Pres. Obama recently struck a compromise with congressional Republicans over the fate of the Bush tax cuts. Many liberals (myself included) wanted the President to pick a fight. At some point he has too. Compromise is seemingly great. In fact, our country was built on it, but many see Pres. Obama as being to eager to compromise. This was the perfect issue to pick a fight with Republicans. The only difference between the President’s plan and Republicans plan was an extension for people whose lives would most likely not be affected but a minor tax increase. The wealthiest Americans would see their income tax rates rise from 36% to 39.6%. No wealthy American was going to lose their house over 3.6%, but many middle class Americans are losing their houses right now.
I recently wrote that Democrats needed to take a stand and show Republicans for what they are; obstructionist whores for corporations and the rich. Democrats could have done it. They could have won, but they didn’t. Instead, the President chose to compromise. So, the rich get to keep more of their money. That won’t help stimulate the economy though. It’s generally accepted that the rich will spend about what they would anyway. The rest will be saved to insure they remain rich. So despite all this, why should we support Pres. Obama? We should support him because it was the right thing to do.
As part of this compromise unemployment benefits are being significantly extended. The portion of payroll taxes that workers pay will be cut. Both of these measures should help to stimulate the economy by putting more money into the hands of a large number of people. Unemployment benefits are a direct government investment in our economy. People who collect them will almost immediately spend them. They have to. Those benefits pay for groceries and housing. They are a direct injection of money into the economy. So, while the wealthiest among us will have lower taxes, the least fortunate will be able to support themselves and as a result support the economic recovery.
This was not a bad compromise, but Pres. Obama must take advantage of it. He may not have done it for the politics, but he should promote the politics of it. Republicans refused to do anything unless the rich pay lower taxes. Economists agree lower taxes for the rich are not the most effective way of stimulating the economy. Putting money in the hands of the most Americans can do much more. Republicans held up the business of the country to ensure their wealthy friends would keep their money. Pres. Obama compromised to make sure the economic recovery would continue while ensuring unemployed Americans could put food on their tables. He was right. They were wrong. Pres. Obama needs to make sure that America knows it and does not forget.