Obama Capitulates To Republicans: Handouts To the Rich, Neoliberal Austerity Coming

11 December 2010

By Stephen Lendman 

Despite campaign pledges and President Obama opposing extending tax cuts for households earning over $250,000, another promise made was broken. At the same time, while supporting them for working Americans, he said doing so permanently is unaffordable. Unsurprisingly, a December 6 White House press release issued a "Statement by the President on Tax Cuts and Unemployment Benefits," saying: 

While "disagree(ing)" with Republicans, he capitulated, arguing that "without a willingness to give on both sides, there's no reason to believe (the current) stalemate won't continue well into next year....I am not willing to let that happen....it would be the wrong thing to do." 

"As a result, we have arrived at a framework for a bipartisan agreement." Everyone will get a tax cut on income, capital gains, dividends, and the Bush enacted federal estate tax that lapsed at the start of 2010, including the super-rich (who deserve higher, not lower taxes), Obama caving to Republicans and deep-pocketed donors who'd likely give less if they paid more.  

In Obama-speak, we need to make "tough choices...to secure our future and our children's future and our grandchildren's future" by: 

-- permanent wars; 

-- greater super-rich enrichment; 

-- temporary populist benefit extensions; as well as  

-- class warfare coming through neoliberal austerity for working Americans, mainly middle class ones, targeted for elimination.  

Neither Obama or congressional allies explained it or that both parties accelerated it in recent years. 

Super-rich Americans will be further enriched by greater estate tax deductions. The exemption will be raised to $5 million for an individual (up from $3.5 million in 2009) and $10 million per family in addition to cutting the tax rate to from 45 to 35%. It matches levels not seen since the Great Depression's onset, besides the current greatest ever wealth gap disparity, obscene and unjustified by any standard.  

In the midst of a deepening Main Street depression, rich and super-rich Americans never had it so good, thanks to Obama and congressional Democrats governing like Republicans, signaling harder times ahead for working households. 

In contrast, the administration and Congress initiated no jobs creation programs or serious long-term relief for millions of unemployed, including many who've lost homes through foreclosure. Instead, unemployment benefits are extended grudgingly for limited periods. In prior downturns, they were enacted routinely without expiration until recessions ended. 

Handouts to the Rich, Pay Freezes for Federal Employees  

On November 29, Obama froze pay for all civilian federal employees, a White House press release saying: 

Deficit-cutting priorities take precedence. "Just as families and businesses around the nation have tightened their belts so must their government." As a result, "the President has decided to propose a" two-year freeze through 2012, excluding military personnel and employees getting promotions. The administration calls it shared sacrifice, "another step in what (it's) done as part of its Accountable Government initiative to cut costs, save taxpayer dollars and do more with less in the federal government." 

Except, of course, for Wall Street, other corporate favorites, imperial adventurism, war profiteers, tax cuts for the rich and super-rich, and other privileged beneficiaries on the government dole. Only the little people make sacrifices, collateral damage in Pentagon-speak. Others do very well, thank you very much, including $30 billion more for businesses that buy equipment in the next two years.  

Neoliberal Austerity Coming 

Other handouts will follow, generous ones if Obama's deficit cutting commission proposals are adopted. An earlier article addressed them, accessed through the following link: 

http://sjlendman.blogspot.com/2010/11/obama-teams-deficit-cutting-proposal.html 

They include dramatically cutting income tax rates to 9, 15 and 24%, down from six brackets ranging from 10 - 35% for income over $373,650. Also slashing corporate rates from 35 - 26%, combined with eliminating some deductions easily manipulated around by clever tax lawyers. At the same time, the following pain was proposed: 

-- ending or capping middle class tax breaks, including deductions for home mortgage interest and tax-free employer provided medical insurance;  

-- deeper Medicare cuts, including higher co-pays and other ways to make recipients pay more; 

-- "comprehensive tort reform," making it harder for aggrieved patients to file malpractice suits; 

-- raising the Social Security retirement age to 69 by 2075 and reducing cost-of-living increases; 

-- by 2015, cutting the federal work force by 10%, adding more to the unemployment rolls; and 

-- raising the federal gasoline tax by 15 cents a gallon and imposing "user fees" on motorists to fund the federal transportation and highway spending program. 

Congress Looks After Its Own 

In January 2009, Congress voted itself a $4,700 increase, raising their pay to $174,000. It abstained in 2010 and 2011, the law requiring both Houses reject it. Otherwise, it's automatic.  

According to the Office of Management and Budget (OMB), Obama's announced freeze doesn't apply to "legislative-branch employees," including Congress able to raise, freeze, or cut pay for all government workers at all levels. 

In 2011, military personnel will get a 1.4% increase, the smallest one since 1973, OMB citing low inflation as justification. Yet considering wartime hardships, including long deployments, high risk, possible severe injuries and deaths, who more than combat forces deserve more consideration on pay and other benefits. Next year and perhaps thereafter, it will be grudgingly meager. 

A Final Comment 

Obama, congressional Democrats and Republicans back shared sacrifice. The rich and super-rich share. Others most in need sacrifice through growing poverty, lost jobs and homes, lower pay, and fewer benefits "to bolster the economy," according to New York Times writers David Herszenhorn and Jackie Calmes in their December 7 article headlined, "Tax Deal Suggests New Path for Obama." 

Honest observers call it business as usual, new policies like current ones plus painful proposed austerity. For Obama: 

"It's not perfect, but this compromise (read capitulation) is an essential step on the road to recovery," for whom he didn't say. "It will stop middle-class taxes from going up" while Washington plans eliminating middle income households. "It will spur our private sector to create millions of new jobs, and add momentum that our economy badly needs."  

Few, in fact, have been created, showing labor force stagnation, full-time jobs being cut. In the last six months, 1.6 million have been lost. Those added are temporary or part time with low pay and few benefits. Moreover, the broader household survey shows large declines - 330,000 in October, another 173,000 in November, a pattern stubbornly persisting.  

Shadowstats reports true unemployment, including discouraged workers and those wanting full-time jobs but can't find them at 22.6%, not the Labor Department's jerry-rigged 9.8%. In a word, the job market's sick, administration policies doing little to improve it. 

Obama's "compromise" does provide a two-year expanded tax credits extension, including the Earned Income Tax Credit, Child Tax Credit, and American Opportunity Tax Credit as well as a 2% cut in payroll taxes in lieu of eliminating the Making Work Pay tax credit.  

It also extends unemployment benefits another 13 months, gives some families a college tuition tax credit, and adjusts the alternative minimum tax temporarily (indexing it for inflation), exempting 21 million households from being hit.  

The cost, of course, adds hugely to the deficit, up to $900 billion over the next two years, according to some estimates. Neither party scrimps on lavish handouts to corporate favorites, wailing only about crumbs to working households, even under Obama's so-called "compromise."  

Economist Paul Krugman opposes extending George Bush's 2001 "fast one, (his) irresponsible tax cut," largely benefitting America's rich and super-rich. In his December 5 op-ed headlined "Let's Not Make a Deal," he urged "just say no." Obama and congressional allies didn't listen, capitulating instead to Republican "blackmailers."

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening. http://www.progressiveradionetwork.com/the-progressive-news-hour/.

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