Category Archives: Barack Obama

Making Sense of Obama’s Tax Compromise

Marc Seltzer © 2010

By Marc Seltzer; originally published at care2.com on December 8, 2010.

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The Obama compromise, which renews existing tax rates for middle class and wealthy Americans and continues tax incentives aimed at speeding economic recovery is not as simple as it seems.

At first it appears that the President allowed wealthy Americans, who have done exceedingly well in the past decade and generally survived the economic crisis with losses, but not foreclosures or unemployment, to win a battle in class warfare.  It is true that letting the Bush tax cuts (for Americans earning more than $250,000) expire would have forced the wealthy to contribute significantly more to the public budget when high unemployment and underemployment were causing a great deal of stress and suffering to middle and lower class workers. In a simple contest over redistribution of wealth, wealth won.

In the larger context, the President’s compromise may have been a significant achievement.  The President is working to stimulate the economy to speed economic recovery.  The best way that he could have done this without continuing tax cuts for upper incomes would have been to let those tax cuts expire and separately to provide a major new stimulus to the economy.  This could have taken the form of a half-trillion dollar infrastructure program or multi-year green-energy committment to make American energy consumption more efficient and take a leadership role (now held by China) in developing green-energy technology.  However, there was not enough support in Congress, let alone the public at large, for such a major new stimulus program.

Without new stimulus spending, the higher tax rates, as Bush tax cuts expired, would have taken money out of the private economy.  This money would go as tax revenue to pay down the deficit, but would not create new public spending or jobs without additional stimulus legislation.

This is the real problem.  The economic recovery is not yet fast enough or strong enough to endure, without harm, tax hikes, absent a corresponding increase in stimulus from another source.  Yet no other stimulus was politically available.

This put the President in the position of having to accept a renewal of all the Bush tax cuts, to keep the economy from losing steam, at least while the economic recovery was weak.  The two-year tax-cut extension was the estimate of that vulnerable window of time.

Importantly, the high-income tax cuts were not the whole deal, they were only the Republicans’ bargaining chip.  As David Leonhardt reports in the New York Times, the President got unemployment benefits extended, a cut in the payroll tax and some business taxes and college tuition tax credits in addition to continuing the lower tax rates for middle income earners.  The President’s package amounts to significant new stimulus over and above continuing the Bush tax rates.  Economists like Paul Krugman and Christina Romer have said, since the financial crisis, that more stimulus was needed to keep the economy growing and to support employment.  The fight in Congress and in the general public has been about how much to spend on stimulus, in light of the deficit and the Republican preference for free-market solutions and lower stimulus spending.

Seen in this light, the President was able to provide significant governmental support for economic and job growth, at the cost of lower tax rates for the wealthiest two percent of Americans than was the President’s preference.  The President ran for office asserting that wealthy Americans should pay a greater share of the nation’s tax burden to insure that all Americans could afford health care and the continuance of social safety-net programs.  However, the economy was not yet in crisis, the unemployment rate not near 10%.  In the current circumstances, the President must focus first on supporting the economy with stimulus and spending, even in the face of the deficit and his stated belief that wealthy Americans should, in the long term, contribute more.

As the growth rate improves, and unemployment comes down, it will be appropriate to cut spending and raise taxes to balance the budget and make decisions about fair contributions from different income earners in society.  For those that believe in a more progressive income tax with higher earners paying more than the historically low levels they pay today, the real fight will be in two years’ time, when the economy is stronger, and the primary consideration of a tax hike on the affluent will be social justice and the great disparity in incomes between rich and poor, rather than the impact on the overall economy.

Economists will still argue about how much impact tax hikes on wealthy Americans will have on the wider economy and politicians will continue to argue about the social justice goals of a progressive tax system, but the context should be quite different.  Hopefully, substantially more of the millions of unemployed Americans will be back at work and the growth rate will have continued to improve.

UPDATE DECEMBER 11, 2010:  Bill Clinton discusses tax compromise

Marc Seltzer is also a contributor to SupremePodcast.com, a weekly U.S. Supreme Court case review podcast.

Airport Security Protests Fizzle and Inspections Continue as They Must

By Marc Seltzer; originally published at care2.com on December 6, 2010. (The original posting received more than 100 comments, often strongly disapproving, which can be seen at the care2.com link.)

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Protests against airline security procedures did not materialize last week despite a media campaign in which a variety of hopeful instigators clamored that the public would not tolerate the invasion of privacy.  While the new procedures — x-ray technology that sees through clothes and pat downs that include private parts — are bound to make people uncomfortable, the vast majority of passengers accept that the threat of attack is serious and the security measures reasonable.

The sniping at the Obama administration and the Transportation Security Administration (TSA) and claims that TSA procedures are unconstitutional on the one hand and misguided on the other don’t hold up to scrutiny.  First of all, flying is optional.  We choose to do it by paying for a ticket and accepting the rules that go with the privilege of flying.  The government, rather than the private airline companies, conduct security operations, but no one is forcing passengers to get in line.  Second, flying is not something you do in the confines of your home, where you would expect the most 4th amendment protection from government search and seizure.  The question of whether it’s reasonable to conduct these admittedly invasive searches in an airport security line depends on the level of protection needed and the availability of other options.

While the U.S. has been lucky that the shoe bomber, underwear bomber and other attempts have failed to bring down a plane, there is a clear threat to aviation security.  The procedures are the best that experts can come up with at this moment.  No doubt less invasive, and more effective, machines are on the drawing board.

Another argument is that the scanners and pat downs can’t stop every conceivable threat.  True, but the new procedures increase the chances of a successful inspection for dangerous materials.  They take more time, they see more, and they make it more difficult to plan and carry out an attack.  That is enough to justify their use, even if something slips through.

The people in aviation security, from front line screeners to administration decision makers, deserve credit for doing a difficult job where a single mistake can cost many lives and the enemy actively tries to exploit errors and weaknesses.

Marc Seltzer is also a contributor to SupremePodcast.com, a weekly U.S. Supreme Court case review podcast.

Winning the Argument on Tax Cuts and Government Spending

By Marc Seltzer; originally published at care2.com on December 5, 2010.

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It’s a funny thing.  Only about two percent of Americans make up the wealthiest two percent of Americans.  How is it then that so many Americans are willing to stand with Republicans in their efforts to lower taxes on the top two percent?

What is it about slogans like “no more taxes,” and “government spending is out of control” that are so appealing to the other ninety-eight percent of Americans?  The 98% don’t really pay all that much in taxes, and they recoup a substantial amount of what they do pay through their use of social programs such as Social Security, Medicare, Veteran’s benefits, welfare, public education, transportation, environmental protection and unemployment insurance, etc.

Liberal commentators often skip over this question and jump into the fray accusing Republicans of greed, manipulation and deception.  Rachel Maddow recently expressed concern that Democrats would compromise on the Bush tax cuts.  She railed against the Republicans’ consistent refusal to compromise and extolled Vermont Senator Bernie Sanders for blasting Republicans for cutting taxes on the wealthy at the same time as they complain about debt and deficits.

SANDERS: “We are now faced with the issue of what we do with the Bush tax cuts of 2001 and 2003, and if you can believe it, we have people here, many of my Republican colleagues who tell us, oh, I am so concerned with debt and deficits, I am terribly concerned with a trillion dollar national debt, terribly concerned, but wait a minute, its very important that we give, over a ten year period, 700 billion in tax breaks to the top 2 percent.”

“We talk about a lot of things on the floor of the Senate, but somehow we forget to talk about the reality of who is winning in this economy and who is losing, and it is very clear to anyone who spends two minutes studying the issue, the people on top are doing extraordinarily well at the same time as the middle class is collapsing and poverty is increasing.”

This is true, so why don’t Americans vote 98-2 in support of taxes and government spending?  Why don’t Democrats have more traction when they argue for raising taxes on the wealthy and spending money on social programs?

Could it be that Americans don’t feel good about taxes and government spending because they really are naturally wary of big government?  Remember that the nation was born of the fundamental principles that power corrupts and authority must be held in check.  Yet the size and scope of government today dwarfs any monarchy or authority that the founding fathers could even have imagined.  The British Empire of old doesn’t hold a candle to present day Washington.

This isn’t to say that Social Security and Medicare shouldn’t be revered and safeguarded.  But costly foreign wars and catastrophic financial mismanagement have caused more than the usual doubt or despair over government.

Anyone who argues in the public arena that taxes must be collected and spending authorized would do well to respect the public’s healthy skepticism. To speak to this concern is to talk about good management practices and improved efficiency; more persons served and better services with lower costs.  This doesn’t have to hide the difficult decisions about balancing budgets and taking care of our fellow citizens.  But it’s not enough to say the rich can afford to pay, or that Republicans want to cut spending on social programs, and think that you’ve won the argument.

Americans know that the breakdown in good government is in part because government’s very size and financial power have turned it into an unwieldy, unaccountable beast.  How the public regains control is not yet known, but those working to preserve the social safety net, should avoid collisions with the public’s genuine desire for government reform.

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Check out my U.S. Supreme Court case law podcasts at supremepodcast.com.

North Korea’s Nuclear Bravado v. the U.S.’s Newfound Hesitation

By Marc Seltzer; originally published at care2.com on November 30, 2010.

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I am watching the news and wondering when everyone went to sleep? Is anyone else wondering the same thing?

Why are we allowing North Korea to have nuclear weapons and at the same time act aggressively? I understand that if we respond aggressively, they might start a war, but since when is that an impediment? We started a war in Afghanistan because they attacked us with our own planes. We started a war in Iraq because they were belligerent and might have had dangerous weapons technology. Both of those situations might have been handled differently, but why isn’t it worth standing up to North Korea? I can’t imagine the logic.

If allowing North Korea or Iran to “go nuclear” leads in the long run to nuclear weapons proliferation among people who do irresponsible things and then hide behind their nuclear weapons, or worse, the use of a nuclear weapon by an individual not associated with a state for whom deterrence isn’t important, what could be worse? What path are we on? North Korea sinks a South Korean ship and attacks a few South Korean civilian homes. No response?

We should be reticent to force regime change on another country, but are we confused that we could not attack their nuclear capability, their military, their government, if we wanted to? Should we at least draw a line that says, “if you kill more than a thousand civilians, we have to stop you” or “if you demand a change in foreign policy based on your nuclear capability, we have to destroy that capability?”

It’s not so much that the recent incident in North Korea is crucial in itself. But it sends the signal to everyone who ever wanted power, that if you can get your hands on some plutonium, you can really throw your weight around. Moreover, we are at only one moment in this evolution, we have a whole future ahead of us facing the prospect of a nuclear North Korea selling or trading weapons to others. In fact, for North Korea, it would seem that a destabilizing attack by a third party on the United States would strengthen the North’s standing in the world, so long as it couldn’t be directly blamed on North Korea so as to justify retaliation.

Although I have not been against the war in Afghanistan — other than it should only have been fought from a plane to punish perpetrators of 9/11, rather than on the ground with the dream of building a modern country — or the war in Iraq — though I was never convinced by the articulation of reasons or the simplistic approach to remaking Iraqi society — I don’t understand how anyone could think that either of those efforts were in the same league in importance compared to curbing the avowed development of nuclear weapons among small belligerent states.

What bothers me is that I am not even reading in the news any consideration of a serious response to either North Korean actions or nuclear proliferation. It seems that the discomfort of standing up and risking another war has become so high that it is off the table. The alternative, a future cataclysm, that we can’t quite predict and that might still be twenty-five years off or might never occur, offers false comfort.  Experts on PBS NewsHour are saying there isn’t much we can do. I understand that President Obama has taken the position during his presidency that North Korean stunts should not be elevated in political importance by receiving a presidential response. This make some sense as a political posture, but at some point, the only appropriate response to a military attack is a serious response.

Unlike in Afghanistan, where a great deal of costly response has achieved very little, the United States needs to find ways for a little response to achieve a great deal. If anything needs to be rethought by the Defence department and civilian leaders, this is it.

The real lesson of 9/11 was to access risk with some imagination. The risk here is that someone or some group will find it advantageous to use a nuclear weapon on a major metropolitan area, whether New York, Moscow, London or Mumbai — that in the subsequent international instability and economic distress, their position would be improved. There are many interests whom are disadvantaged in the current world order, and it is impossible to predict the path connecting nuclear technology and radical political designs.

While the President cannot eliminate all threats to the United States or its allies, the conclusion drawn from a period of ineffective or at least inefficient military campaigns cannot be to take confrontation, including military action, off the table. The United States must think smart about where the greatest risks lay, and take action now to achieve the most effective containment of those risks. History will not wait for us to get it right.

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Check out my podcasts on U.S. Supreme Court case law at SupremePodcast.com

President Obama’s Tea Party Credentials

By Marc Seltzer; originally published at care2.com on November 14, 2010

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I wonder if the story of the midterm elections is what it seems:  Tea Party Rejection of President Obama’s policies ushers in a Republican agenda.

In that story, President Obama is either the same old Washington problem, out to use tax-payer money and gov’t power for his own out-of-touch interests or an out-of-control Democrat-Socialist on a wild spending spree.  The deficit and debt represent the proof of the irresponsibility of the incumbents, and the new Republicans are the populist heroes who will reign in spending and balance the budget.

But I keep remembering candidate Obama saying “I am not doing this so I can pass the buck on the hard decisions.”  Difficult decisions are the ones where you take things from powerful people or make them pay what they cost, rather than offer give-aways.

Leave the financial crisis aside for a moment.

The current President inherited both short-term deficit spending (war, tax cuts, excess gov’t spending, etc. — unpaid for) and long term structural debt (Medicare, Medicaid, Social Security going up unsustainably per existing law and future demographics).  There are sometimes reasons to borrow money, to spend now and pay off debts later, but the past decade was not WWII.  Congress simply spent more than it took in, and it gave gifts such as tax cuts and Medicare benefits by borrowing money.

Along comes Barack Obama, talking about “bending the cost curve.”  Significant in the health care reform was removing tax subsidies for generous employer-sponsored health plans. Most Americans get their insurance from employer-sponsored health plans, and this substantial reform, however unpopular, will reduce the costs and waste of excessive medical care.  Mr. Obama also approved taking funds out of Medicare.  That’s hurting doctors and potentially forcing more cost containment on publicly funded health care for seniors.

The President also talked about reducing earmarks (the first budget under Obama contained earmarks prepared before his inauguration).  That hurts corporate interests and the politicians so aligned.   Then, Mr. Obama sought to reduce defense spending, with his Secretary of Defense standing up to criticism by congressional and corporate defense interests.

This sure seems like the long-term path of fiscal discipline.

What I’m wondering is, could the Tea Party movement be going in the same direction as the President?  Could it be that in order to balance the budget a lot of sacrifices will have to be made?  The President started down that path. (The financial crisis brought some unexpected costs — Bush’s TARP and Obama’s Stimulus — but not a recurring give-away). Now, the Tea Party-rejuvenated Republicans are all about cutting spending.

Doesn’t that really put them in the President’s camp?  Everyone with an interest, special or otherwise, will argue for their piece of the pie.  Tea Party Republicans are proposing to reform earmarks, cut defense spending and balance the budget.  They come at the problem as if it was the government that was devouring all the money.  But if they stay in the game for long enough, they will see that it’s not that simple.

In that case, President Obama may again appear the reformer:  A leader with a clear understanding of what needs to change to create a more sustainable America, waiting for people with integrity and discipline, a willingness to sacrifice, and political courage to join the fight against a system of entrenched interests.

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Listen to Marc Seltzer’s weekly podcasts on the U.S. Supreme Court at SupremePodcast.com

No Tea Party in Canada

By Marc Seltzer; originally published at care2.com on October 13, 2010
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Democrats seem bewildered by the strength of the Tea Party movement.  Powerful incumbent Senators such as Boxer (CA) and Reid (NV), and numerous House Reps in leadership positions find themselves in difficult contests. Republicans are poised to gain significant numbers in the legislative branch in November’s mid-terms election.

Fighting back, Democrats and their supporters have gone after Tea Party-Republican candidates, focusing on their oddities, inconsistencies, and lack of coherent policies.  Rachel Maddow, among others, has exposed the remarkably poor caliber of some candidates propelled by the Tea Party to victory in the Republican primaries.

Be that as it may, the legitimate complaint of the Tea Party movement has not been effectively dealt with by Democrats.  The root groundswell of anti-government energy comes from fear and anger about deficit spending and debt.

Deficits matter.

In Canada, governments of the past decade worked hard to erase the substantial deficits of the 1990s.  When the 2008 financial crisis arrived, Canada was able to face the recession with sound economic fundamentals.   Increased public spending in 2009 and 2010 again created deficits, but helped Canada recover nearly all the jobs lost in 2008.  Embarking on a new deficit spending program did not faze the public, and Canadian leaders are now talking about returning to surplus budgets in the next 7 years.

There is no tea party movement in Canada.  National health care, yes.  Major tax protests, no.

For all the things wrong with aspects of the Tea Party movement, from blaming the Obama administration for current ills to dredging up misguided social views, the truth is that the U.S. would have braved the recession far more effectively if it had had a budget surplus.

In not addressing this aspect of the financial health of the nation directly from the start, with a coherent long-term plan, the Democrats have allowed the opposition to bundle legitimate disapproval of the government’s budget outlook with generalized anger at banks, unemployment, the Bush administration, Congress, taxes, and government spending.

It’s working for Republicans so far, and if this election looks bleak, imagine Sarah Palin filling a stadium near you in 2012.

(Marc Seltzer has been on paternity leave after the birth of his daughter in June.  Marc can also be heard reviewing U.S. Supreme Court cases at SupremePodcast.com)

Arctic Oil Drilling Suspended

By Marc Seltzer; originally published May 27, 2010, at care2.com

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President Obama has stopped the permitting process for drilling in the Arctic.  In the wake of the BP Gulf oil spill disaster, the administration’s moratorium will be in place until the cause of the Gulf spill has been determined and new environmental rules are imposed.  (New York Times coverage of President’s announcement)

While a practical response to current oil spill, this may also aid the administration in pressing forward to develop a more sustainable energy policy.  President Obama campaigned for an end to excessive dependence on foreign oil.  This put him in favor of more offshore oil drilling, development of a new generation of nuclear power plants, as well as government support for new green technologies such as wind, solar and improved mileage standards for vehicles.  However, the President has not had universal support for green technology initiatives on the one hand, and has not gone far enough to address environmental concerns related to increased oil drilling, nuclear and climate change, on the other.

The U.S. populace is a reckless consumer of energy with little regard for the geopolitical or environmental consequences.  In contrast, Europe charges high gasoline taxes to discourage fossil fuel consumption.  Current legislation on climate change is a huge first step, but our nation needs bold leadership to move forward in energy policy, threading the needle of politically sound choices, management of limited resources and promotion of economic growth.

The President should seize the initiative during the moratorium period.  Of course, current dependence on oil, including foreign oil, cannot be changed overnight.  But developing policies that point in the right direction, towards sustainable energy with environmental safeguards should be the top priority goal of the administration.  We need fifty-year and 100-year plans.  The fact that technologies will change over time beyond our current understanding, does not alleviate our need to chart a responsible course now.

President Obama and the Democratic Congress face political challenge because of the economic downturn.  But that is looking backward.  Going forward, the Democrats should propose and campaign for transforming American energy policy.  Such a policy would clearly distinguish Democratic and Republican candidates in November.  It would offer international leadership above and beyond the tone of collaboration ushered in by Mr. Obama, and would begin the necessary public dialogue about a system for the use of resources and an accounting for damage to the environment that is appropriate for sustained progress and development.

The old model of environmental advocates lobbying for regulation of business served to pressure businesses to eliminate the worst of their pollution while businesses protected their profit potential.  However, what is needed now, is long-term, visionary policy that promotes green technologies, but also engages the public in the transformation from destructive consumption and development to sustainable management of the earth’s precious resources.

“You never want a serious crisis to go to waste,” Rahm Emanuel, Obama’s chief of staff, said just after the election.  A year later we have some significant progress in financial reform.

The Gulf oil rig tragedy has temporarily refocused attention on the dangers and mismanagement of energy policy.   Now is the time to act boldly!