Sunday, July 3, 2011

Mark Thoma Takes Down Obama on Leadership

Here is a bit from an excellent post by Mark Thoma on his Economist's View blog. He nails Obama for failed leadership on the economic issues:
But that argument has already been lost thanks, in no small part, to the president's acquiescence to Republican ideas. Once the president bought into the belt-tightening arguments, there was little hope of avoiding a belt-tightening outcome. The only issue to be decided was who would be asked to do the tightening.

Which brings up a question: If household's have to tighten their belts, how come that doesn't apply to wealthy households who have ample room to tighten? When we talk about belt-tightening, why does it have to involve cutting programs that hurt the poor rather than tax increases directed at the wealthy? The very best outcome we can expect, according to reports, is for less than 15% of the budget reduction to come from tax increases:
even if Obama were to gain all the tax-law changes he wants, new revenue would make up only about 15 cents of each dollar in deficit reduction in the package. ... But substantively, budget experts note, the plan would still be dominated by cuts to government programs, many of them longtime Democratic priorities...
Obama once targeted the wealthiest Americans, the top 2% who earn beyond $200,000 a year, proposing to cap their income tax deductions.

But weeks of closed-door talks have diminished that goal. Now, even a deduction cap on those Americans earning beyond $500,000 a year — just 1.3 million Americans, fewer than 1% of all taxpayers — has been dashed.
If we're going to make the stupid belt-tightening argument, it should at least be applied equitably across households of all income levels.

We can do better than this, but it takes leadership and a willingness to fight rather than acquiesce, traits that are far too short in supply in the current administration.
It is incredible that Obama allows the Republicans to set the agenda, define the terms of the discussion, set the parameters for a possible "compromise", and dictate the terms for successfully negotiating a settlement.

Why does all this worry me? Canada's economy is strongly dominated by our trading relationship with the US. When political leaders in the US commit economic suicide it takes us down as well because our economy is shackled to yours. It is purely self interest. I want a vibrant US economy so that Canada can thrive.

Oh... and I hate how the rich stick it to the poor. I have a hang-up over social justice.

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