"It's not big government versus small government. It's an issue of smart government."

NPR's Steve Inskeep interviewed Obama yesterday. There really isn't much commentary to add, except that it rather underscores the long-term focus of Obama's goals and methods, present UI crisis notwithstanding:
at the end of the day, people are going to conclude we don't want 2 million people suddenly without unemployment insurance and not able to pay their rent, not able to pay their mortgage, not able to pay their house note.

I think that people are also going to understand that the single most important thing we can do for all of our constituencies is to make sure that the recovery that is taking place right now gets stronger.

And over the last 48 hours, a range of independent economists have concluded that this package would, in fact, increase potential economic growth by as much as 1% and could end up meaning an additional 1.5 million jobs. And that, I think, has got to be the highest priority for everybody.

It's really, really easy to decry this bill as capitulation and excoriate Obama for caving/not fighting/cave fighting/not fighting caves/whatever, but this is very, very real:
The issue here is not whether I think that the tax cuts for the wealthy are a good or smart thing to do. I've said repeatedly that I think they're not a smart thing to do, particularly because we've got to borrow money, essentially, to pay for them.

The problem is that this is the single issue that the Republicans are willing to scotch the entire deal for
.

And in that circumstance, we've got, basically, a very simple choice: Either I allow 2 million people who are currently getting unemployment insurance not to get it, either I allow the recovery that we're on to be endangered or we make a compromise now, understanding that for the next two years this is going to be a central battle as part of a larger discussion about how do we reform our tax code...
Battles versus wars. This tax deal? But a skirmish, okay...a skirmish and an opening salvo on a much larger front of the war. Inskeep mentioned an exchange in which Obama was asked about his intentions to overhaul the tax system long-term.
...if we eliminate what happens to the tax code every decade or so — loopholes get built in, special interest provisions get built in — the nominal rates end up high, but the actual tax rates that well-connected folks or people who have good accountants pay end up being a lot lower. Ordinary people end up getting squeezed.

So typically, the idea is simplifying the system, hopefully lowering rates, broadening the base — that's something that I think most economists think would help us propel economic growth.

...Here's one thing that I don’t think will change. And that is that people like myself who have been incredibly blessed and who have a lot more income and wealth can afford to pay more than we currently are paying. I strongly believe that.

...And so the fight about what the top 1 percent or 2 percent of America should be contributing as part of our contribution to rebuilding America and putting it on a competitive footing — that basic principle is one that I continue to believe in and I will be fighting for over the next two years.
Yes; I know the specter of Simpson-Bowles still lingers and the zeitgeist CW is that their recommendations will be a blueprint for next year's budget. But Obama points out repeatedly that most economists agree a contraction of the economy would not be good for economic recovery, i.e. fears of an austerity bender are a tad premature. He also said any budget tightening considerations would leave no sacred cows -- even the defense budget would be subject to cuts. This was especially heartening in light of his stated priorities:
You know, when — when families sit around the kitchen table, they say to themselves, what are the things we have to have? College education for our kids. Paying our mortgage. Getting the roof repaired. A new boiler. What are the things that would be nice to have? A vacation. Eating out. Some new clothes. And if they can afford it, they'd buy things that they'd like to have. But the first thing they do is take care of the things that we have to have.

And under that category, I'd put things like research and development (jobs), education (jobs), making sure that we're sending our kids to college, rebuilding our infrastructure (jobs) to compete in the 21st century, making sure that this country is safe.

...When we look at the deficit and the debt, I think it's important to understand this doesn't need to be Armageddon. This is not a situation where we've got to slash and burn everything. It does mean we've got to make choices. And it means that discussions have to be serious and they've got to be based on fact.
Let's hope we do have that serious conversation about the tax code and the deficit. I know it sucks that the high-end income tax break has survived for now; the good news, though, is that one of the changes sought by the House would change the estate tax rate to a $3 million exemption and 45% thereafter. They've also already wrangled grants for alternative energy (jobs) out of the deal.

So, we can get the best out of this deal -- because if the Progressive Caucus won't cut a deal, the bill will likely pass without them. Which might have merit on its own in terms of optics; maybe this pushback was planned. Just how badly does the GOP want these tax cuts? But this is still just a skirmish in the much longer-haul battle to change the fundamental structure of our tax code. Which makes this deal all the less relevant, in the long-term.

By all means, let's push Congress to do the best possible thing here. Call them non-stop to adopt the $3 mil/45% estate tax model. But some kind of package will pass now and the less support it gets from the progressive wing of Congress, the more it depends on cooperation from the GOP, which is not where anybody wants to be. As always, the most pressure is needed in the Senate. Tell them to pass the package as the House wants it, with the increased estate tax. But also tell them the GOP's game is getting old and Congress needs to commit to overhauling the tax code in general in the coming years. That's the next big battle.

Toll free numbers for Congress:

1-866-338-1015
1-866-220-0044
1-866-311-3405


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