Does Compromise Always Make Good Policy?

Do You Take What You Can Get?


The Washington Post reports that about 70 percent of Americans approve the compromise between Republicans and Democrats, but a small 11 percent approval of the four major points of the bill.  This clearly speaks of support for a moderate, cooperative and civil atmosphere.  It also says that there's things in the bill that both sides don't like.


Why Does This Matter?


These negotiations will effect:

1. Overall Taxes (extended Bush Tax Cuts)
2. Unemployment benefits that will run out soon or have already run out.
3. Payroll Tax (you will get a holiday, meaning more money in your pocket)
4. $5 million threshold for inheritance taxes (estates of $5 million or more will pay 35 percent tax)

Will it Help the Economy?

Not really.  It's actually projected to add $900 billion to our national deficit that is already out of control.  It continues tax cuts we could never afford and supports programs that cost us a fortune.  In many ways, it is the same financial irresponsibility that continues to put our country in the hole.  Sure, it's nice to have lower taxes, but we have a real financial crisis to deal with.  

The Republicans argue that these tax cuts for the wealthy will create jobs.  I say, not likely.  Private sector job creation benefits more from R&D tax credits, lower corporate tax rates and other business tax incentives.  Most of the rich individuals will hold onto their money because it's part of how they became rich in the first place.  They're smart and no one will make major moves to hire unless they see record profits headed their way.  The poor will spend a little, but will pay off debt as well, stimulating nothing.  Public confidence that these new package of laws will make a big difference are at a pathetic, but accurate, 9 percent.

Political Messages

The Democrats are a mess right now, but President Obama wants to frame this as a leadership decision for cooperation and, most of all, a decision to help the American people.  The Republicans want to take the stance that there was no compromise and that they got what they wanted by sticking to their guns.  Both parties look better for the compromise, but there's no reason to think that years of bitter fighting are forgotten.  It's still about positioning for the elections in 2012.

This is also a big signal from Obama that he is willing to make deals to get laws passed.

Dissension in the Ranks


House Democrats are pissed and a lot of them are saying that Obama could've got a much better deal than he did in the negotiations.  While they could be right, I believe this was a political move to make sure that other items that Democrats want passed get a chance with Republicans taking over the House very soon.  It shouldn't be quid pro quo (I'll do this for you, if you do that for me.) but that's how many laws actually get made.  It's not just based on good data or what makes the most rational sense.