As I embark on writing my final piece for this column, I look back on the past 11 weeks and reflect. I find that I have taken on a more than mildly pessimistic tone on the current state of affairs, both at home and abroad. I'm not sure if that is due to my inherent cynicism, or if the situation really is that bad. I'm going to discuss yet another topic in order to come to some sort of conclusion on the issue, and as the reader, you may take away what you'd like.
This brings me to a discussion of the newest development out of Washington: the compromise on extending Bush−era tax cuts for the wealthiest Americans. The complex deal includes provisions that both the Democrats and the Republicans in Congress pushed for. The GOP got $95 billion in two−year−long tax cuts for Americans making over $250,000 and $30 billion in estate tax cuts. The Democrats, on the other hand, got $56 billion in unemployment insurance for the next 13 months, $30 billion in incentives for business investment and other components.
Of course, all those billions add to our already unfathomable yearly deficit. For the fiscal year 2010, that figure tops $1.171 trillion which does not even include this deal. Though the deal's provisions add significant value to our debt, they are all stimulating policies. With the economy still lagging and unemployment still climbing, there is no question that more stimulus is needed.
The initial question was what type of stimulus is more appropriate: tax cuts for the wealthy or increased unemployment benefits and tax credits for businesses.
Both parties succeeded with this compromise and ostensibly made political gains. However, since the tax cuts for the wealthiest Americans were not made permanent, there will be another debate on this issue when 2012 rolls around. Discussion on this issue, aptly referred to by Obama as the GOP's "holy grail," will turn into greater political success for the Democrats. According to the president, the Republicans will have no way to justify continued tax cuts for the wealthy in two years when the economy is better and the deficit is even worse.
Though Obama achieved much of what he wanted to for the present and predicts a relatively rosy picture of the future, the deal may have alienated his liberal base. Many in this group see the compromise as a defeat and yet another one of Obama's departures from his campaign promises. The story is not over, however. It seems he will again attempt to follow through on this in 2012.
Yet the base does not see the pragmatic value of this compromise. This deal achieved more than any of the experts could have imagined. For those of us concerned with joblessness, the conditions the poor face and stimulus to alleviate the related issues, this compromise is still a success.
So, the White House lost now to win later. It is imperative that the cuts for the wealthy get repealed sometime soon, but now is not the opportune time. The Democrats needed a bargaining chip to get the more important unemployment benefits, set to expire this month, passed. The intransigent GOP would not budge on that issue. The deal shows the Obama administration's ability to effectively navigate the treacherous waters of beltway politics. This is encouraging.
In other news are two more topics to consider: The Troubled Asset Relief Program (TARP) will turn a $12 billion profit for the government (nice), and Bush's job approval rating is now higher than Obama's (Apocalypse?). Well then, I shouldn't venture to conclude whether or not my pessimism is justified — that generalization wouldn't reflect the complexities of our world.
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Joshua Youner is a freshman who has not yet declared a major. He can be reached at Joshua.Youner@tufts.edu.
