The Obama Tax Cut Extension Compromise as an Indication of Cultural Short-Sightedness

10 December 2010

Short-term thinking characterizes everything we do — and therefore overwhelms the utility contained in compromises

I address cultural short-sightedness in this essay because the debate and acrimony surrounding the Obama tax cut extension compromise miss the lesson that is not so subtly buried in the mess.

Politicians and pundits have been quick to defend short-sighted stupidities that could have been avoided.

Short-term tactical thinking consistently skews after-event political analysis in exactly the same way that it destroyed the far-sighted strategic thinking that should have taken place before the errors in direction and implementation were made.

This essay is not about compromise or an unwillingness to compromise. It is about using forward-looking intelligence to create situations in which the foreseeable necessity for compromises will not destroy the nation.

Disjointed, last-minute political counterpunching is like going to war without a strategy and plan

Playing last minute, counterpunching politics is like going to war without an intelligent clue as to:

(i) why we want war,

(ii) what the war’s specific outcome should be,

(iii) whether the outcome is achievable,

and

(iv) if the outcome is achievable, what steps are necessary to get there,

(v) taken in what order,

and

(vi) according to what timing.

Last-second, purely situational counterpunching is stupidly self-defeating.

Using the Obama tax cut extension compromise to illustrate the point

Two days ago, I was mostly in the minority, when I criticized President Obama’s political ineptitude in trying to make the pigs-ear compromise on tax cut extensions look good.

My criticism was that the, admittedly now necessary, compromise had been forced on Democrats by their strategic bone-headedness in putting off a confrontation with Republicans over the issue many months ago.

Sitting on complacence, with a hurricane visibly looming on the horizon, is silly.

Everyone knew when the Bush tax cuts were set to expire. We all knew the enormous contribution they had already made to our already unmanageable deficit. And we all recognized that Republicans and Democrats vehemently disagreed about what to do about extending the tax cuts. We could also be pretty sure where the majority of the public stood on the issue.

Intelligent people would have begun preparing the political soil to carry their point of view forward.

Republicans did. Democrats did not.

As late as just before the November 2010 mid-term elections, Democrats decided to procrastinate still more:

But some Schumer [Democrat, New York] colleagues said the party gave Obama little time or leverage to stage a tax fight with Republicans. House and Senate leaders, including Schumer, decided months ago to shelve the tax debate until after the election, and they failed to quickly rally behind a common strategy after Nov. 2.

As a result of the Democratic Party’s short-sightedness, lack of action painted the nation deeper into the deficit-deepening hole favored by the Republican Party. Nor did the President or his congressional allies come up with even a semblance of a plan for successfully developing our nation’s way into a more productive and sustainable future.

Contrasting (a) tactics in service to strategy with (b) tactics exercised purely for the sake of disjointed, situational squabbling

Tactics are generally only meaningfully useful when they are planned and timed to carry out a long-term strategic goal.

Flaws in political maneuvering, like those that led to the Obama tax cut extension compromise, are due to our society’s insane penchant for thinking in the shortest possible terms.

Lack of distance vision leads us to apply disjointed tactical maneuvering that, in effect, avoids successful dealing with long-term strategic problems.

People defend the compromise as being the best possibility available today, without recognizing that its compromised-away components would have been easily achievable some time ago.

Short-sightedness and a lack of strategy forced the Administration to settle for tactical crumbs, when its Republican adversaries strolled off with the strategic cake.

The Center for American Progress graphed the results of Obama’s compromise — these show the embarrassing cost of disjointed tactical thinking

Yesterday, Ezra Klein, one of the critics of my harsh view of the Obama compromise, admitted that there was some merit in the hostility directed toward it.

He wrote that he still supports the compromise for its economically stimulating properties.

(As I do, for the same reason I support throwing a Hail Mary football pass during the last seconds of a poorly played game.)

But Mr. Klein added that the compromise’s inequitable wealth distribution aggravated that already pronounced socioeconomic trend.

He published graphs made by Michael Linden (of the Center for American Progress). These show which socioeconomic groups are benefited by the dollars being handed out by the tax cut extension compromise.

The rich are getting richer, on a per capita basis, funded by the deficit-deepening tax-payer handouts that the compromise agrees to make.

Citation

Ezra Klein, Why liberals don’t like the tax cut deals — in graphs, Washington Post (09 December 2010)

The economic disparity of tax cut extension benefit is enormous — and in the wrong direction

Mr. Linden’s graph, with its probably crude division between Democratic and Republican stake-holders, shows that 156 million poorer constituents are to get $214 billion in relief. And 4.8 million rich people are to get $133 billion.

If you break this down to per capita gains, poor/middle class people metaphorically get $1,372 each. And the rich figuratively get $27,708 each.

The rich are getting 20 times more per capita than the poor.

That doesn’t make sense in a society that presumably hopes to avoid creating financial slavery.

I have no idea how accurate Mr. Linden’s numbers or group designations are. But their general thrust certainly matches the economic indices that I have been following for the last few years.

Mr. Klein writes about the Linden graph:

[O]n an individual level, the wealthy are getting much, much more.

The question, at the end of the day, is whether stopping them from getting it is worth cutting benefits for the unemployed, and tax cuts for middle-income Americans, and the Earned Income Tax Credit. I don't think it is, and that's particularly true because it's not, to me, about the size of the transfer so much as the possibility for stimulus.

But given the level of inequality in this country, and the potential that deficit reduction deals won't be worked out by a progressive congress, I see how you could come down on the other side.

Supporting the same points, Columnist Eugene Robinson observed that, given that Democrats had procrastinated for at least six months, the compromise is a necessary evil.

But:

For a two-year cost of nearly $1 trillion, we get a bit more than $300 billion worth of measures that are truly stimulative: a cut in the payroll tax, a provision allowing businesses to write off capital investment and an extension of unemployment benefits.

We'll spend the rest . . . borrow the rest, then spend it - to continue existing tax breaks that obviously are not roaring engines of job growth.

The deal invests basically nothing in the nation's future.

We need to be channeling money into education and clean energy, where it can help the United States remain competitive against China and other economic rivals - not into the well-stuffed bank accounts of the rich.

In short, there is no long-term strategic sense to the tax cut extension compromise at all.

This is a display of obscenely dumb Democratic Party politicking. And inept Presidential leadership.

Mr. Klein’s stimulus prioritization demonstrates how even smart people can be diverted by tactical situations that should never have arisen

My analysis next tackles the silliness of praising the President’s political courage in making the best of the terrible situation his lack of leadership put him in.

Ezra Klein’s point about the necessity for stimulus is, indeed, correct. The stimulus benefit that results from the compromise is important.

But its inequality-widening and deficit-increasing costs are strategically atrocious. The last-minute necessity for agreeing to both could have been avoided by politically astute thinking and action taken eighteen months ago.

The strategic need for encouraging forward thinking is a larger point than the strategically-limited stimulus point that Mr. Klein makes.

We should be wondering how to correct the short-sightedness that got the United States into this economic predicament.

Hammering home the “short-sightedness is bad” point with Paul Krugman’s help

Economist Paul Krugman made an important observation yesterday about intermediate-term strategy and tactics. And the Administration’s ineptitude in regard to both.

He wrote:

The deal essentially sets up 2011-2012 to be a repeat of 2009-2010. Once again, there would be initial benefits from the stimulus, and decent growth a year before the election. But as the stimulus faded, growth would tend to stall — and this stall would, once again, come in the months leading up to the election, with seriously negative consequences for Mr. Obama and his party. . . .

Wouldn’t there be pressure on Democrats to offer Republicans something, anything, to improve economic prospects for 2012? And wouldn’t that be a recipe for another bad deal?

Surely the answer to both questions is yes. And that means that Mr. Obama is, as I said, paying for the release of some hostages — getting an extension of unemployment benefits and some more stimulus — by giving Republicans new hostages, which they may well use to make new, destructive demands a year from now.

Speaking as a former litigator and an ex-cop, I think Krugman is correct.

Consequently, the lack of foresight corner we are in is worse than it looks.

More broadly still, a point by Thomas Friedman

Columnist Thomas Friedman said in regard to the tax cut compromise:

Economics is not war. It can be win-win, so it’s good for the world if China is doing better. But it can’t be good for America if every time we come to a hard choice we borrow more money from a country that is not just out-saving and out-hustling us, but is also starting to out-educate us. We need a plan.

Planning requires thinking ahead.

Admiring the President's pragmatism does not mean one has to miss the thinking ahead point

Defenders of the tax cut compromise laud the President’s pragmatism in doing what was necessary. But they make a mostly useless point.

Getting things done does require compromise. But it also requires learning to establish the circumstances that lead to compromise in such a way that resulting agreements will be nation-enhancing, rather than nation-destructive.

This larger point means that constructive pragmatists learn from strategic failure. Will President Obama and the Democrats learn from this fiasco?

Will the President learn to lead, or will he continue to be a disjointed tactical counterpuncher — continually having to make the most of the bad situations his Party creates for itself?

There must be Dumb Dust in American modernity’s water

The United States was founded on (i) determination and (ii) thoughts and action from some of the planet’s finer brains.

Today, we are lolling along on (i) a complete absence of forward-looking will and (ii) mostly silly thoughts from lesser brains.

We have to change, if we are going to survive as a decent and capable society.

Learn, strategize for the benefit of the whole, and execute with intelligent discipline

Let’s start looking farther out.

And formulate our strategies, tactics, and criticisms with the long-term in mind.

PeteFree.com

The Obama Tax Cut Extension Compromise as an Indication of Cultural Short-Sightedness