Losing to the disaster capitalists

Losing to the DC

by digby

I don't know if this is true, but it is certainly a good plan for Boehner:

--E.J. Dionne, in next Monday’s column, sees “perverse genius” in the GOP approach: “Boehner can just sit back and smile benignly as Democrats battle over which concessions they should give him. When the negotiating gets tough, he can sadly warn that his freshmen need more because he can't guarantee what they'll do. The perpetually tanned one is a shrewd dude. Democrats who underestimate him will only be playing into his hands.”

Democrats could play their own games, of course, for instance by trying to line up some Tea Partiers to oppose war spending or corporate tax breaks. Unfortunately, that would probably open the door for the president to make a deal with the rest of Republicans to protect war funding and corporate tax breaks. (Think NAFTA) These games are much easier for the Republicans since the president has already signaled that he's willing to deal on their terms as long as they will "regretfully" give up some extreme strawman legislation to throw to his base as evidence of sharp negotiating.

I wrote yesterday about the fact that we are looking at a pending "deal" which, when combined with the extension of the Bush tax cuts, adds up to an economic program of massive tax and spending cuts. And as this post by Lawrence Lewis at DKos points out, this is a Republican program:
The problem is that, on economic issues, DC Democrats have forgotten how to be Democrats. By making the Bush tax cuts their own, they have removed even from discussion the most obvious means of addressing any fiscal issues. And it isn't confined to the White House. Congressional Democrats are playing along by accepting those short-term budget cuts for a mere delay in the shutdown showdown, signaling as the White House already did with the tax cuts that the Republicans can get their way by playing hardball. But is it really only the Republicans' way? That's the question. And while some Democratic governors are attempting a more responsible approach, their efforts are being hampered by those Obama tax cuts:
Struggling states could lose as much as $5.3 billion in tax collections during the next few years in an unintended consequence of one of the lower-profile federal tax cuts that President Obama enacted in December, according to a report released Tuesday.

The tax-cut package the president signed in December is best known for extending the Bush-era tax rates for two years and giving a one-year payroll tax cut to most Americans. But it included a business tax cut that could blow a hole in state budgets: a provision allowing businesses to deduct the full value of new equipment purchases from their taxes through 2011.

Those Democratic governors deserve a lot of credit, because the politics of supporting responsible tax increases is not easy when a Democratic White House and its Congressional allies have removed tax increases from the federal conversation and are actually doing the exact opposite by promoting tax cuts at the same time they're ostensibly concerned about deficits. Tax cuts that are making the jobs of those Democratic governors even more difficult.

And guess what? I'm sure you've noticed that these actions haven't made the Republican governors any less hostile. As with their DC brethren, you give them an inch and they ... bust unions.

Given that the Republicans don't appear to have a standard bearer who can beat President Obama, it would seem that the administration is likely to slide into re-election with a tepid economic recovery under the banner of bipartisan compromise. It's a "fingers-crossed" strategy and perhaps it will even work. Capitalism usually does equalize an economy over time, and maybe sheer luck will ensure that this one equalizes fairly quickly by historical standards. (Usually, however, it takes a long time and we all know where we'll be when that happens, don't we?) Let's hope so for the sake of ordinary Americans who really need a break.

But it won't change the fact that slashing spending for the middle class and taxes for the well-recovered wealthy is not really an effective way to deal with recession. Indeed, it's not an effective way to deal with the debt either. The less ordinary people make, the less taxes they pay after all. With taxes for the wealthy off the table, this debt is self-perpetuating. Unfortunately, the efficacy of slashing spending and taxes on the wealthy will will become conventional wisdom now that Democrats have signed on to the program and the disaster capitalists will have won their war against egalitarianism and redistribution. The Democrats didn't even put up a fight.