the art of saving face: u.s. house rejects tax deal

Monopoly Poor TaxThe Democrats have finally outmaneuvered the Republicans (for once).

And everyone’s a winner, because saving face while getting nothing done has become an art form in Washington. Just look at the results of how the debate concerning the extension of the Bush tax cuts transpired.

The Republicans will take control of the House just as the nation’s taxes go up. And while they will blame the outgoing Democratic leadership for the increase (they rejected the deal after all), the Republicans will be stuck in the unenviable position of having to argue for tax breaks, which will grossly increase the nation’s deficit, after they’ve spent the past year saying we should reduce the deficit. However, Republicans can claim credit for championing tax breaks for all Americans, can take credit for the inevitable reduction of the deficit (due to increased tax revenues) as they take control of the House, and now can rally their conservative base by claiming that the evil Democrats are responsible for the nation’s tax increase. It’s a win-win for Republicans.

President Obama comes out looking good, because despite not getting the tax cuts he claims he wanted for some of the American people, he rode into town to save the day and worked in a bi-partisan way with Republicans in an effort to keep taxes down, which should help him garner some votes among moderates and Republicans in the upcoming 2012 Presidential election. But, since the House rejected his deal, taxes do indeed go up (which is what President Obama wanted for at least the wealthy), and as the economy continues to recover, he’ll be in line to both take credit for improving the disastrous economy he inherited from his Republican predecessor, George W. Bush, and get credit for working with Republicans to cut taxes. It’s a win-win for the President.

House Democrats win too. They can now go back to their districts and claim that they defeated the Republican minority (for once) and even stood up to their own President, which will earn them fervent support from those on the left. Taxes will go up on the wealthiest Americans (which Democrats want) and everyone else as well, but Democrats can blame a sell-out President and the evil Republicans for the tax increase, which will please their liberal base. It’s a win-win for House Democrats.

This is the art of saving face and it’s hard to imagine that something akin to the deal described above was not discussed somewhere in some back room at some high level.

Everyone gets what they want, everyone’s base is energized, everyone saves face, and everyone wins…except us, the taxpayers, who pay more taxes while nothing gets done.

This is the state of modern politics in America.

3 Responses

  1. great political analysis! would you also agree that in the short term, it is also a loss for the america people since it will hurt an economy in recovery-mode? after the tax deal was announced, forecasters immediately raised their projections for US economic growth.

  2. yes, but we should find some balance between pulling out the corporate credit card to stimulate growth now and actually finding a sustainable funding model (i.e., revenues/taxes vs. expenditures/spending) for the long term.

  3. Great article Bob! Would you agree the tax code needs to be revised so that small business does not get lumped in with millionaries? Orchange that business are actually defined as legal people?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: