President Obama’s ‘Compromise’ – or “Why We Should Never Negotiate With Terrorists”


President Barack Obama. Image from http://www.politico.com/news/stories/0410/35287.html

Though I am grateful we have avoided default, I can’t help but feel as though our economy was taken hostage by extremists, Obama negotiated with the terrorists, and we are grateful the hostage was freed safely.

Yes, we are facing a historic national debt level and this needs to be addressed. But there are two ways of cutting the deficit: raising taxes or cutting spending. Raising taxes imply taking money from the wealthy. Cutting spending implies taking money from the poor. Certainly there are exceptions, but these are the implications being expressed.

With the Bush-Era Tax Cuts of 2001 and 2003, President Obama acknowledged that taxes on the wealthy are “at the lowest levels in half a century”. President Obama extended them, albeit this was the ransom to extend unemployment benefits. These taxes affected an inequality of our tax base. As Nobel Laureate Joseph Stieglitz points out, in the past ten years the income of the top 1% risen by 18%, while that of blue-collar workers has fallen by 12%.

The deal Obama hashed out last night only includes spending cuts. As Paul Kurgan pointed out, “It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.” He continued to point out, “The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further.”

If cutting spending reduces job growth, then we can expect higher unemployment rates and thus higher demand on government services. This will affect lower tax revenues as more Americans drop below the taxable threshold. Without raising taxes, this will result in further cuts in social services, which will result in further unemployment, and which will continue to drag our economy further down. It is a vicious downward cycle.

But as I write this, raising taxes is not on the table, only the possibility of raising them at some unidentified time in the future. Considering how tax cuts have been held hostage numerous times by the Tea Party and Republicans, it’s hard to believe that it will be easier to raise them in the future. There is enough time for another self-imposed crisis to be manufactured, generating collateral which may also be held hostage in order to prevent discussing of raising tax rates, again.

What incentive will Republicans or Tea Partiers have to discuss raising taxes in the future? They have already successfully held them off three times through extremist, hostage-taking measures. There is little reason to believe that the next results will be any different. There is also little evidence to support the notion that Republicans or Tea Partiers will act any more civilly in the future.

President Obama may be operating on the belief these negotiations are being held in good faith. Yet, the evidence points to the contrary. He may believe that he has prevented the U.S. from defaulting on its debt and Americans are better off with this compromise than without it. I don’t share in his optimism. He has opened the door to allowing the most extremists in our government dictating what policies are discussed and considered. We will continue to be held captive to the terrorist tactics of the Republicans and the Tea Party.