I almost feel naïve for being so angry at President Obama’s betrayal of his campaign promises regarding taxes. I had never harbored much hope that he actually intended to enact the reforms that his supporters expected – not after he appointed the most right-wing of the Clintonomics gang, Larry Summers, then Tim Geithner, Ben Bernanke and other Bush neoliberals.
But there is something so unfair and wrong that I could not prevent myself from waking up early Tuesday morning to think through the consequences of President Obama’s sellout in the years to come. Contrary to his pretense of saving the economy, his action will intensify debt deflation and financial depression, paving the way for a long-term tax shift off wealth onto labor.
In achieving a giveaway that Democrats never would have let George Bush or other Republicans enact, Obama has laid himself open to the campaign slogan that brought down British Prime Minister Tony Blair: “You can’t believe a word he says.” He has lost support not only personally, but also – as the Republicans anticipate – for much of his party in 2012.
Yet Obama has only done what politicians do: He has delivered up his constituency to his campaign backers – the same Wall Street donors who back the Republicans. What’s the point of having a constituency, after all, if you can’t sell it?
The problem is that it’s not going to stop here. Monday’s deal to re-instate the Bush era tax cuts for two more years sets up a 1-2-3 punch. First, many former Democratic and independent voters will “vote with their backsides” and simply stay home (or perhaps be tempted by a third-party candidate), enabling the Republicans to come in legislate the cuts in perpetuity in 2012 – an estimated $4 trillion to the rich over time.
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