Last night "Angry Obama" made an appearance and scolded Democrats who have been crying foul over his capitulation to the Republicans over the Bush tax cuts. What caught my attention was his "hostage" analogy:
I think it's tempting not to negotiate with hostage takers, unless the hostages get harmed. Then people will question that strategy. In this case the hostage was the American people, and I was not willing to see them get harmed.
Let me also revisit my commentary on the science of "hostage taking":
During negotiations, the hostage taker may be "convinced" to make slight concessions such as freeing a hostage or two, but they do not EVER make concessions on their primary objective.
NEVER.
The proper hostage taker like any skilled negotiator knows what their objectives are and what they are willing to concede on in order to obtain that objective.
In this case the hostage takers represent the financed class (some of whom are not even citizens, but who's registered entities are subject to taxation). The finance interests in the US do not care about the hostages except for how they may be used for capital. They care about their long term interests: less taxes and access to government coffers.
They will gladly allow the unemployed to receive benefits because those benefits go directly to them on the form of debt payments. Seriously, unemployment benefits go to food, rent / mortgages and other non-discretionary expenditures.
Not only did the big money people get an extension of the Bush tax cuts, they got a reduction in the estate tax as well. They reduced payroll taxes as well, meaning that a country currently "at war" will be seeing less income to pay for it. I don't suppose that the defense contractors will be reducing their prices to the government to reflect this. Back to the hostage scenario though.
Now returning to this new, yet to be voted on deal:
White House officials confirmed that there would not be an extension of unemployment benefits as part of the final package. The administration had insisted that an extension be part of the grand bargain it was negotiating with Boehner. But when those discussions fell apart, so too did efforts to ensure that unemployment insurance was part of a final package. A senior administration aide added that the president would push for an extension in the months, if not weeks, ahead.
Note that unlike last time, unemployment benefits, that were held hostage last time, did not make the cut. What is the president going to do? Exactly what he should have done back in December. Introduce an extension later as a separate piece of legislation as to separate it out from the budget "negotiations". Had he done this back in December it is likely that the Bush tax cuts would have been history by now and the budget issue as we know it would be completely different given the amount of the deficit that is due to those cuts.
The Huffington Post article says:
Some observers scored one victory for the president -- the second round of cuts do not kick in until 2013, when the Bush-era tax cuts are set to expire. Having a fresh round of deficit reduction that is all cuts with no revenues could give the White House ammunition to end the tax cuts on wealthier Americans, as it failed to do last winter.
So then they will be right back in the same position in 2013. Are we to believe that 3rd time is the charm?
Also written by the Huffington Post:
Liberals were extremely displeased with the final result of the talks, which began with Democrats saying there should be no strings attached to a debt limit increase that would enable the country pay its bills.
Then they insisted that if deficit reduction was going to be linked to the debt limit, then closing loopholes and raising taxes on the rich had to be part of the deal.
They lost completely on both counts, and House Republicans managed to pull the entire deal further and further to the right, even inserting a requirement into the agreement for a vote on a balanced budget amendment to the U.S. Constitution.
So the least vulnerable population in the US continue to be protected? Their stocks and hedge funds that are in dollar denominations stay at value. A "good" deal indeed. There are people who will object to this analysis because for them the whole "debt ceiling" thing has been resolved. What they fail to understand is that the "debt ceiling thing" ought never have been on the table. As explained above it was simply the gun to the nation's head to get a particular objective through.