Page 2 of 2 Old bottles will test Obama's vintage
By Julian Delasantellis
Pelosi wants is going to get passed, with her Democratic Party sitting on top
of a huge, 79-seat majority), especially considering Obama's recent
extraordinary magnanimity in reaching across the aisle to try to establish
bi-partisan consensus and comity.
Obviously, whatever their protestations about only wanting "what's best for the
country", what the Republicans really want is for the new president's tenure to
collapse in a fantabulous fanfare of failure. Still, with Obama's popularity,
they have become hesitant about the re-employment of the no-never-negative
strategy used with so much success against Bill Clinton. They have learned the
lesson that Hamas is only painfully learning against Israel in the rubble of
Gaza - you can't directly attack a vastly more powerful foe.
But the Republicans also don't want to go along with Obama's near
trillion-dollar big-government stimulus program; they're desperately hoping to
recapture their brand identity as the small government party after eight years
of Bush's fiscal profligacy. Also, with the next election, the mid-term
contests of 2010, still 22 months away, they don't want to be relegated to
being irrelevant and ignored for the next two years.
In other words, they want a place at the adults' table where the big issues are
being determined, but a place near enough to the door so they can still exit
quickly and blame the Democrats if, as they hope, the stimulus doesn't work and
the economy is still in tatters by the time of the 2010 mid-term Congressional
or 2012 presidential elections.
It is now apparently the question of tax cuts that will decide the issue. Two
weeks ago, Democrats and left-wing bloggers were surprised to read reports that
the Obama administration was planning to have a significant amount of the
stimulus package, some say up to 40%, in the form of tax cuts, the Republicans'
preferred policy prescription from everything from recession to rectal itch.
This did not please many in the Democratic base, for it implied a continuation
of the core conservative ideology that the best thing that the government can
do for the nation is for it to give the people their taxes back. In the January
15 Financial Times, Joseph Stiglitz, a former Clinton economic advisor and 2001
winner of the Nobel prize in economics, had this to say on the issue:
What
is clear is that tax cuts will not help much. When Barack Obama,
president-elect, last week proposed to use nearly 40% of the stimulus for tax
cuts, he was rightly told this would be less effective than, say, spending on
infrastructure. It has been surprising, then, to see President George W Bush's
former economic advisers, including Greg Mankiw, argue that tax cuts are the
way forward. Tax breaks for business may prove to be a sink-hole as bad as the
troubled assets relief programme. Particularly worrisome are rumors that
companies will be allowed to set off their losses against profits made in the
past five years to get tax rebates - a big gift to those who mismanaged risk,
including banks such as Citibank.
Still, middle-class tax cuts
were a key part of the Obama electoral platform, and the tax cuts being
proposed, targeted overwhelmingly to working and middle-class taxpayers, are
far different than the usual Republican tax cuts overwhelmingly directed
towards the indolent rich, the so-called "Paris Hilton tax cuts". Also, tax
cuts of any nature would get now desperately needed money into the economy much
faster than the other main focus of the stimulus program, infrastructure
spending, with its potential multi-year implementation lag times.
Like everything else in Congress, this matter will probably come down to a
matter of negotiation. A preliminary stimulus bill draft released last week
from the liberal House Appropriations Committee called for one-third, US$275
billion, of tax cuts from as part of a total $825 billion package. This will
essentially become the lowball point in the negotiations with the Senate; in
that chamber, majority leader Harry Reid will have to agree to something closer
to 40% of the package being tax cuts in order to forestall a Republican
filibuster, and to also placate Obama's desire to have the stimulus package
pass the upper chamber with 70 votes or more. This would be the fulfillment of
Obama's pledge to unite the nation and turn a page on the bitter, polarized
political battles of the past.
That is, unless the Republicans, seeing Obama quickly agree to 40% of the
package being tax cuts, decide to not take "yes" for an answer and move the
goalposts further back. This they could do by demanding what they know Obama
and the congressional Democrats would never accept, such as tax cuts as more
than 40% of the total package, or insisting on tax cuts more directed towards
their patrons among the rich, maybe even pushing the envelope to see if Obama
was willing to gut or totally scrap the infrastructure stimulus part of the
proposal in the name of unity.
How much of his principles is Obama willing to trade away for those nebulous
Republican votes in the Senate? Is it possible that, in the final analysis,
getting the economy moving and bi-partisan consensus are two, mutually
exclusive goals, and that he'll eventually have to choose one over the other?
Perhaps most importantly, are there fangs behind the smile, a hard fist under
the velvet glove?
The Republicans dilemma is how to say "no" when they're getting a lot of what
they want - how much can they sign onto this and still credibly say they were
not involved if it goes badly?
The Democrats in Congress are behaving very similar to how the party reacted to
the first two years of Bill Clinton's tenure, and that could be a major problem
for Obama. Just like 16 years ago, party leaders in both chambers are slowing
the legislative process to a crawl, haughtily insisting that the new president
genuflect to the legislative body's perpetually preening petty potentates and
pokey processes. The American people elected Obama on a platform of change;
getting Congress to put the people's welfare as a priority above its own
self-defined institutional privilege would be considered a fine start to the
polity's metamorphosis.
Originally, Obama had hoped to have the stimulus bill passed and ready for
signing as he came back from the inauguration; now, some commentators are
claiming that he'll be lucky if he sees it by St Patrick's Day on March 17. The
equity markets, currently seeing the stimulus package as the only sign of hope
in an economic landscape of now unforgiving bleakness, would take that very
badly, selling off, shearing away much of Obama's now substantial popularity;
that would only then embolden the Senate Republicans to enhanced recalcitrance.
For the sake of both the economy and his presidency, Obama must get the
stimulus package out of Congress much quicker than the Congress is prepared to
let it go. He can do that by using his high levels of popularity to light a
fire under both the Democrats and Republicans in the Congress.
How can he keep the country madly in love with him? Well, adopting a cute puppy
that America falls in love with, then having the new president photographed
walking it, playing Frisbee with it, maybe helping his daughters give it a
bath, would help maintain and bolster his popularity with the public, pressure
the Congress to do his (Obama's, not the dog's) bidding, and, in doing so, give
immeasurable near-term assistance to the world economy.
Back in December, Obama said that, after New Mexico Governor Bill Richardson
withdrew his name from consideration under an ethics cloud, a new puppy was
proving harder to find than a new commerce secretary. Considering how much more
important the puppy choice is proving to be for the new administration than
that of commerce secretary, perhaps the relative difficulties in the two
staffing decisions is nothing but a real illustration of the current state of
the government's relationship to the governed.
But allow just a bit more from the cynic.
Early in the campaign, Republicans produced TV advertisements that called Obama
"the Messiah", an obvious attempt to link the then still mostly unknown
candidate to the hayseed backwoods millenarianism of the "Left Behind"
theology, which, among other things, prophesized that the Antichrist would one
day walk the Earth proclaiming ( "oh no! how evil! ") a message of peace.
In a certain manner, Americans are treating Obama as the Messiah, albeit as a
secular, benevolent savior. Millions seem to think that all they have to do is
vote for him, maybe watch him dance with his wife at the inaugural ball,
perhaps even pick up a cheap commemorative inaugural dish towel holder, and all
will be right with the nation.
It won't. America's problems are now far too grave to think that the country
can be healed with how those under 40 years of age believe social action should
be undertaken, through consumer products' choices.
In other words, you can't right America's wrongs just through the purchase of
an Obama mug at Starbucks.
Fixing America will require an equal amount or more of the dedication and
purpose that was displayed by Obama's vast army of volunteers. If not, control
of the government will invariably soon revert to the big-money special-interest
lobbyists who were given a free run of the kingdom under Bush. After all, by
2008, even Bush's most faithful allies in the Christian fundamentalist movement
came to realize that all the pious bromides they liked hearing the president
utter were just the elevator Muzak being played to cover up the sound of Bush's
big money corporate and financial benefactors picking the middle classes'
pockets.
So enjoy the inauguration pageant as a glorious symbol of a nation attempting a
resurrection from a very dark time. My wife has promised me that I'll get my
fingers broken should I try to change the channel to CNBC to see how the
financial markets are reacting to the inaugural address, so I'll be right there
with the rest of the world, in front of the TV.
Afterward, since the inauguration will be commencing at 9am US West Coast time,
it'll be a bit early for me to raise a glass to fete the new president. That
will happen later. With apologies to Slate.com wine columnist Mike Steinberger,
my libation of choice will be a finely aged 2008 Budweiser, imbibed, to best
appreciate its delicately impudent pastiche and bouquet, straight out of its
long-necked bottle.
Julian Delasantellis is a management consultant, private investor and
educator in international business in the US state of Washington. He can be
reached at juliandelasantellis@yahoo.com.
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