Extortion works . . .

President Obama has just announced that he is caving on the Bush tax cuts – for the noblest of reasons, of course.  I know that symbolic victories don’t mean squat to the average American family, whose income has remained at a standstill (if they’re lucky) while the cost of food, education and utilities has climbed steadily.  BUT:

·        The President’s deal with the GOP trades off 13 more months of unemployment benefits for a 2-year continuation of ALL of the Bush tax cuts to everyone, including the richest Americans. 

·        The cost of the unemployment benefit extension is substantially less than half of the cost of extending the Bush tax cuts to the richest Americans.

·        Neither the unemployment benefits extension nor the tax cut extension is in any way “paid for” by this deal.  In fact, the deal includes absolutely NO SPENDING CUTS.  None.  Nada.  Zip.  Zilch.  So, while everyone claims to be concerned about the deficit, the President and the GOP have just agreed to spend a lot of money and to pass up even more in revenues.

·        Economists report that each $1 of unemployment benefits produces $1.60 in spending in the private sector, while each $1 of taxes not collected from the wealthy produces considerably less than $1 in private sector spending.  So, while everyone is concerned about stimulating the economy and private sector spending, the President and the GOP have just agreed to incur substantial additional Federal debt while producing less than optimal economic stimulus.

·        Among the Bush tax cuts that will be extended under this deal are cuts in the Federal Estate Tax that allow the first $5 million of every estate to pass tax free.  This is a bonus for the wealthy which produces no economic stimulus whatsoever.

Sadly, I have to conclude that:

1.      President Obama lacks cojones.

2.      Political extortion works when your opponent lacks cojones.

3.      The GOP is totally full of crap.  Republicans don’t give a rat’s anus about the debt or the unemployment rate or the state of the economy.  The only thing they care about is making sure that rich people pay as little in taxes as possible.

On the plus side:  The Republicans and the business community have told us for the better part of a year that employers would start hiring just as soon as they could be sure of what their tax situation would be after 12/31/10.  So any day now, new jobs should start falling on us like rain.  Laissez le bons temps rouler!