Why This Tax Cut Deal Sucks

Filed in National by on December 7, 2010

This was the hill to die on.

If you have any desire to cut the deficit, you don’t extend these cuts.

For months, Obama has fought off attacks from the right, saying that he has exploded the deficit.  Of course, part of this is due to the current economic conditions and much of it has been inherited.  I used to think that this was a sign of stupidity on the part of the teapartiers, but it is worse than that.  Their support of these tax cut extensions shows them to be disinterested in actually controlling of the deficit and debt.  Rather, they just want tax cuts, no matter the cost to their precious grandchildren.

If you want to promote business investment and job creation, you don’t extend these cuts.

There has been a lot of bullshit in the past few weeks about how we were killing jobs by taxing S-Corp “Job Creators”.  This tax cut extension will only further the hoarding of wealth by these individuals.  Let me explain:

If a business generated $2M in sales and paid out $1M in raw materials, employees, expenses, etc. it has made $1M in profit.  That profit is what the owner is taxed on. You will note that he has already paid his employees.  So if his taxes are lower on that million in profit, it makes sense for him to pay the taxes and put that money in the bank.  And for the next 2 years, that tax difference is around 2.5%/year (or about $25,000).  However, a higher tax rate on his profits, makes it marginally more advantageous to reinvest some of those profits in employees, raw materials, supplies, etc. to avoid the higher tax rate.

We can argue and have an adult discussion about whether it is morally right to tax the wealthy, but let’s not have a bullshit discussion that the taxes are job killing as some disingenuous business interests are trying to peddle.

For now, I am left in the unenjoyable position of hoping that Nancy Pelosi stands her ground and saves the country.  I think she’s up to it, but for how long can she hold out?

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  1. anon says:

    She is rich and is retirement-eligible (even if not really ready). So Nancy can take the heat if she wants to.

  2. anon says:

    If I were Nancy I’d still be pissed about spending political capital to deliver a public option while Obama negotiated it away behind her back, and then talking her into voting for the HCR deal. Not only voting for it, but spending even more political capital to get it through. Fool me twice, shame on me. So yeah, if she has a backbone she will fight to kill the tax deal.

    Hell, the teabaggers ought to kill it on spending issues alone. I’d like to see Nancy and Bachmann leading the revolt.

    Anyone who uses UI and middle class tax cuts as an argument for the deal, is underestimating the willingness of ordinary Americans to take a hit in order to do the right thing. Americans respect a fighter for principle.

  3. pandora says:

    One of the problems is that the voters care about their tax cuts more than other people’s. So… if they get their cuts and the rich get their cuts it’s not a big deal. If only the rich got tax cuts, there would be a problem.

    It’s sad, but it’s kinda like people with a job making unemployment benefits their number one priority. We are very selfish.

    I wouldn’t mind if Pelosi stands her ground, but, then again, I’m not on the front lines. We are employed. Not sure I’d be willing to take this hit if we were in the unemployment line, or if a tax increase would impact our lives.

    I don’t like this compromise, but I will admit I have the luxury of not liking it.

    It’s a complicated mess, with pluses and minuses on both sides.

  4. donviti says:

    Obama was against it before it is the main reason why it sucks. He totally flip flopped and now looks like an amazingly weaker President than I had originally thought.

    wow, just wow.

    I guess Obama is the Chauffeur driving us into the ditch now…

  5. anon says:

    I don’t like this compromise, but I will admit I have the luxury of not liking it.

    Having a secure income and health care, secure no matter who is in power, is a powerful bubble to live in. But if you don’t have those things, you see politics in a different light.

    Blogging is a pastime of the upper middle class. People who make the median income or below don’t blog, for the most part. So when you read a blog you have to take the selection bias into account.

    Noblesse oblige

  6. Jason330 says:

    As an s-Corp I hereby confirm that LiberalGeek is 100% correct in his assessment.

  7. anon says:

    By 2012 the only people who want Obama to be re-elected will be Iran.

  8. Capt.Willard says:

    “I guess Obama is the Chauffeur driving us into the ditch now…” GREAT line donviti !

  9. Capt.Willard says:

    Things fall apart; the President cannot hold;
    Mere anarchy is loosed upon the world,
    And what rough beast, its hour come round at last,
    Slouches towards Washington to be born? – W.B.Yeats corrupted for my selfish purposes. I apologize to his shade.

  10. donviti says:

    What’s really, really neato about this deal is in 2 years, we get to have the battle all over.

    what happens in 2012? Anyone? Anyone?

    I can’t even imagine how this plays out. (not)

  11. anon2 says:

    Good point Don–do these expire before or after the 2012 election? Repubs are probably thinking that a Repub will win the White House and then make the cuts permanent for the rich and all will be right with the world.

  12. anon says:

    Obama feeling heat, schedules press conference for 2:20 today.

    I’m betting he is going to use the bully pulpit to defend tax cuts for the rich. All the while telling us he opposes them and has no choice.

    Is it too early to drink?

  13. anon says:

    I am suddenly remembering Obama is a lawyer, not an economist.

  14. donviti says:

    You should try to remember he is a politician.

  15. anon says:

    The liberals are revolting!

    Watch out Obama, here comes the pendulum.

    A serious, committed revolt by everybody left of center could make the Tea Party look like… a tea party.

  16. anon says:

    Obama presser coming up on CSPAN3


  17. anonLIVE! says:

    Obama: “Yes I sold you out, but look how many pieces of silver I got!”

  18. anonLIVE! says:

    “I wanted to fight…”

    “We can’t afford the tax cuts for the rich. So I will fight to end them… two years from now”

  19. anonLIVE! says:

    Now questions. The press smells blood in the water.

    First question: “Why should anyone believe anything you say now?”

    Obama with long answer blaming the Senate.

  20. liberalgeek says:

    These tax cuts were the Republicans Holy Grail […so I gave it to them]

  21. anonLIVE! says:

    Q. Yes, but what about the last 2 years? Why didn’t you fight then?

    Obama: blames Senate again. Now he’s gonn blame the House… wait for it… wait for it…

    YES! Blames Boehner.

  22. anonLIVE! says:

    Just to let you know, I had another DL browser crash and missed the question. Obama talking now. Says his deal will help growth and jobs.

  23. anonone says:

    Does anybody else think he looks aged and tired?

  24. anonLIVE! says:

    Obama again: “Look how many pieces of silver I got!”

  25. anonLIVE! says:

    Q. “More jobs? Really?

  26. anonLIVE! says:

    “Does anybody else think he looks aged and tired?”

    That happens to all Presidents. Plus, he had a bad week taking crap from liberal Congressmen.

  27. anonLIVE! says:

    Holy Crap – O. uses a hostage analogy… not to attack the GOP, but to justify the deal.

  28. liberalgeek says:

    The polls are on our side on this issue [But I gave in anyway].

  29. anonLIVE! says:

    Q. “Aren’t you a crappy negotiator? Won’t Repubs just force you to capitulate over and over again?”

    (“capitulate” is verbatim. The press is talking like netroots now)

    Obama: ” I’ll fight the Repubs on the little stuff, just not health care and taxes.”

  30. liberalgeek says:

    Awesome question by Chuck Todd: Don’t you think that you have given the R’s a blueprint to beat you for the next two years?

  31. anonLIVE! says:

    Q: “Will you push for a broader overhaul of tax code?”


    Obama: “We need to have a broad-based discussion…”

    (Behind that door are the Fair/Flat taxers and the Paul Ryan roadmap…)

    Obama covers now by launching into some kind of stump speech from 2008. On autopilot, he even includes his old language against the tax cuts for the rich.

  32. anonLIVE! says:

    Q: “Won’t the Repubs kick your ass in the debt ceiling debate?”

    Obama: “I’ll take John Boehner at his word.. Nobody is willing to see the US collapse…”

    (is it too early to drink?)

  33. anonone says:

    He still thinks that the repubs negotiate in good faith.

  34. Jason330 says:

    Wow. This sounds brutal. You’d think that it could serve as some sort of wake up call. I understand that it won’t, but still…

  35. liberalgeek says:

    Mr. President, what are your core values? What are you willing to go to the mat on?

  36. anonLIVE! says:

    Q: “What the fuck are your core values? What WILL you fight for? aren’t you going to get your ass kicked in 2012?”

    Obama: “I’ve got a whole BUNCH of lines in the sand.” (verbatim)

    hoo boy – that’s a keeper

  37. anonLIVE! says:

    Obama: “This is the public option debate all over again” (verbatim) (he is oblivious to the unintended truth of his statement)

    Obama riffs on HCR, still thinks it is something to be proud of. Reminds me of COD thinking the Widener crowd was laughing with her.

  38. donviti says:

    Tax cuts create jobs! woohoooo

    FYI: These Tax cuts were given when we had a Surplus.

    Why is that the DEMS always forget the details?

    ohhhhhh, wait, b/c they are on the same team as the R’s

  39. anonone says:

    He is pissed. And he is lying.

  40. Joe Cass says:

    ain’t no long term about it, one termer

  41. anonLIVE! says:

    The press was like a pack of wolves. Just the way I like them. Obama didn’t see it coming.

    Watch out Mr. President, here comes the pendulum.

    Now cspan taking phone calls. Callers are the usual stupid. Where is that browser crash when I need one.

  42. Joe Cass says:

    “field of competition”?!?
    didn’t he just say that’s not what public office is NOT about?

  43. Polemical says:

    Now don’t get all ‘Sactimonious’ and ‘Purist’ on me, said Obama to his followers! Don’t ya’ll feel like little Cindy Who from Whoville, after the Grinch patted her on her head?

  44. Jason330 says:

    How can someone who is so aware of the excesses and vices of “the left” be so oblivious to the excesses and vices of “the right?”

  45. anonone says:

    If Lincoln had been like Obama, he would have given the South over to slavery to avoid the Civil War and then called the abolitionists “sanctimonious purists.”

  46. socialistic ben says:

    why cant he just say “the republicans are terrorists who gave me the choice of throwing millions of americans out into the cold 2 weeks before Christmas, or giving the rich scum bags in this country more money that other people earned for them”?

    he came so close last night. It isnt the actual decision that bothers me. there was no choice in the matter. The unemployment insurance HAD to be extended. The GOP does not care about Americans so they would gladly let hard workers starve to death. It is this whole “we made a good compromise” party line he keeps hanging on to.
    Mr president. It failed. I was wrong, you were wrong, we were all wrong. the GOP will not be reasoned with. They are heartless bastards who would rather every poor person die than pay one cent of taxes. They should be demonized every time you speak.

  47. a. pissed off liberal. says:

    lets not forget who the real enemy is.
    we have to assume that Obama is a lame duck now.
    forget about him. it’s over.
    We cant get so caught up in piling on that we forget to keep the GOP out of the white house. out of power. The only thing we should concentrate on is destroying the terrorist organization that is the republican party and every single traitor that associates with them.

  48. anon says:

    Obama’s performance at this press conference was so bad it will weaken him politically, and strengthen the hand of any Dems who may be staging a revolt.

    Well, not so much his performance, as the deal itself. I don’t know any performance could have polished that turd.

  49. Republican David says:

    Please do you think anyone even saw it but the hardcore of activists whose votes are already decided? What would have hurt would him would have been losing the Bush enhancements the earned income credit, child tax credit, and the dividend cut benefiting seniors. Not to mention the 2 million jobs which would have gone by the wayside. No deal would have sealed his fate.

  50. anon says:

    Please do you think anyone even saw it but the hardcore of activists whose votes are already decided?

    Doesn’t matter. The blood is in the water; soon everybody will smell it.

    Watch the late-night comedians tonight.

  51. anon says:

    Bold progressives already smell the blood in the water. Obama has CAVED on every issue. From bailouts to banksters, to health care, to 2 illegal wars of imperialism. Obama didnt even TRY to make the case. He did his back door deal with the repukes before the progressive caucus could even hold a hearing. He did the same with health care reform. Obama is done, a cooked goose. We need to immediately find a real progressive if ANY progressive issues will be offered. The righties should be told to stop calling Obama a socialist, he is an corporate whore who has delivered up everything the richest in america could possibly want. Its done, he’s over. Join the bold progressives NOW to find a real progressive.

  52. a. price says:

    they wont stop calling him a socialist because it still works on the morons (fox viewers)
    Obama could jail pelosi and soros and he would STILL be a socialist to the conservatives because their false pro(phe)its say so.

  53. anon says:

    Two more years of tax cuts for the billionaires and only a few months for the unemployed, not covering the 99ers..screw them let them eat from the food pantry. The tea baggers are about to get their comeuppance re: earmarks. So why are progressives standing with Obama. Sending Biden to talk to the progressive caucus..like to be a fly on the wall in that meeting. Its all a game people, both parties are corporate whores, both parties need a real viable third party, a progressive movement and there isn’t a second to waste.

  54. Jason330 says:

    You crack me up anon. This stuff is priceless!

  55. anon says:

    You are dealing with a few different anons here. That’s how we hide.

  56. liberalgeek says:

    It’s easy to keep track of the anon’s. One of them uses terms like “banksters”. The rest of them do not.

    What we have above at 3:55 is the bankster-anon.

    2:14 is a sensible anon.

    simple, really.

  57. anon says:

    Geek, you have been wrong on so many things I barely no where to start. Banksters is a term used by Alan Grayson and more progressives and tea baggers! Perhaps you should get your foot off the desk, your fingers off the computer sites you go to and read some sites that are progressive. You are a moderate in every sense of the word.

  58. liberalgeek says:

    anon the idiot – you have been proven wrong at every turn and are technically still banned here, but I have looked the other way.

    Your anti-semitism has been exposed, your inability to have relations with other human beings has been exposed and your tendencies toward paranoia have been exposed. Yet, somehow, I’m the one that is wrong all the time.

    I’m gonna savor that for a while.

  59. anonone says:

    LG, I applaud your post. Finally, some posts openly critical of Obama have made it to the top of Delaware Liberal (besides Jason’s few). Comments on other liberal sites are showing many other supporters and fence sitters finally throwing in the towel on this guy, too, particularly after that disaster of a news conference.

    Maybe we will get an opportunity to vote him out in a Democratic Party primary in 2012 after all!

  60. anon says:

    I stand with Jewish Voices for Peace and J Street.Alternet today: Angry progressives shut down white house phones re: tax cuts for billionaires. Thats the company I keep. To the question of voting him out, hell he may not even run. The problem is finding another real progressive who wont lie and deceive us as he has.

  61. liberalgeek says:

    Well if I have to choose between Obama and you and your compatriots, I’ll stick with Obama.

  62. Obama’s re-election depends on the state of the economy in 2012. That’s what is driving this deal. Where were all these passionate defenses of letting the cuts expire in September. Congressional Democrats completely pissed that away and NOW they are mad about it? Why did they wait until after the election slaughter until Obama had a weaker hand to negotiate?

    Yes, I’m mad but focusing all the ire on Obama is misaimed. The Democratic party dropped the ball. You do know that the Senate voted on tax cuts for the middle class this weekend and 5 Democrats voted against it. There are structural barriers to getting what we want. Why are we ignoring this?

    Hey I’m glad the left is angry. Hopefully that will translate into action which is more than bitching in the echo chamber. I’ve heard more Democrats on the news making the case that the Bush tax cuts hurt the economy in one day than I’ve heard in 2 years. That’s what needed – communication and explaining our position.

  63. anon says:

    That’s what needed – communication and explaining our position.

    We will need an expert turd-polisher. Obama has lost his communication mojo.

  64. TheGoodAnon says:

    The unemployed couldn’t give a crap about tax cuts.

    What ever happened to the progressive Democratic concept of services for the poor paid for by taxing the rich? Tax cuts for the rich AND UI benefits – have we lost our minds? Funding a war on recession without taxing the rich, makes no more sense than funding a couple of shooting wars without taxing the rich.

    Let everything expire. Then in 2011 let the army of the unemployed come for their UI benefits with pitchforks and take it out of Republican hides. The middle class can be next in line for GOP hides with their Weed-Whackers and patio bricks.

  65. pandora says:

    I keep hearing about how Obama needs to stop capitulating to Republicans, which got me thinking. Other than this tax cut deal and the stimulus haven’t the rest of the crappy compromises been Dem on Dem negotiations/warfare?

  66. dv says:

    Oh? Sounds like u want to let Obama off the hook for being a pathetic and weak leader

  67. dv says:

    When does Obama close gitmo?

  68. pandora says:

    Did I say let him off the hook? I said I was thinking – you might want to try that sometime.

  69. TheGoodAnon says:

    haven’t the rest of the crappy compromises been Dem on Dem negotiations/warfare?

    The Dem on Dem wars only occurred because there was a leadership vacuum. With a strong President setting expectations and making specific demands on his party, the turncoat Dems would fall in line.

    Remember Enzi and Grassley on HCR? These people never should have had any role in the process except as a regular Senator.

  70. pandora says:

    When does Obama close gitmo?

    Please read

  71. Ordinary Joe says:

    I guess Obama is the Chauffeur driving us into the ditch now…

    Hmmmmm. . . isn’t that statement rather racist?

  72. anonone says:

    U.I wrote: “focusing all the ire on Obama is misaimed.”

    Sorry, U.I. I disagree. Right now, he is the leader of the Democratic Party and the President. This tax cut was just the latest in a long series of broken promises, lies, trashing of the base, and political incompetence. His press conference today was an embarrassment.

    And. pandora, his proposal to freeze of Federal Workers wages was all of his own doing. Not to mention his hiring and retention of Simpson on the Cat food commission. And can you tell me what his plan is to decrease unemployment? I am all ears.

  73. Truth Teller says:

    In his speech today Obama showed that he did not understand the progressive point on the Public option. We were not that really upset because the Health plan did not include it as much as we wished it did. The problem we had was with Obama himself for he took the Public option off the table before the talks began. Years ago while hammering out a union contract we agreed that we would settle for a 10 cent an hour raise so we asked for 25 and ended up with 15. Had he got an agreement on DADT and stark along with the unemployment extension this might have been a palpable deal but he didn’t all we got was 900 billion dollars added to the debt.

  74. kavips says:

    I’m actually impressed: someone acknowledged Yeat’s on this blog…

  75. kavips says:

    I’m kinda surprised at the animosity progressives are feeling towards Obama. I felt it yesterday, but got a different take off his speech this afternoon.

    I thought it was a good speech, But… I heard it on radio, with no visual. Was the visual showing a weakened, beaten man?

    On radio, he came across as a feisty fighter and I turned around my argument from yesterday, to support his decision.

    The independents are the swing vote of this election. In 2012 Independents need to line up for Obama. He is positioning himself to do just that. He is not a progressive candidate. He is president.

    yesterday I knew little and tried to argue him against capitulating. Today I know more, and understand why, and believe it is the smart thing to do…

    We’ll see. But having the Republicans during election year, when everyone is watching, arguing billionaires deserve tax breaks, is just too delicious not to watch….

  76. kavips,

    There’s been a lot of dumb things posted in the last few days like Obama is a Republican and that we should primary him. Hopefully cooler heads will prevail. I believe this anger is really about the rigged system we have and apparently they’re taking it out on one guy. I’m hoping this means we’ll get some passion for institutional reform rather than just become the rock throwers from the sidelines. We will see.

  77. anon says:

    UI – are you serious? The President’s own party is rising up against the deal. The institution is working.

    What kind of institutional reform are you talking about? All we need is for the President to assume his traditional leadership role as the advocate for his own policies.

    But instead Republicans are trying to keep a straight face when they think about all the political traps they have laid in the deal.

    At this point, the best option is gridlock. Which is also part of the institution.

    I’m actually impressed: someone acknowledged Yeat’s on this blog…

    After we got them to acknowledge Obama is working against us, anything is possible.

    (who is “Yeat”)

  78. anon says:

    And one more thing: Harry Reid voted FOR cloture on the tax cut bill. I am not 100% certain, but usually when a bill fails cloture, Reid votes AGAINST it for procedural reasons, which under Senate rules allows him to re-introduce it later – “move to reconsider.”

    The bill failed cloture 53-36. All Obama needed to do was round up 7 votes.

    Obama is insulting us when he says he fought for it but Republicans wouldn’t budge. On the day of the cloture vote, Obama was in fucking Afghanistan. Don’t tell me you fought for that bill in the Senate, Mr. President.

    And then there is Joe Biden – the dog that didn’t bark. Joe Biden has been a Senator for 30 years. He knows where the bodies are buried; he knows every Senator’s pain points. Did Joe get down in the Senate and fight?

    And now that Dem sentiment is shifting, we can’t even go back to the Senate and fight for the clean tax cuts, because Reid shut the door with his Yes vote (if I am correct about the procedure).

  79. Jason330 says:

    Ui, I didn’t say that Obama is a Republican. I said that Dems in the house should act as if they are dealing with a Republican President.

  80. anonone says:

    Yes, U.I. Obama’s secret back room deals with pharma and insurance companies on HCR, his fighting against DADT in court, his arbitrary proposal to freeze Federal wages, his incompetent and dishonest handing of the BP gusher, his escalation of the war, his lack of any plan to stimulate the economy and restore jobs, and now this give-away of social security dollars to the wealthiest Americans are all the Senate’s fault because Obomba is the GREATEST DEMOCRATIC PRESIDENT EVAH!

    Maybe we should start working to change the Constitution so he can run for a third term in 2016.

  81. anon says:

    And yes… I would support a credible primary challenger, if only to change Obama’s behavior.