourage a lot of shoppers to go out and buy – or, on the following Monday, to order gifties over the web. We’re not talking boom times, by any wild stretch of the imagination, and what’s good now might easily go sour in the new year, but for the moment I’m feeling a tad optimistic.
As for the Senate, the Republicans needed to win 7 seats to gain a majority, and succeeded in picking up only 5, while Democrats triumphed over aggressively-campaigning Republicans in California, Connecticut, Delaware, Nevada, West Virginia and Washington State (as well as winning re-election in some states, such as New York, where the overall majority is traditionally Democratic). This means that the Democrats still have a slender majority of 51 votes — plus two nominal “independents.” One, Bernie Sanders of Vermont, votes Democratic except when he thinks the Democrats are being too conservative, and the other, Joe Lieberman of Connecticut, votes Democratic except when he thinks the Democrats are being too liberal, so the two of them tend to cancel each other out. This Democratic majority isn’t large enough to cut off filibustering, so the outlook is for stagnation in the Senate, any time the Democrats want to get anything meaningful done. The good news is that the Republicans don’t have enough votes to override a Presidential veto. That requires a two-thirds majority in both House and Senate of all voting members, which is to say (assuming that everybody has been rounded up to vote) 290 votes in the House, and 67 in the Senate.
Given the handsome majorities that the Democrats enjoyed just 2 years ago, the question arises, where was the slippage? Why did the Republicans do so well? In a story by Jim Rutenberg and Jeff Zeleny published in the NYTimes on November 4, the Republicans owed their victory to their carefully choreographed 2-year comeback program, but as I see it, the truth lies deeper. I’ve written before now of how the leftist component of the electorate has been undermined over the past half-century by the shift of an older & more affluent population into occupations that normally vote for the right; this phenomenon suggests that the Democratic victories of 2006 and 2008 were due to special circumstances, not long run or underlying tendencies. But beyond that, in 2010, were two other considerations. First, there was the continuing bad state of economy, and the high rate of unemployment, factors that have for decades and maybe even centuries played against the party in power. Second is the fact that the Democrats lost the election, as opposed to the Republicans winning it. This is a loss for which Barack Obama, above all else, can claim responsibility, since more than anything else what kept potential Democratic voters away from the polling booth was disenchantment with him and his policies. By his continued insistence on compromise, he showed himself not radical enough for the left, whether we’re talking health care reform, policing of the financial markets, or stimulus spending. At the same time, even in their eviscerated forms, these newly enacted acts came across as too radical for the right.
Alienating the left impacted primarily upon younger voters, many of whom had taken up Obama as a noble cause in 2008. The Times ran two stories, during the 2010 campaign, on how fewer younger voters were seeing themselves as Democrats this time around (September 3) and how younger voters felt less involved, even “abandoned” (November 1). But many older voters, especially among the aging flower children of the ‘60s, just couldn’t work up the enthusiasm to get out there and campaign, either (the Times didn’t do any individual stories on this that I noticed, but it’s so, nonetheless). The fact that Obama also came across as not conservative enough for the right undermined his standing with moderates and/or independent voters who had voted for conservative Democrats, the so-called “Blue Dogs.” These Democratic Congressmen & Senators therefore often chose to campaign on a platform of renouncing their own party’s leadership—a policy which seems to have led voters to think well, hell, if I’m going to vote against the Democratic leadership, I might as well vote Republican. When the final votes were counted, the carnage in the Democratic party in Congress was bloodiest among the Blue Dogs. On November 9, Matt Bai reported in the NY Times that the Blue Dog Caucus, which had been comprised of 54 Democrats, was instantly reduced by half, and the two top leaders of the caucus, Representatives Stephanie Herseth Sandlin of South Dakota and Baron P. Hill of Indiana, were among those who’d lost their seats in Congress.
Meanwhile, the Republicans, represented at their most extreme by Tea Party candidates, were out there hustling eagerly for votes. The last time that the Times reported on a survey of the Tea Party, way back on April 15, its members were more likely to be male, white, 45 or older, upper income, and college-educated, than the population as a whole (the survey was conducted by the Times & CBS). Yet when a later Times/CBS poll was conducted, this one of the electorate as a whole, and the Times published its results on October 28, it found that Republicans were making headway among women, lower income Americans and people in the age brackets of 30 to 44, too. More disquieting, 57 percent of registered voters surveyed indicated they’d be more willing this year to take a chance on a candidate with little previous political experience, and more than a quarter said they’d go with a candidate whose views they considered “extreme.” The Times, in its accompanying story by Jim Rutenberg and Megan Thee-Brenan, described these attitudes as representative of a nation “politically disquieted and disappointed in its current trajectory,” a phrase that suggested dissatisfaction with both the economy and the reigning Democrats. But the Republicans were doing everything they could to enhance this dissatisfaction, aided by vast quantities of corporate funds channeled through the anonymous “non-profit” organizations that have been newly sanctioned by the Roberts Supreme Court, and appealing particularly to seniors with a blizzard of ads that accused the Democrats of voting for billions of dollars in cuts to Medicare. This claim was not only grossly distorted (as Jennifer Steinhauer explained in a piece in the NYTimes for October 31), but also (I add) hypocritical in the extreme, since the Tea Party is the one that is calling for putting Medicare and Social Security either out of business entirely, grossly cut back, and/or privatized. Privatizing, of course, would render such benefits both more expensive & more unreliable (as Steinhauer pointed out, most of the recent increases in Medicare expenses have come about through the Medicare Advantage plans that are administered by private insurance companies: in 2010, they cost the government 9 percent more than traditional, single-payer fee-for-service treatment would have).
Another clever trick that the Republicans employed was to fan the flames of religious bigotry, attacking a plan to build a mosque near Ground Zero in New York, and, in Oklahoma, proposing a state constitutional amendment outlawing the use of Islamic law in the courts. Islamic law, of course, has never been used in any court in Oklahoma, but fear of it drove a high Republican turnout to the polls in Oklahoma, enacting the proposed amendment by a 70 percent majority, giving Republicans veto-proof control of the state legislature and electing a Republican governor for the first time. According to a NY Times editorial for November 29, Republicans in other states are now talking of enacting similar measures, even though a judge has already issued a restraining order against Oklahoma’s blatant disregard of the First Amendment. “The voters of Oklahoma were badly misled by demagogues into passing a profoundly un-American measure,” the Times editorial said. “Now it is up to the federal courts to prevent the hatred from spreading further.”
WHO REALLY VOTED FOR WHOM?
Once the dust had settled, the Times published a mop-up survey on November 7, telling who–upon the basis of exit polls– had actually voted for whom (this survey was conducted by a firm paid by a consortium of ABC News, CBS News, CNN, Fox News, NBC News and The Associated Press). The headline for the page of charts was, “Rightward, March: sometimes by margins not seen since 1982, Democrats lost a long list of voters: Catholics, independents, voters 60 and older.” Certainly, the 47 little charts themselves made very sorry reading for a loyal Democrat like myself, yet when I started to analyze them, I realized that there was more to be said. In every chart, the little blue lines denoting the percentage of the vote received by Democrats over the past four elections trended downward in 2010, while the little red Republican line trended upward, but in 19 out of the 47 charts, Democratic votes still outnumbered Republican ones, suggesting that the percentages indicated by the lines were not the entire story. The text block summarizing the charts, by Marjorie Connelly, said that “Republicans received a majority of women’s votes,” but, if one looked at the chart, the margin of Republican victory was only 51 percent to 49. “Catholics, independents and voters age 60 and older also sided with Republicans by margins not seen since 1982,” Connelly continued.
However, looking a little further, these margins were amplified by the fact that larger percentages of voters participated in certain categories and smaller percentages in others. This showed up particularly in the age breakdowns: 11 percent of the voters belonged in the category of men and women aged 18 to 29, and 58 percent of them had voted Democratic, but the total number of men and women in that age bracket constitutes 14 percent of the U.S. population—in other words, the young didn’t turn out to vote in proportion to their numbers. On the other hand, 34 percent of the total voters polled belonged in the age bracket of 60 plus, where 58 percent had voted Republican, but persons in that age bracket constitute only 17 percent of the population. Truly, this was a vote of age against youth, with age upset enough to turn out en masse, while a goodly number of the young didn’t see that their interests were affected. It was also an election in which Republicans turned out slightly more often than Democrats or independents did, and a year in which proportionately more men voted than women—Republicans and men both being categories of voter more likely to opt for Republican candidates.
WHERE DOES THIS LEAVE US NOW?
Much as I hate to admit it, the election returns do indicate a substantial degree of disenchantment with Democratic programs & elected officials, and an equally substantial degree of support for Republican campaign slogans & shibboleths, however misguided I may consider them. And I do consider their economic proposals not only misguided but downright stupid, the kind of pandering to wish fulfilment that denies the fundamental facts of economic life and adds up to Know Nothingism. The talk of phasing out Social Security, unemployment insurance and Medicare is not only evidence of gross selfishness on the part of people who are wealthy enough so they don’t need these programs, but also the surest guarantee of economic disaster. Listen to David Frum, an online political commentator allowed to expound in the NY Times Sunday magazine for November 14. “Even from a conservative point of view,” he argues, “the welfare state is not all bad.” Specifically, the income guarantees put into place in the 1930s and again in the ‘60s act as “automatic stabilizers,” ensuring that although people may have lost jobs or otherwise encountered expenses they can’t afford, they will still have enough money to buy food and clothing, and this means that to at least a minimal degree, the economy will continue to function—“unlike in 1929-33, when the whole economy collapsed upon itself.” Frum cites the teachings of Milton Friedman, a conservative economist, as well as John Maynard Keynes in support of this position.
Even these Draconian – and misguided — measures, however, are not enough to satisfy the most selfish & reactionary members of the Republican right. According to Jeffrey Rosen, writing in the NY Times Sunday magazine two weeks later, one newly elected Tea Party senator, Mike Lee of Utah wants to dismantle both the Department of Education and the Department of Housing and Urban Development, on the grounds that they’re unconstitutional (and besides, their programs help a lot of poor people who vote Democratic). He would also repeal the 16th Amendment, enacted in 1913, which authorizes the progressive federal income tax, and the 17th Amendment, also enacted in 1913, which allows senators to be elected by direct popular vote, instead of the state legislatures. One wonders why he doesn’t want to repeal the 13th Amendment, abolishing slavery in 1865, or the 19th Amendment, giving women the right to vote in 1920—after all, if he is really serious about taking the Constitution back to the 18th century, why be so selective? Or is it only those issues that appeal to 21st century voters that he’s really enthusiastic about—and if so, is he prepared to admit that 21st century voters are different from 18th century ones? It’s the inconsistency here that I find particularly pathetic.
Alas, the Democratic response to all of this is equally depressing. Even they are talking about cutting back on government expenditures — even in the midst of a deep recession — and trying to reduce the deficit—while at the same time, equally inconsistently, avoiding the issue of whether or not to renew the Bush-era tax cuts for the wealthy, scheduled to expire at the end of 2010. Permitting the tax cuts for the wealthy to be extended will increase the deficit, while at the same time doing little if anything to stimulate demand, as millionaires already have more than enough money to spend. If they aren’t spending it, giving them yet more to hoard is not going to help matters.
The President's leadership on this whole issue has been at least as much as, if not more than, what Republicans applaud, as opposed to what would make his own party happy (or anyway, its liberal wing). On Monday, November 29, he declared a two-year pay freeze for civilian federal workers. Now that will cut into the money that the labor force has to spend (and incidentally outrage union workers, who have been among the Democrats’ most faithful supporters). Its only rationale was that it might help with deficit reduction. Yet only days later, the President announced that he'd made a "deal" with the Republicans to settle the issue of the Bush-era tax cuts---in a way that, on the face of it, will expand the deficit.
Obama proposed that all the Bush-era tax cuts be extended, both those for the middle class (which he has long favored) and those for the upper class (which he has said in the past he opposed). In return, he expected that the Republicans will agree to continue unemployment insurance, which the Democrats want but the Republicans have been resisting. Further features of the proposal include favors for the very rich in the matter of estate taxes, and further favors for the middle class through other forms of tax abeyance. Purists like Paul Krugman are still bitching that the stuff the Republicans are getting will last longer than the stuff that the Democrats would get under the terms of this deal, but hey, the Democrats in Congress have had all year to work out a solution to the tax-cut dilemma, and they simply haven't done it. Moreover, any "solution" that might take place after January 1, when the Republicans are in control of the House and able to filibuster in the Senate, is going to be worse than what Obama is offering now.
WHAT WILL HELP?
Actually, the only thing that is really going to help with deficit reduction is if the economy picks up—which in turn will mean that the income from taxes will increase. This was really what enabled Bill Clinton to reduce the deficit when he was in office. And – hold on to your hats, folks – but it looks to me as though there were a few hopeful signs on the horizon. To be sure, the Federal Reserve Bank continues to project a 9 percent unemployment rate for the entirety of 2011, nor is the stock market making me feel optimistic, this time around. Although it has had some good days, it’s also had some bad ones, spooked on many recent occasions by the debt problems of Ireland and Portugal so that on the whole, it has been oscillating between 11,000 on the Dow and let-us-say 11,400. Still, on the plus side, corporate profits broke all records for the 3rd quarter of 2010, according to a Commerce Department report covered by Catherine Rampell in the NY Times for November 24, and the economy as a whole (according to the Commerce Department at the same time) grew at a slightly faster pace than originally estimated– 2.5 percent a year in inflation-adjusted terms, as opposed to the 2 percent originally estimated and 1.7 percent in the preceding (second) quarter. Consumer spending, wages and salaries also rose in the third quarter, leading retailers to hope for a merrier Christmas season than in the previous two years. And, according to stories in the Times by Stephanie Clifford, Verne G. Kopytoff and Liz Robbins, on November 29th and 30th, the Thanksgiving weekend did encourage a lot of shoppers to go out and buy – or, on the following Monday, to order gifties over the web. We’re not talking boom times, by any wild stretch of the imagination, and what’s good now might easily go sour in the new year, but for the moment I’m feeling a tad optimistic.