Obama Claims Victory as Congress Reaches Payroll Tax Deal

It's a good thing Boehner took the deal. The GOP was getting hammered on this, letting the Obama-Democrat-Socialists seize the mantle of tax-cutters. What a joke that is.

At Los Angeles Times, "Lawmakers reach tentative deal on payroll tax cut; House action Friday":

The agreement amounts to a reversal of sorts for the House Republican majority, which had rejected a compromise plan that the Senate overwhelmingly passed last weekend to extend relief for wage-earners for 60 more days.

Boehner had said the House wanted a full-year extension, and called on President Obama to demand the Democratic-controlled Senate return to Washington to continue negotiations.

Earlier Thursday, the Ohio Republican showed little sign of reversing course, convening his top negotiators in an otherwise-empty Capitol to call on Democrats to join them for "serious negotiations."

Asked later about the perception that Republicans had caved, Boehner said, "I think our members waged a good fight." He admitted, though, that it may not have been a politically popular one.

The White House issued a statement from Obama congratulating members "for ending the partisan stalemate.""This is good news, just in time for the holidays," he said.

"This is the right thing to do to strengthen our families, grow our economy, and create new jobs."

I commented on this debacle previously at length. But check Howard Portnoy at Hot Air, "The GOP’s costly fumble over the payroll tax extension." And also, Jonathan Tobin, at Commentary, "Capitol Hill Fiasco Again Shows Why Obama is No Pushover." More at Memeorandum.

Experts See a False Dawn in Economy's Recent Gains

Here's hoping the bad economic news weighs heavier on the voters than GOP incompetence.

At New York Times, "Signs Point to Economy's Rise, but Experts See a False Dawn":

WASHINGTON — As the fourth quarter draws to a close, a spate of unexpectedly good economic data suggests that it will have some of the fastest and strongest economic growth since the recovery started in 2009, causing a surge in the stock market and cheering economists, investors and policy makers.

In recent weeks, a broad range of data — like reports on new residential construction and small business confidence — have beaten analysts’ expectations. Initial claims for jobless benefits, often an early indicator of where the labor market is headed, have dropped to their lowest level since May 2008. And prominent economics groups say the economy is growing three to four times as quickly as it was early in the year, at an annual pace of about 3.7 percent.

But the good news also comes with a significant caveat. Many forecasters say the recent uptick probably does not represent the long-awaited start to a strong, sustainable recovery. Much of the current strength is caused by temporary factors. And economists expect growth to slow in the first half of 2012 to an annual pace of about 1.5 to 2 percent.

Even that estimate could be optimistic if Washington lawmakers fail to extend aid for the long-term unemployed and a payroll tax cut for the United States’ 160 million wage earners.

At stake is about $150 billion, the bulk of which would go to middle-class families and the unemployed. If Congress does not pass the measures, economists say, it would significantly weaken growth from already-damped levels anticipated early in the new year.

Well, come to think of it, Boehner and friends may still find a way to give the Dems all the political advantages of the lousy economy.

More on that coming up later...

Republicans Losing the Tax Issue to Obama

As I was saying about those MFM headlines.

At New York Times, "Obama Gets a Lift From Tax Battle With Republicans":

WASHINGTON — After a long stretch of high unemployment, legislative turmoil and, in turn, slipping public approval, President Obama seemed to regain his political footing this week with the help of House Republicans, whose handling of a standoff over payroll taxes had even leading conservatives attacking them for bungling the politically charged issue.

At stake were continued payroll tax cuts for 160 million workers and aid for several million long-term unemployed Americans that expire Dec. 31. The holiday brinkmanship over the issue recalled the December budget showdown 16 years ago between another first-term Democratic president, Bill Clinton, and a new Republican Congressional majority — a fight that capped their year of confrontation over the nation’s fiscal priorities by reviving Mr. Clinton politically as he began his re-election race.

But the impasse was not without risks for Mr. Obama. Democrats fretted that Mr. Obama’s vow to stay in Washington through Christmas and New Year’s to get a deal would backfire should he join his family in Hawaii before a resolution. Also, though House Republicans were bearing the brunt of criticism for the latest show of Washington dysfunction, Mr. Obama could be hurt if the tax break and jobless aid are not extended and the fragile economy sours, as nonpartisan economic forecasters have warned it will without the continued stimulus measures.

And while even other Republicans were predicting that the House Republicans would have to blink, or risk further political damage, the ugliness of the fight reminded Americans yet again of the seeming futility of Mr. Obama’s 2008 campaign promise to make Washington work as the year of his re-election race is upon him.

Sounds balanced, right? Obama faces liabilities just like the GOP? Well, not exactly. Republicans have to run not only against their Democratic opponents but against the MFM as well (i.e., the "Mother F***ing Media). Republicans won't get breaks from the press. So they can't afford to screw up as bad as they are right now by giving the Democrats the upper hand in the public relations battle. The irony is that John Boehner's right: Republicans are the party of tax cuts, but they're blowing the year-end politics on a grand scale.

Miracles do happen, of course. Maybe the Democrats will beat the odds and manage to screw up this gift they've been given by Boehner's incompetence. It's a riveting political battle, at least.

GOP's Taking a Beating On Payroll Tax Extension

Image is everything, as Andre Agassi used to say.

And I can't see how the House GOP expects to win the public relations battle over the payroll tax holiday when you've got this kind of obstructionist imagery right at before the Christmas holiday. It looks really bad:

And the MFM headlines aren't helping either. At Christian Science Monitor, "In payroll tax battle, GOP shows cracks under Democratic pressure." At CBS News, "House GOP takes a political beating in payroll tax fight."And at Washington Post, "After payroll-tax debacle, GOP goes into damage-control mode."

Harsh: Wall Street Journal Slams GOP's 'Circular Firing Squad' on Payroll Tax Debacle

It's a devastating indictment, and depressing if you're a conservative.

See: "The GOP's Payroll Tax Fiasco."

And the story's trending at Memeorandum. No doubt progressives are eating this up, since they live for the deception.

'You are a pyromaniac in a field of straw men...'

George Will decimates Robert Reich, with humor no less, via Big Journalism:

Obama Applauds Vote to Extend Payroll Tax Cut

At ABC News, "Obama ‘Pleased’ About Payroll Tax Cut Extension," and New York Times, "Senate Votes to Extend Payroll Tax Cut" (via Memeorandum):

Representative Cathy McMorris Rodgers: 'We Are Changing the Course Here in America to a Pro-Growth Agenda'

McMorris Rogers hammers the administration's threatened veto of the payroll tax cut extension with the Keystone XL provision.

Also earlier at New York Times, "House Republicans’ Bill Sets Up Pipeline Battle."

PREVIOUSLY: "House Approves Payroll Tax Cut Extension."

FDR Prolonged the Great Depression

From the Center for Freedom and Prosperity.

Michelle Fields narrates:

RELATED: At The Other McCain, "‘F– Michelle Fields!’ — Interview With Reporter Harassed at Occupy DC Protest."

House Approves Payroll Tax Cut Extension

At National Journal, "House Passes Payroll-Tax Package Obama Has Threatened to Veto":

Legislation to extend the payroll-tax holiday, reduce and extend unemployment benefits, and avoid a 27 percent cut to Medicare doctor reimbursement passed the House on Tuesday by a vote of 234 to 193.

The legislation, which passed with just 10 Democratic votes, will head to the Senate where a vote is expected later this week. Leadership aides in the Senate said they expect the GOP-drafted legislation to fail when it reaches the Senate floor.

Leaders in both the House and the Senate have agreed to extend the programs in the GOP legislation, but the fight still continues over the size of the unemployment program, the future of the Keystone XL pipeline, and how to pay for the package. Democratic objection to the House-passed bill led to an official veto threat from President Obama on Tuesday.

Also at New York Times, "House Passes Extension of Cut to Payroll Taxes" (via Memorandum).

Occupy Agenda Requires Regressive Tax System

At Investor's Business Daily, "Tax Hikes On Top Earners Won't Pay For Safety Net":

As Occupy Wall Street turns its focus to D.C. this week, its long-term agenda seems to be higher taxes for the top 1% and firmer government support for everyone else.

If so, then what the protesters want — even if they aren't saying it and almost certainly don't even realize it — is higher taxes for the 99%.

America's progressive income tax system is not particularly well-suited to financing an expansive safety net. And that would remain true even if the income tax becomes a whole lot more progressive with Senate Democrats' plan to slap a surtax on income more than $1 million.

Just look at what you can — or can't — pay for with this so-called millionaire's tax and a reversal of the Bush top-earner tax cuts.

Continue reading.

Place the Super Committee Blame Where it Belongs: On the Democrats

Look, idiot progressives are in denial, but the fact is Democrats have pushed for higher taxes all year and the GOP hasn't budged. Here's GOP Conference Chairman Jeb Hensarling, at Wall Street Journal, "Why the Super Committee Failed:

Even if Republicans agreed to every tax increase desired by the president, our national debt would continue to grow uncontrollably. Controlling spending is therefore a crucial challenge. The other is economic growth and job creation, which would produce the necessary revenue to fund our priorities.

In the midst of persistent 9% unemployment, the committee could have enacted fundamental tax reform to simplify the tax code, help create jobs, and bring in over time the higher revenues that come with economic growth. Republicans put such a plan on the table—and even agreed to $250 billion in new revenue by eliminating or limiting most of the deductions, credits, loopholes and tax expenditures mainly enjoyed by higher-income Americans. We offered this to avoid the even larger tax increases already written into current law that will intensify the pain Americans are feeling during these difficult economic times.

Republicans were willing to agree to additional tax revenue, but only in the context of fundamental pro-growth tax reform that would broaden the base, lower rates, and maintain current levels of progressivity. This is the approach to tax reform used by recent bipartisan deficit reduction efforts such as the Bowles-Simpson fiscal commission and the Rivlin-Domenici plan.

The Democrats said no. They were unwilling to agree to anything less than $1 trillion in tax hikes—and unwilling to offer any structural reforms to put our health-care entitlements on a permanently sustainable basis.

Unfortunately, the committee's challenge was made more difficult by President Obama. Since the committee was formed, he has demanded more stimulus spending and issued a veto threat against any proposed committee solution to the spending problem that was not coupled with a massive tax increase.

RTWT.

Jennifer Rubin places blame directly on the president: "The consequences of presidential weakness" (via Memeorandum).

Additional thoughts at Left Coast Rebel.

Super Committee Failure

From James Pethokoukis, at The American, "Democrats’ tax-hike obsession killed the SuperCommittee":

GOP Tax Pledge Is Hurdle to Deficit-Reduction Deal — Or Is It?

At New York Times, "Economic Memo: Tax Pledge May Scuttle a Deal on Deficit."

It's a good piece. But I think the claim that the tax pledge is the main driver of GOP decision-making behavior is off base. Spending it out of control today in a way that is dramatically different from earlier eras. That's what Senator Jeff Sessions is talking about, for example:

Davis, Peters, and Caldeira on "The supply chain of CO2 emissions"

A compelling, open-access article in the new issue of the Proceedings of the National Academy of Sciences (PNAS). Here is the abstract:

CO2 emissions from the burning of fossil fuels are conventionally attributed to the country where the emissions are produced (i.e., where the fuels are burned). However, these production-based accounts represent a single point in the value chain of fossil fuels, which may have been extracted elsewhere and may be used to provide goods or services to consumers elsewhere. We present a consistent set of carbon inventories that spans the full supply chain of global CO2 emissions, finding that 10.2 billion tons of CO2 or 37% of global emissions are from fossil fuels traded internationally and an additional 6.4 billion tons CO2 or 23% of global emissions are embodied in traded goods. Our results reveal vulnerabilities and benefits related to current patterns of energy use that are relevant to climate and energy policy. In particular, if a consistent and unavoidable price were imposed on CO2 emissions somewhere along the supply chain, then all of the parties along the supply chain would seek to impose that price to generate revenue from taxes collected or permits sold. The geographical concentration of carbon-based fuels and relatively small number of parties involved in extracting and refining those fuels suggest that regulation at the wellhead, mine mouth, or refinery might minimize transaction costs as well as opportunities for leakage.

Worth Reading

Daniel Kahnemann, the psychologist who won the Nobel Memorial Prize in Economics in 2002 for his contributions to behavioral economics (challenging mainstream conceptions of rationality), has an interesting column in today's New York Times (here) on the "hazards of confidence." Here is an excerpt:

The confidence we experience as we make a judgment is not a reasoned evaluation of the probability that it is right. Confidence is a feeling, one determined mostly by the coherence of the story and by the ease with which it comes to mind, even when the evidence for the story is sparse and unreliable. The bias toward coherence favors overconfidence. An individual who expresses high confidence probably has a good story, which may or may not be true.

I coined the term “illusion of validity” because the confidence we had in judgments about individual soldiers was not affected by a statistical fact we knew to be true — that our predictions were unrelated to the truth. This is not an isolated observation. When a compelling impression of a particular event clashes with general knowledge, the impression commonly prevails. And this goes for you, too. The confidence you will experience in your future judgments will not be diminished by what you just read, even if you believe every word.

Meanwhile, future Nobel laureate (for contributions to environmental and energy economics), William Nordhaus has an interesting essay (masquerading as a book review) on energy in the New York Review of Books (here). Here's an excerpt:

If we look at actual taxes in the energy sector, they are far below the calculated external costs. In 2007, for which we have complete data, after discounting the net of energy subsidies, the money paid in total federal energy taxes was $21 billion, or less than one tenth of the level necessary to price energy at its social costs. Virtually all of these taxes were gasoline taxes—devoted to building roads so that cars could drive faster and farther! So Graetz is correct in his assertion quoted above that the US has failed to charge the full cost of its energy consumption; it is not even close.

A second point is that environmental taxes can play a central role in reducing the fiscal gap in the years to come. These are efficient taxes because they tax “bads” rather than “goods.” Environmental taxes have the unique feature of raising revenues, increasing economic efficiency, and improving the public health.

Australia's House Enacts Carbon Tax

John Quiggin has the story (here) over at Crooked Timber. The tax is set at $23 (AUD) per ton, which is comparable to the the median of the trading range of EUAs on the EU ETS and to the social cost of carbon (SSC) adopted by the US government last year. The conservative party have vowed to repeal the tax when they take office, but they may find it difficult to do so, given that proceeds from the tax will be used to raise the income tax threshold from around $6,000 to around $20,000 (AUD), which should create a sizable constituency for retaining the carbon tax. Although I would personally prefer offsetting tax cuts for all taxpayers (except, perhaps, those at the very top of the income ladder), I am heartened to see that governments are finally figuring out how to tax bads like pollution instead of goods like income.