Do The Deal: For The Jobless. For The Economy.

Bill Scher

Deal or No Deal?’s Bill Scher and Dave Johnson make their cases for and against the preliminary tax cut deal between the President and Republican leaders. Bill Scher’s case for the deal is below. Click here for Dave Johnson’s case against the deal.

Why support the tax cut deal? Three reasons.

1. Stimulus Is Back.

After Election Day, I did not think Congress would be able to pass any additional stimulus — which by definition means increasing the deficit — for our struggling economy during the next two years.

But if the deal President Obama made with Republican leaders clears Congress, we would get more than $300 billion of additional stimulus.

On policy grounds, that’s a pretty good deal. On political grounds, that’s pulling a rabbit out of a hat.

2. Deficit Hysteria Is Out.

The big fear many had of the deficit commission was that it made Washington focus on the wrong issue. The immediate crisis is jobs, not the deficit.

If merely having the commission prompted Washington to turn off the spigot, the jobs drought would continue, and the economy would keep sputtering or even collapse.

I even worried that the current Senate turned off the spigot back in June, when a bipartisan majority killed the last attempt to increase the deficit and provide more economic stimulus.

Fortunately, those fears have been proven unfounded. The spigot is back on.

The risk still remains that Washington could start cutting too early, before economy is ready. But at least with this deal, austerity doesn’t start today.

To start the new year: Economy 1. Deficit hysterics 0.

3. The Political Winners Are Unknown. The Jobless Win Now.

Would the President have gotten a better deal if he refused all GOP demands, allowed all the Bush tax cuts to expire, and attacked Republicans for abandoning the middle-class and the jobless to protect tax cuts for millionaires?

Maybe. But maybe not.

And if not, millions of jobless Americans would suffer.

I’m not arguing that those who continue to advocate confrontation are being callous toward the jobless. They understandably fear that giving in to Republican leaders now means more concessions later which would further hurt the middle-class and those desperately trying to return to it.

But I am arguing that such a political calculation is mere assumption. It is not a given that compromise today means worse compromises tomorrow.

What if the President’s poll numbers go up because he just delivered an additional middle-class tax cut — in the form of the one-year payroll tax deduction?

What if the Republicans take it on the chin because, as EPI’s Larry Mishel astutely observed, “Who got what out of the deal is clear … The Republicans got tax cuts for the best-off 2 percent … President Obama won policies that will put or keep money in the pockets of the families of the unemployed and middle- and low-income families”?

I’m not saying that is sure to happen. But it might. And if it did, the next two years may not be as dismal on the policy front as first thought. (Heck, this deal happened with the President’s approval in the 40s.)

It’s impossible to know exactly what the political ramifications are and how it affects future policy. But the 13-month extension on support for the long-term unemployed is real money, right now, for those who need it most.

Further, comparing the length of the jobless aid extension to the tax-cut extension is apples to oranges.

Decisions on jobless aid extensions are continually made based on the state of the economy, and we can’t be precisely sure what the jobs picture will look like in a year. But progressives wanted a extension long enough to prevent conservatives from periodically forcing aid cutoffs and sowing confusion among recipients. We won.

It helps people in need, and it stimulates demand for the broader economy. That’s hard to turn down.


Now, of course, there are bad aspects to the compromise. That’s why they’re called compromises.

The new stimulus is not balanced, as it lacks any infrastructure investment, weakening its effectiveness. Those unemployed for longer than 99 weeks still are left hanging.

But an unbalanced stimulus beats no stimulus. Unemployment benefits for those out of work between 26 and 99 weeks beats no benefits for any long-term unemployed workers.

That’s a compromise, where we get something. Not a capitulation, where we get nothing.

The deal is taking action .. our government taking action. That should be embraced.

We need to keep fighting for robust investment in America’s future to spark a sustainable recovery. And the best way to do that is to build on what’s good in this deal, tout what middle-class voters are getting and bring back their appetite for more action by our government.

Who would have thought there would be a chance to do that one month after conservative Republicans took over the House?

I didn’t. Thankfully, I was wrong.

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