The political compromise on tax cuts and the extension of unemployment insurance benefits between President Obama and the Republican leaders has been easier to announce than to deliver. Against this compromise are upset liberals and progressives in the Democratic Party that could be labeled as the now “party of protest,” replacing the Republican’s reputation of protesting in the past.
Perhaps the Democrats’ ideological opposition to changing parts of this deal comes from four years of being in control of Congress, and knowing that they will lose control in 2011. Many Democratic politicians felt the president gave away too much on the deal. They were angry because the negotiations took place behind closed doors, without their input or prior approval. Many liberal members of Congress felt the President lacked the backbone to make difficult decisions in his negotiations. Some stated that Republicans were blackmailing Obama, to meet an end of the year deadline, when the unemployment benefits run out for 2 million jobless people. Democratic politicians are expected to try to change some conditions in this compromise. On the other hand, some Tea Party adherents are angry that the Republicans gave in on extending unemployment benefits without attaining budget cuts to pay for them. The Republicans did get an agreement from the president to continue the tax cuts for everyone, for two more years. A waiver also was agreed to for the estate tax extension of five million dollars for single, and ten million dollars for families, with a 35 percent tax beyond those amounts.
The agreement, if passed, will keep taxes from being raised on the people who create most of the jobs, which is necessary in this recovery period after the recession. The private sector has been building jobs, but not fast enough, probably because of uncertainty about the tax situation.
No one in government can give an accurate answer as to when jobs will really pick up. After the Great Depression of the 1930s, it took a long time to bring back the economy. It was not until after World War II was over, in the mid 1940s, that jobs and the economy started to grow again. President Obama and the Republican leadership took positive steps to quickly address solutions on current unemployment and tax problems. Both sides should be applauded for working on a solution.
Leadership in politics is about getting people to work together. It takes courage and responsibility to make tough and sometimes unpopular decisions, but strong leaders have to make those decisions. What makes the art of negotiation in the political arena any different than those negotiations conducted in the business world? In fact, the only real difference is that the public pays or benefits, instead of the two sides to the agreement. In this case, the public will benefit.
When each side in a negotiation gets most of what they bargained for in a deal, it is a good compromise. An old law school professor once said “a good negotiation is where each side is satisfied with the outcome, even though neither side gets everything that they asked for.” In business, when the economy is bad, you cut overhead costs by reducing expenses. Our government usually tries to increase taxes, rather than reduce expenses. This is why the huge deficit continues to grow. The government’s actions seem backwards to many business persons. The government needs to get its balance sheet in order, just like businesses do for their operations. One solution might be to have more people with prior small business and business manager backgrounds available to give advice or work for the administration in Washington, DC. Obama made a good decision, whether popular or not, in negotiating the tax compromises. Yet, on the negative side, his actions will add over $850 million more to the national debt.
The President agreed to the tax cuts as a the short term economic stimulus, with an extension of 13 months unemployment insurance benefits for 2 million unemployed people; a cut of 2 percent on payroll taxes, child credit increases, and other tax credits. The outcome could possibly bring long term solutions for jobs, economy growth and lead to reductions of the deficit in the future
The President’s action goes to the middle ground needed by both political parties to gain the public’s confidence level. Perhaps Obama might even improve his own re-election chances in 2012, by a reversal away from the far liberal left in his own party and more towards the center.
Democratic and Republican politicians should vote to pass this bill. It’s a win-win situation for everyone.
— Bernard Featherman is a business columnist and past president of the Biddeford-Saco Chamber of Commerce. He can be reached by e-mail: bernard@featherman.com.
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