The Bush Billionaire Tax Cut Dance

Bush Billionaire Tax Cut Dance

by digby

I don't know what they're going to finally do about extending these Bush tax cuts, but I think that their main objective right now is to give Blue Dogs and candidates running in conservative states the ability to finesse the issue until after the election. They could do this with a vote, of course, and let their Blue Dogs vote for billionaire bailouts, but I think they're probably fairly worried about blow back from Democratic voters if they actually do it.

It's kabuki and has been for the past month as they listen to strategists who insist that any Democrat who says he'll vote for a tax hike, no matter who it's for, is going to be slaughtered. It's become a axiom. More importantly perhaps, they are deathly afraid of losing the Big Money from petulant little billionaire babies like this:

MR. HARWOOD HAD said that Wall Street felt Obama treated them like dogs, but he'd mixed his metaphors. "He went on 60 Minutes and said 'fat cat bankers,'" one of the four senior executives The Observer talked to complained. "He didn't say Dick Fuld or Ken Lewis, he just said 'fat cat bankers.' Meaning all bankers are fat cats. And we have over one million bankers in this country. And they're all taxpayers." That interview was in late December, after the year's huge bonuses were announced. Later on in the interview, the executive, who watched the CNBC town hall but, exasperated, had to turn the sound off after five minutes, came back to the slur. "He just said that we are all fat cats! All of Wall Street! He said 'fat cat bankers.' He said 'fat cat,' he's doing name calling, stereotyping, which is pretty amazing."

Back during the second month of the administration, writing in New York magazine, Gabriel Sherman documented the anxious rage of a privileged class that was unsure of what to expect. What has happened to Wall Street under Obama, though, has not been bad at all. But never mind the death of the Brown-Kaufman amendment, which would have limited the size of the nation's mega-banks; or the softened Volcker Rule; or Goldman Sachs' record 2009, followed by a quarter this year when Bank of America, Citigroup, Goldman and JPMorgan made a trading profit every single day; let alone the administration's satisfaction with the new Basel III rules on leverage and capital ratios, which were much laxer than they would have been without the banks' massive global lobbying effort.

"We've been ostracized," another source said. "I went to jury duty about a year ago, and when I said I'm in investment banking, the people in the jury room were making ugh sounds, and I'm like, fuck you. I'm proud of what I do. And I think this firm did a lot to get the recovery going. Somewhere ranked below a pimp and well operator is not right."

A White House spokesperson did not comment. But Wall Street's emotions have consequences. "If, as a result of this anger, credit becomes unavailable, particularly for small and mid-size businesses," Mr. Schwarzman wrote in The Washington Post this year, before his Poland blunder, "then at best the economy will slow and, at worst, we will find ourselves in a dire situation." He said bankers felt under siege and were responding by "becoming conservative," a lovely little pun about lending and politics.

"He's pissing on us and Wall Street and bankers and capitalism; then we have gotten afraid," the executive who turned CNBC on mute said. "We then are not investing in maybe what we should invest in."

I have a sneaking suspicion that the Democrats think that an extension of the Bush tax cuts would soothe that little boo boo. Except it won't. This is about more than money. It's about their wounded vanity and self-image as the most popular boys in school.I don't think mere money can fix this. It's going to require some very serious ass kissing.

The big problem for the rest of us, of course, is that if they don't vote on extending the tax cuts before the election, it's far less likely to pass. The arrogant Republicans of this lame duck congress will be screaming to high heaven about mandates and "consequences" and demanding that the congress and the White House fulfill the "will of the people" or they will burn the place down. And the Dems will acquiesce.

If they don't vote on this now, and win, it ain't happening short of a huge upset in the election. That could happen of course, but it's pretty clear that nobody's counting on it. The upshot is that all the Bush tax cuts are probably going to be extended. They'll "compromise" by sunsetting it until just before the presidential election -- when they can run the same game again.