The art of the possible: still cramped and narrow after all these years

The art of the possible

by digby

There's been a lot of back and forth in the comments and elsewhere about the payroll tax cut and whether or not the Democrats should have ever signed on to something that gives the enemies of Social Security another cudgel with which to bash the program. I certainly agree that it's as inevitable as the sun coming up tomorrow that the depletion of the trust fund will be used at some point to justify benefits cuts. But I'm also fairly sympathetic to the fact that allowing those tax cuts to expire without an adequate replacement would be contractionary at a very bad time. It's hard to see how they could have done anything else in this environment. Which is the problem in a nutshell.

But the politics are something else. This article by Josh Bivens in Salon discusses how the Democrats got hoodwinked into changing the "Making Work Pay" tax credit into this payroll tax cut and how it played right into the Republican framework. I had not heard this before, but it's a perfect illustration of how the Dems get played over the long term.

He also points out the weakness of the victorious arguments we're hearing all over the TV today:
Further, the way the payroll tax cut is being marketed by too many of its Democratic proponents is maddening. Essentially, they sound like Republicans, and tout the simple virtue of the extension as being families having to pay less in taxes, period. How many of us have heard the statistic about a family earning $50,000 in wages will save $1,000 from the payroll tax cut? I’d guess pretty much everybody who has dipped into this debate for even a second.

On the other hand, how many know the estimates of how many jobs will be created or preserved because of the increased economic activity it spurs? Very few of us who aren’t economists, I’d imagine. Conservative estimates put it between 400,000 to 700,000 jobs. But it’s the jobs that make this tax cut worth doing – unless progressives are willing to willing to accede to the Republican framing that all the economy and American families really need is “tax relief” – a phrase that actually appears in the Senate bill extending the payroll tax cut for two extra months.

This inability to connect economic policy to the larger problem of joblessness is a real problem with the debate over the payroll tax cut. This disconnect explains why the unemployment insurance extension bundled with the payroll tax cut have attracted so much less attention. After all, if all that matters is the first tranche of money, the payroll tax cut will affect many more households than the UI extension. But all serious economists agree that the extension of unemployment insurance is a far more efficient fiscal support – providing about 50 to 100 percent more jobs per dollar added to the deficit.

What makes unemployment insurance so much more efficient? It is laser-targeted at families in genuine distress, meaning that the recipients will spend every marginal dollar that comes in the door. This also makes the extension better targeted at alleviating actual economic misery. I, for example, get a pretty big benefit from the payroll tax cut and that’s nice, but I’m (knock wood) doing pretty well. People like me really shouldn’t be highest on the list of policymakers’ concerns today. Sadly, this last point might not make for good politics.

I'm not sure if this is a lack of imagination, laziness, design a combination of the three. But no liberal should ever even utter the words "tax relief." And by failing to properly spell out the reasons for stimulus over the past two years --- jobs --- the Democrats have actively helped the GOP tie their hands over the course of this recession. (I won't even go into the political malpractice of spending an entire year flogging deficit reduction and austerity...)

This isn't just petty partisan politics. I don't care what anyone says, it matters how you frame problems and solutions. The parameters of what's possible are made through these understandings and the agenda is largely fashioned around them. Indeed, the public's understanding of how the economy and their government works is the essence of democracy --- it is a failure of leadership when both parties succumb to a political framework and agenda that works against the national interest.

The Republicans have spent decades persuading people that they are hugely overtaxed and their money is then wasted on uncaring, bloated bureaucrats and lazy good-for-nothings who refuse to pull their weight. It's through that understanding that they focus every economic argument. They hammer phrases like "tax relief" and "death tax" and "it's your money" over and over and over again until it just sounds like conventional wisdom. And that, in turn, defines the framework of the debate.

I realize that many very smart people believe that politics is really just grim determinism and discount pretty much everything but war and wallets, but my observation of the way the world works is that people understand both of those things through the prism of a cultural, political and social belief system that's very complex. If democracy has any meaning at all, one has to address not just the money people have in their pockets but the way they understand their place in the world, their relationship to others and their duties as citizens. Otherwise we should just assign leaders on the basis of GDP and call it a day.

If the Democratic Party still sees itself in ideological opposition to the Republicans (a dubious assumption at the moment) it must break out of the "low tax", "small government" imperial power paradigm that the Republicans created (and the centrists later assumed) in response to the New Deal. If the best the Democrats can do during an epic economic meltdown is take credit for "tax relief" and manage to extend Unemployment Insurance (while also cutting it, by the way) it's a very big stretch for them to claim progressive success. Until leaders of one of the parties stop talking about cutting taxes and deficits and shrinking government (except the military) as if doing that is the reason for their existence, it will always be the 1%'s world and we will just live in it.


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