House Democrats defy Obama on tax cut bill

[frigidmagi]

Politicalticker

Defying President Obama, House Democrats voted Thursday not to bring up the tax package that he negotiated with Republicans in its current form.

"This message today is very simple: That in the form that it was negotiated, it is not acceptable to the House Democratic caucus. It's as simple as that," said Democratic Congressman Chris Van Hollen.

"We will continue to try and work with the White House and our Republican colleagues to try and make sure we do something right for the economy and right for jobs, and a balanced package as we go forward," he said.

The vote comes a day after Vice President Biden made clear to House Democrats behind closed doors that the deal would unravel if any changes were made.

"Wow did the [White House] mishandle this," a senior House Democratic Source told CNN. "Breathtaking. Members have major substantive concerns and they should have gently guided people to the finish line."

Rep. Peter DeFazio of Oregon said: "They said take it or leave it. We left it."

Had added the caucus resolution is technically not binding, but believes House Speaker Nancy Pelosi "will follow the wishes of her caucus."

The vote came less than an hour after Obama himself urged Congress to pass the compromise he struck with GOP leaders earlier this week and warned that failing to do it could cost jobs.

"There is an important debate on Capitol Hill that will determine in part whether our economy moves backward or forward," Obama said at an Export Council meeting. "The bipartisan framework we have forged on taxes will not only protect working Americans from seeing a major tax increase on January 1, it will provide businesses with incentives to invest, grow, and hire."

"Every economist I have talked to or read over the last couple of days acknowledges that this agreement would boost economic growth in the coming years and has the potential to create millions of jobs," Obama continued. "The average American family will start 2011 knowing that there will be more money to pay the bills each month, more money to pay for tuition, more money to raise their children," he said. "But if this framework fails, the reverse is true. Americans will see it in smaller paychecks that will have the effect of fewer jobs."

Great, Barry is using Republican rhetoric now. Meanwhile the Congress Democrats are in open revolt. While I'm glad to see this, I wish they had done this about 8 months ago.

[SirNitram]

'Republican Rhetoric' on cuts that actually are proven to be stimulative(IE payroll vacations for workers)? This is getting stupid.

[Derek Thunder]

'Republican Rhetoric' on cuts that actually are proven to be stimulative(IE payroll vacations for workers)? This is getting stupid.

Tax cuts for the rich are stimulative too, but both have lower rates of return than infrastructure spending/aid to states/unemployment insurance.

Obama's accepting right-wing rhetoric in the sense of implicitly validating tax cuts as a legitimate means of providing economic stimulus. It's fighting on the Republican's rhetorical and policy turf, and they've spent 30 years practicing for that sort of ideological showdown.

Also, the accelerated depreciation in the bill will do next to nothing to stimulate the economy, as we do not have an investment problem but rather a demand problem.

[SirNitram]

So validating the entirely real point that some tax cuts are stimulative is right-wing rhetoric. Is this some wholesale rebellion against reality? And of course he speaks some. He's a centrist, he ran as a centrist in the Clinton mold, he was raised in Kansas. If a white constitutional law scholar from Kansas ran as a centrist would this nonsense be up? Centrist in this country means 'Right of center'.

[Derek Thunder]

So validating the entirely real point that some tax cuts are stimulative is right-wing rhetoric. Is this some wholesale rebellion against reality?

I'd recommend re-reading what I wrote. There's a difference between saying 'tax cuts are stimulative' which I concede, and saying 'tax cuts are a legitimate means of stimulus,' which they are not.

He's a centrist, he ran as a centrist in the Clinton mold

He also ran with a health care plan that included a public option and no consumer mandate to purchase insurance.

If a white constitutional law scholar from Kansas ran as a centrist would this nonsense be up?

I'm... not sure what you're trying to say with this.

[SirNitram]

THe last bit is biting sarcasm. People are getting stupid, and I frankly suspect alot of people are so because he's black. Expecting him to be progressive or liberal is a bit surprising. That health care plan is from the 90s GOP. So yes, centrist, in the Clinton mold. The mandate is a price control. As for the public option.. It was always a long shot, no matter how many people insist it's the compromise point in the beginning.

But at the core of this: How can tax cuts be stimulative, but not a legitimate means of stimulus?

[Derek Thunder]

But at the core of this: How can tax cuts be stimulative, but not a legitimate means of stimulus?

Because in many cases a dollar of tax cuts creates less stimulus than that dollar.

Here's Moody's on the multiplier effects of stimulus measures.

Granted, a payroll tax holiday/reduction has a better effect, but it's still less than ideal compared to state aid/infrastructure spending.

[SirNitram]

As I said in my reply to the earlier post on the compromise, this is a far from ideal deal. But that's okay, because if it does get pushed, the Dems have the majorities to reshape it via amendment. But I reject the idea that less-than-ideal is not 'legitimate'(Side note: Didn't I bring up that chart?).

And it's fun for political points, I'm discovering, as the GOP starts biting each other.

[Derek Thunder]

As I said in my reply to the earlier post on the compromise, this is a far from ideal deal. But that's okay, because if it does get pushed, the Dems have the majorities to reshape it via amendment. But I reject the idea that less-than-ideal is not 'legitimate'(Side note: Didn't I bring up that chart?).

I really hope that the Democrats are able to amend this bill to possibly add real stimulus or add another tier of unemployment benefits for the 99ers, but who knows.

I just hate this bill's provisions that would exacerbate the troubling inequality of wealth in this country. The estate tax in this bill would be less progressive than Bush's.

[SirNitram]

You realize Bush simply turned off the estate tax? Reinstating it at full rates for those over 5 million is alot more progressive than that. There hasn't been an estate tax for over a year, because of Bush.

[Derek Thunder]

You realize Bush simply turned off the estate tax? Reinstating it at full rates for those over 5 million is alot more progressive than that. There hasn't been an estate tax for over a year, because of Bush.

Oh, I know, but from 2001-2010 the exemption was significantly lower than 5 million and the top rate was higher. It's not being re-instated at 55% as it was under Clinton, it's being re-instated at 35%, which is lower than at any point during the Bush presidency.

[SirNitram]

Not Ideal.

But it's back, which is more progressive than 'Let's turn it off', so could we be honest about that? The 'As bad or worse than Bush' practically never stands to scrutiny.

[Derek Thunder]

But... if they had left it alone it would have reverted to a 55% with a 1 million dollar exemption on January 1st.

[SirNitram]

And UI would remain expired, and tax cuts on the working class would remain in position, and there'd be no AMT fix or EITC, either.

[Derek Thunder]

I think you're presenting a false dichotomy where either the Democrats take this deal or allow everything to revert. It's quite possible they could have gotten a much better deal by playing political and rhetorical hardball instead - Like how the Republicans do for everything ever.

[SirNitram]

I'm sorry, are you reading what I'm writing? Have I not already noted the Dems can amend it? Or is this now an attempt to score petty points when I've already knocked down your original points?

[Derek Thunder]

I'm sorry, are you reading what I'm writing? Have I not already noted the Dems can amend it? Or is this now an attempt to score petty points when I've already knocked down your original points?

I'm reading what you're writing, and;

- Tax cuts are still terrible stimulus, you didn't prove otherwise.
- The estate tax bargain is an awful deal which will exacerbate income inequality and increase the deficit.
- Accelerated depreciation is terrible stimulus too.
- Democrats can only amend the bill so much before Republicans withdraw their support.

Also, unemployment benefits have come up for a vote 5 times in the past two years and the Republicans, grudgingly, ended up voting for them, so I don't think getting these on their own was a lost cause with this congress.

I understand the whole "don't let the perfect be the enemy of the good" thing but after a certain amount of time you have to start walking away from lemons like these.

[The Cleric]

I'm wondering why an estate tax is needed at all. If my parents made a lot of money, have already paid taxes on it, and want to pass it to me, why should I have to pay for it again?

[SirNitram]

So what's the solution? Ignore it and the richest top tax cuts be made by the GOP majority in the House attaching it to every bill? Not even bother to help the unemployed or working class?

The unemployment insurance is not in effect now. The extra stuff needed.. And needed badly. It ran out. Where's the caving on the GOP side? I don't see it. They've in open revolt about it being in this deal.

[Derek Thunder]

I'm wondering why an estate tax is needed at all. If my parents made a lot of money, have already paid taxes on it, and want to pass it to me, why should I have to pay for it again?

Because they can't gift it to you without paying a gift tax, and its no different than any other taxable transfer of wealth.

Also, the whole dynastic wealth thing.

[The Cleric]

I'm wondering why an estate tax is needed at all. If my parents made a lot of money, have already paid taxes on it, and want to pass it to me, why should I have to pay for it again?

Because they can't gift it to you without paying a gift tax, and its no different than any other taxable transfer of wealth.

Also, the whole dynastic wealth thing.

And again I ask, why? The money was taxed when my parents earned it, why should they have it taxed again transferring it to next of kin after death? Why exactly is dynastic wealth a bad thing (excepting the potential for abuse that's present with any amount of money sufficient to purchase legal flexibility)? Why should the government get ANOTHER slice of the money that was earned fairly by my parents?

Please bear in mind that I stand to inherit no great sum of money; my parents are financially secure but not leaving me a trust fund. I'm not asking this because I'll lose something, just as a "this doesn't seem right" to me. Much like the fact that I pay more taxes than a couple with children do, but actually cause far less drain on the public dollar.

[Derek Thunder]

So what's the solution? Ignore it and the richest top tax cuts be made by the GOP majority in the House attaching it to every bill? Not even bother to help the unemployed or working class?

The unemployment insurance is not in effect now. The extra stuff needed.. And needed badly. It ran out. Where's the caving on the GOP side? I don't see it. They've in open revolt about it being in this deal.

I want the Democrats to play the hardest of hardball. Use unspent stimulus funds to pay for another 8 weeks of extended unemployment, wait for the new congress to be seated, allow the tax cuts to lapse, then say this to Republican leaders:

"You know how folks in the Tea Party tend to say "I demand that government be smaller except for those services which benefit me directly?" We are not going to assent to a tax cut for the rich, and any attempt will be vetoed. If this results in a government shutdown, the public will blame you, and you will suffer just like Newt Gingrich and his goons suffered in 1995. Agree to new extensions for unemployment and stimulative spending, and we will allow you to take all of the credit for giving a tax cut for all income below 250k. Refuse, and we will break you."

Maybe it wouldn't be so melodramatic, but it would be cool if it were.

I do wonder in the back of my mind whether this current deal is the only 'acceptable' one, but I have to hold out hope that the Republicans aren't politically invincible.

And again I ask, why? The money was taxed when my parents earned it, why should they have it taxed again transferring it to next of kin after death? Why exactly is dynastic wealth a bad thing (excepting the potential for abuse that's present with any amount of money sufficient to purchase legal flexibility)? Why should the government get ANOTHER slice of the money that was earned fairly by my parents?

Because for the recipient of the money it represents income not earned through labor or investment. It is the most idle of idle capital. You took no risks and bore no burdens to get it, so getting 50% of it represents no increase in pain (if you believe that taxes should impose an equal amount of pain). Also, a good deal of assets that are handed down are 'unrealized gains' such as stocks, bonds, and other investments which haven't been liquidated and thus haven't yet been subject to capital gains.

Also, you could make that argument for all sorts of income that's double-taxed. You're taxed when you earn money, then taxed again when you spend it (through sales taxes). Finally, the estate tax is marginal so taxes are only assessed on money above the exemption cap.

E: Keep in mind that charitable donations are not taxed and can reduce the taxable amount of an estate to below the cap, which would seem to encourage those sorts of donations.

[Destructionator XV]

Don't let the "don't let the perfect be the enemy of the good" be the enemy of America.

I've come to just fucking hate that statement. It makes two false assumptions and strawmans the other side at the same time. a) It assumes the "perfect" is unattainable, b) it assumes the given offer is good, and c) it characterizes any opposition as a black/white utopian perfection instead of whatever reality it is.

[Charon]

I want the Democrats to play the hardest of hardball. Use unspent stimulus funds to pay for another 8 weeks of extended unemployment, wait for the new congress to be seated, allow the tax cuts to lapse, then say this to Republican leaders:

"You know how folks in the Tea Party tend to say "I demand that government be smaller except for those services which benefit me directly?" We are not going to assent to a tax cut for the rich, and any attempt will be vetoed. If this results in a government shutdown, the public will blame you, and you will suffer just like Newt Gingrich and his goons suffered in 1995. Agree to new extensions for unemployment and stimulative spending, and we will allow you to take all of the credit for giving a tax cut for all income below 250k. Refuse, and we will break you."

Maybe it wouldn't be so melodramatic, but it would be cool if it were.

I do wonder in the back of my mind whether this current deal is the only 'acceptable' one, but I have to hold out hope that the Republicans aren't politically invincible

Except the Republicans have already been touting for months that if the tax rates go up it's the Democrats fault. Hell, one Representative has a big fucking countdown clock on their site titled "Countdown to Democrat Tax Hike" Utter bullshit and lunacy, but hey, it's the Republican party. There's also the fact that the Democratic party simply refuses to work together while the Republicans have thus far been having very few problems doing so. Which means the democrats, despite their technical majority, can't actually get anything passed on their own. Personally, I'd have been going up to the Democrats that are acting like the Republicans and going "You are going to vote for this or we are cutting you loose and good luck in your next election. Yes, we will take the chance that a Republican will take the seat, frankly we'll face just as much trouble from them as we have from you."