Over the last week, President Barack Obama’s deal on the tax cuts – where he caves in to right-wing hostage taking and agrees to deficit-exploding tax cuts for the rich in order to get a few more months of unemployment benefits – has gotten a lot of criticism from progressives, who correctly see it as a very bad deal.
Many of those critics are here in California. And that is fitting, because we have faced this situation before – and we made the correct choice, to reject a bad deal designed to promote right-wing goals and instead keep fighting for progressive solutions.
In February 2009, Democratic leaders in Sacramento cut a budget deal with Governor Arnold Schwarzenegger to close a $20 billion deficit. The deal included temporary tax increases that lasted until mid-2011, but also included several ballot initiatives for a May 19, 2009 special election that would extend these taxes and take money from other voter-approved funding streams, including funds for early childhood programs (First 5) and for mental health services, along with “securitizing” the state lottery.
One of the ballot measures, Prop 1A, extended the tax increases for another 2 years – but only at the cost of accepting a spending cap. A spending cap has been a Republican holy grail since 1979, when Paul Gann’s Proposition 4 passed, designed to limit the growth of state spending. John Garamendi later put Prop 111 on the June 1990 ballot to eviscerate the Gann limit, and its passage sent the right back to the drawing board to impose a spending cap to achieve the destruction of state government they’ve always desired.
California voters have twice now rejected a spending cap – Prop 76 went down in flames as part of Arnold’s 2005 special election, and Prop 1A failed in May 2009 as well. Progressives understood the danger of the spending cap, and that it would make austerity permanent, further enshrining right-wing ideology in the state constitution.
Here at Calitics, we strongly denounced the deal from day one. But as soon as the campaign for the May 2009 special election proposals got under way, Sacramento Democrats began a full-court press to convince progressives, unhappy with the bad deal, that we had to support it – or else cause widespread suffering.
One Sunday in April 2009, I was on a conference call with then-Speaker Karen Bass and her staff. She was anxious to get me and others to back the initiatives. For two and a half hours we discussed the deal. I understood Bass’s point, that if the initiatives failed there would be “ugly” cuts that would hurt people. But I rejected the premise. I pointed out that not only would Democrats still have the ability to drive a better and harder bargain because they had the votes to block Republican budgets – but also that the long-term damage of the deal would cause MUCH more harm than any short-term pain.
Bass and her staff kept returning to the same metaphor that President Obama used in his press conference last week: that Republicans had “taken hostages” and we could not let them shoot the hostages. My response was the same then as it is now: giving in to Republican demands merely encourages them to take more hostages in the future, while the deal itself would cause much more pain indefinitely, given the effects of the spending cap.
At the time, I was working as Public Policy Director for the Courage Campaign, and as always, the Courage Campaign polled our members on the initiatives for our endorsement in our progressive voter guide. We presented Bass’s and Darrell Steinberg’s arguments alongside a staff recommendation that the initiatives be rejected. Courage members saw both sides, and overwhelmingly voted to reject Prop 1A and the other flawed proposals. A few weeks later, on May 19, Californians as a whole did the same thing; the special election initiatives went down in flames.
And yet the suffering that was predicted never materialized. Sacramento Democrats didn’t surrender to Republicans. They kept fighting. Within days, progressives and Sacramento Democrats had put the special election split behind them to unite to fight Arnold Schwarzenegger’s austerity – and to lay the groundwork for proposals for the 2010 ballot to advance the progressive cause. Out of that post-May 2009 effort came Prop 25, which finally restored majority rule on the budget.
To be clear, we still have not solved the budget crisis. Progressives have not suddenly fixed California’s problems because we rejected the May 2009 proposals. But neither are we permanently hamstrung by a right-wing spending cap. By late 2009 the progressive movement and Sacramento Democrats were working to defeat Meg Whitman and her right-wing fiscal plans. That victory has now paved the way for a June 2011 special election that, we hope, will provide a clear choice for Californians – austerity or stimulus.
What we learned in May 2009 is that it’s OK to reject a deal that is rigged to advance Republican goals. We can live to fight another day, the sky will not fall, the world will not end. It is imperative that we do the same and reject the president’s foolish deal.
Everything in this deal is designed to advance Republican goals. The huge spike in the deficit is intended to force massive federal budget cuts in 2011. The payroll tax cut is intended to make Social Security’s finances look bad and force big cuts to that program. The one-year extension of some unemployment benefits (and not to the 99ers) is intended to set up another hostage crisis whereby Republicans can take advantage of Obama’s naive understanding of politics and do this all over again. Progressives are told that if we don’t support this deal, people will suffer – but if this deal becomes law, a LOT more people will suffer a great deal more, and over a longer period of time.
Californians are now in the position Winston Churchill was in 1938 – denouncing appeasement as a fool’s errand that will only result in greater demands that forestall the inevitable fight. Some might object at the comparison, but it’s merely the most familiar example of appeasement; history is full of others. The basic concept is always the same – when a more powerful side is afraid or unwilling to fight, and are willing to make deals with extremists, the extremists will always come back for more and will always demand an even more insane price to avoid the fight. But in the end, you WILL have to fight the extremists, or else surrender to them entirely.
Neville Chamberlain eventually understood this, declaring war on Nazi Germany in September 1939 after Poland was invaded. Had Britain stood firm at Munich a year earlier, or had France been willing to stop German rearmament, perhaps there would have been fighting sooner, but it is also possible that one of the most horrific experiences in human history could have been stopped.
I hope that the stakes are not nearly as apocalyptic today as they were then. But we know how this story is going to end. Barack Obama will eventually have to fight the Republicans. He does not want to; he is an appeaser at heart. But there will come a moment when Republicans demand the equivalent of the surrender of Poland, and Obama may finally realize he has to fight. Either that or he simply yields to the right and lets them do whatever they want.
Let’s hope that progressives understand the lessons of history, particularly the May 2009 special election here in California: you don’t have to give in to Republican demands. Instead it is better to fight now, since the fight will come eventually, rather than make huge concessions to the right and be in an even worse position when the battle begins.
The far and middle right were far more vehement in their opposition to 1A than anyone. That gave it a patina of appeal to the left.
This analysis is seriously flawed. Prop 1A was permanent–Obama’s is not. The Obama deal is set up to allow a campaign on the nature of government in 2012, as the tax cuts will be expiring. The most important part of the deal is the stimulus action–it will add 1% to growth and perhaps a million jobs. Is it enough? No. But it gives Obama a fighting chance to win in 2012. Then Obama has the upper hand as he can simply veto any extension and the tax structure will return to 2000 levels (which, incidentally, effectively balances the federal budget).
The argument about appeasement is particularly dangerous. Vietnam was justified as not appeasing the Communists, that is, not making the same mistakes as were made before WWII with respect to Hitler. This argument would have been correct if the Vietnamese war was a proxy war of a puppet state, as was Korea. It was wrong because it was a war of national liberation and united Vietnam quickly turned against its backers (the Chinese), by overthrowing the pro-Chinese government of Cambodia (which lead to the border war in 1980 between Vietnam and China).
The point is, historical analogies need to be accurate. Defeating Prop 1A was correct because it ensured the issue would come up again. Similarly, the Obama extension ensures the issue will come up again. Democrats need to keep fighting. The next step would be a ballot measure to lower tax increases in support of education to 50%. Another would be to effectively repeal Prop 26 by allowing a 50% vote for fees that remediate pollution and allow the substitution of one tax for another (this would be a great threat against business).
Sorry
In 2012 Republicans will hold Unemployment Insurance hostage or raising the National Debt ceiling or something else that Obama will cave on
The Republicans see that they can roll Obama
They’ll roll him. again
Unless they see that Democrats won’t blindly follow ‘Fearless Leader’
This is the most incompetent and inept Adminsitration since Jimmy Carter
The Gang that can’t shoot straight
Why Help Obama ‘triangulate’ ?
ANYBODY BUT Obama 2012
An interesting discussion and several people make good points. However, I’ve maintained two simple objections since the deal was announced. I’m gratified to see both finally getting some mention in major media outlets.
1. If tax cuts are stimulative and create jobs, why have we seen a major collapse in employment since the original cuts were enacted in 2001?
2. Everybody and their brother has wondered why Republicans, who profess to see the deficit as the major problem facing the country, want to increase it by continuing tax cuts. The answer is they don’t. Just like prop. 13 was never meant to keep retired people in their homes, as it was sold, but was instead part of a long-term project to shrink government revenues and so force draconian services cuts the GOP could not get any other way. This is the same strategy.
Services cuts are not popular with politicians because their constituents don’t like them. Even Tea Party protesters out yelling in the streets about big government and “Obamacare,” don’t want to lose their own Medicare benefits. So the only way to get around this is to create a fiscal crisis by driving up debt. If they can simultaneously line the pockets of their major donors, the GOP considers it a win-win. Dubya did a great job of this with two wars that were a windfall for military contractors, and a Wall Street bailout that the bankers loved. Both, of course, exploded the deficit. Neither offered anything at all to average Americans. Bush has lately said that his biggest regret was not “reforming” (read privatizing) Social Security. This is another twofer for the GOP. Wall Street is eager to get their hands on our retirement funds so they can make money off of it. Of course that doesn’t mean that we will. I don’t know about you all, but Morgan Stanley made more money on my IRA than I did. Not tough to do since I’ve lost money on it for years. As I approach retirement age, putting my future in the hands of Wall Street becomes increasingly frightening.
Moody’s today warned that, if the tax cuts pass, they may lower the bond rating for the U.S. government. As with California bonds, which now must pay much higher interest rates because of our financial disarray, this would raise the cost of borrowing for the federal government–further increasing the deficit. This is, in fact, what has happened in Greece and Ireland and is a major factor in their fiscal problems. Why anybody listens to Moody’s anymore after their shocking failures of late is another question. But the fact remains that this is something Republicans have done right here in California and are now attempting on a national scale.
And that’s the only historical parallel I’m going to use. We’ve already seen this movie folks. I give it a thumbs down.
The central problem is that the right-wing is very organized and very persistent (one of William F. Buckley’s
complaints in God and Man at Yale was that Keynesian economics was being taught–60 years later there is still an assault on the only system of economics that has been proven to undo the results of an economic collapse). This is really not that hard for them because they are primarily funded by a few hundred individuals/corporations (think of the Koch brothers).
Most people are not that far-seeing. Solzhenitsyn describes how the Soviet Central Committee shot itself over the course of two years. What he meant by that pithy comment was that a petition would be passed around indicating that materials had been found against a certain member of the Central Committee and did you agree with that
members arrest? Of course, everyone signed, and over the course of two years 75% had been executed.
What we have seen over the last 30 years is what happened to the Central Committee–we have been shooting ourselves. Prop 13 destroyed California schools (no one remembers they were the best in the nation during the 60’s and 70’s, Max
Rafferty notwithstanding). Massive tax cuts for the rich (and a tremendous hike in Social Security tax to pay off not future retirees expenses, but current retirees expenses, who hadn’t contributed enough–why should not this have come out of the General Fund?), combined with preferential treatment for what used to be called “unearned income”, resulted in the current banana republic distribution of income (worse than a banana republic’s–read Kristof’s NY Times pieces on this).
But what is important for Democrats to remember is that we have won, but the fruits of our victory won’t be realized for another 10 years. California is the future of our country and it is the ethnic vote (Latino, but the Asians came along) which destroyed Republican efforts in this state. In the next 10 years, this will spread throughout the Southwest, and the coasts plus the Southwest will be a winning coalition in national affairs. What we must stop, for the next 10 years, is Republican attempts to lock in the current economic hierarchicalization, which was the intent of the Bush tax cuts (there were others, even worse, which fortunately never got passed–for example, allowing unlimited tax-free accounts which would further create an economic aristocracy). So Obama must win in 2012, as demographic change creates a future that allows the average citizen, not just the top 1%, to prosper. As with the Russians fighting off the Napoleonic or German invasions, we must stage a fighting retreat, if necessary (and extending the tax cuts for the rich is such a retreat) in order to assure ultimate victory.