The Tax Compromise the President hammered out with congressional republicans last week is a big deal on many fronts. The White House appears to have put all of their eggs in this basket. Remember the Stimulus Bill cost around $787 billion dollars (roughly $10,000 per family) and because the economy under President Bush was worst than what had been reported, most of President Obama's Stimulus Bill was spent saving the jobs of teachers, police officers, firefighters, and the like, instead of creating and adding brand new jobs to our economy. The administration had forecasted that if this bill was passed the unemployment rate should be contained at 8%. The current unemployment rate is 9.3% according to the US Bureau of Labor Statistics. You also have to keep in mind that during the Thanksgiving-Christmas holidays, retailers always hire tens of thousands of extra temporary employees to help with holiday shoppers. These temporary jobs are figured into this current unemployment report. Once the holidays are officially over, the rate will likely go up somewhat again.
Now fast forward to the Tax Compromise which is estimated by the CBO (non-partisan Congressional Budget Office) to cost roughly $860 billion. That's roughly $1.5 trillion between these two bills that is supposedly going to stimulate our economy. With our country already trillions in debt, there will not be any appetite in Washington to add more money to future bills for job creation. What is truly alarming is that if this Tax Compromise does not create and add a significant number of jobs to our economy, you will have many Americans facing years of unemployment. What will happen to them and their families? More American homes going to foreclosures? More Americans applying for social programs like Welfare, Medicaid, and Food Stamps, further fraying the stability of those programs with a flood of new recipients being added to the roles?
Another possible fallout from this compromise if it does not actually create the new jobs as being advertised is the democratic party could actually lose the large advantage politically they have always had for decades over republicans on the issue of the economy because you now will have a democratic President, regardless of his protestations in speeches or press conferences, who will be signing onto the republican economic plan that cutting taxes for the wealthy will create substantial numbers of jobs. To urge fellow democrats in congress to vote for this bill, the White House has been using over the last week, what had previously been, republican talking points. If this bill does not succeed, this albatross will be hung around the necks of the democratic party because the President signing this bill into law is a democrat. The waters will possibly be muddied for democrats on this issues for a generation.
As we have seen during the recent Midterm elections, with the big republican megaphone on the airwaves and the corporate media's refusal to actually expose the falsehoods peddled by republicans and the media's willingness to often times use republican narratives when explaining issues like health care reform, tax cuts, etc., it will take a long hard push from the democrats to overcome all of this.
Furthermore, it will be very difficult if this does not work for the POTUS to say to the American people in 2012 that I did not believe in cutting taxes for the wealthy in a severe recession but I had no choice but to sign on to this in exchange to give a quarter of America's laid off workers unemployment extensions. That's going to be an extremely tough sell for the President.
What could the POTUS have done to avoid this? 1) After getting sworn into office, explain to the public the extreme problems this economy has, 2) Explain to the public that all available resources in America will have to be used to save and fix our economy, 3) Explain to the public that it may take many years to recover, and 4) Hire a few million unemployed American workers directly, like FDR did, in a two months span for much needed infrastructure programs around the country, more FDA inspectors, more workers to monitor when visas expire, etc 5) Explain to the public that the majority of these jobs are temporary until the private sector problems are fixed and are creating large numbers of private sector jobs. Once the private sector issues have been fixed, many of these government jobs will be fazed out. If the President or White House were worried that creating such a program would allow their opponents to label them as socialist? Guess what Mr. President, they already are and you have never voiced support for such a program but at least a few more million Americans would have been off the unemployment line.