Picking Nits on Capitol Hill

The lame duck Congress now in session has been marked by somewhat bitter infighting within the Democratic Party. The issue: extending the Bush era tax cuts to everyone. Obama had to give up one of his campaign promises in negotiating a compromise (with the Republicans) that will allow millions of unemployed Americans to collect more benefits. Democratic leaders in Congress believe that Obama caved in more than compromise.

I say compromise, you say caved, maybe we should call the whole thing off!

Here’s how the Capitol Hill battle over tax rates would personally affect me. Since I am unemployed – and will probably remain so for the remainder of this year and a good part of next year too — then my income (not counting unemployment benefits) is estimated to be zero. That’s zero, as in less than one, or in other words nothing, nada, null set! Now math was always my worst subject, but to make sure I have crossed all my “I’s” and dotted my tees, I will use my calculator to confirm my suspicion. Let’s see, tap in zero, tap in 39% of zero, tap multiply, and oh yes, my total tax liability would be (drum roll, please)...zero!

My little exercise shows how irrelevant some of the nit-picking about the Bush era tax cuts/unemployment benefit extension bill is to me and the rest of the 9.8% of us who are career challenged during this holiday season. As the debate rages on, I find that my feelings on this issue, once in lockstep with President Obama, now is slowly changing and being shaped by the political and economic realities of the moment. The President is also showing signs of undergoing the same conversion.

President Obama made a campaign promise to repeal the tax cuts for the multi-millionaires/billionaires who make $250,000 or more in adjusted gross income. That pledge was made in the heat of battle for the White House. Oh, I’m convinced that Obama was sincere about this promise, but he has recognized – during the last few weeks – that his best intentions will not become reality. He has measured this realization against the idea that millions of unemployed Americans will shortly lose unemployment benefits.

This is called flexibility, and it should not be considered a crime in political circles. Democrats, please take note.

In the best of economic times, when deficit reduction is an attainable goal, then Obama’s tax cut plan would be desirable. The last quarter of 2010 is not one of those times. The President has little choice this year but to cut his losses and make a deal with the Republicans in Congress.

Unfortunately, many Democrats in Congress – these are the people who are theoretically in the same party as Obama – do not agree with the deal and are adamant in not allowing a vote on it to come to the House floor. Obviously, these people did not get the memo that compromise needs to be made for the good of the American people. They do have a valid point in allowing the super rich to get away from paying their fair share, but ladies and gentlemen of the Democratic caucus, the timing sucks.

So many clichés could be used to counter their argument: cut your losses, choose your battles more wisely (as in defending Obama’s health care reform), retreat now and come back to fight another day...and so on! Democrats, you need to have Obama’s back now. Oh sorry, you’re too busy charging at him with spears from the front to have his back. No, no, change direction and face those who will make you look like hypocrites on middle class tax increases to the electorate: the Republicans in Congress.

The Republicans, who have been arguing that maintaining a tax cut for the super rich will encourage investment and more job creation, appear to have won this battle. Soon we will call their bluff. Once the tax cuts are extended, then the American people should expect, nay demand, that the Republicans in Congress pressure their billionaire buddies to invest more of their income and create jobs.

This would be the time to take risks with their investments, tweak business models, diversify their production, and develop new innovations and products which will grow their companies and the nation’s economy in the face of international (i.e., China and India) competition. Oh yes, and of course, hire, hire, HIRE! If this is done, then in two years time, when the next round of elections are scheduled, the Democrats won’t be able to label them as hypocrites.

(Thank you for reading. Please remember, Mr. and Mrs. American Businessperson, “hire” is a four-letter word that should not be feared!)