Obama Tax Compromise Derailed & the Economy Holds It Breath

Bookmark and Share    A small band of liberal Democrats in the House and an even smaller band of House conservative Republicans, have successfully derailed President Obama’s great tax “compromise” which lies at the heart of an omnibus spending bill that among other things, will keep the government open through the new year. Thanks to a procedural hurdle, the rules under which the vote for this omnibus spending bill would take place can not be established and without such rules in place, the game can’t go on.

The procedural blockade to passage of the bill which would extend the Bush tax cuts and unemployment benefits can be overcome by a two thirds vote in support of suspending the rules. However; at this point in time, it is clear that such a supermajority does not exist and would fail.

Failure to pass compromise spending bill before the new year, would have a devastating short term effect on the national economy, tens of millions of American families, the day to day operation of the federal government, and President Obama.

Without passage of the bill, one of the most immediate effects will be a shutdown of the federal government which could come as early as this weekend. For some of us, the idea of a government shutdown is actually not bad news. Many of us see it as the only way for the government to save money and stop spending like there is no tomorrow. But beyond the prospects of a shut down, are the debilitating effects of the uncertainty that will be caused by a failure to pass the compromise on taxes that exists in the bill.

Failing to pass the compromise bill and the Bush era tax cuts will force businesses to continue holding off on hiring and investing. This will continue to keep money out of the economy and American workers out of work. In addition to that, while less money is coming in to our pockets, every American will have to dole out more money from their pockets to pay for what essentially amounts to a tax increase. This will all only exacerbate a still sluggish economy and spur on a economic reversal that would mire us in economic decline.

As for the President, he has put all his weight behind passage of this compromise based, omnibus spending bill. He has called in former President Clinton to urge fellow Democrats to pass it and has warned that without approval of it, millions of Americans will suffer great economic pain. Yet despite his efforts and dire warnings, the majority of dissenting voices come from members of his own Party. Those members are diehard liberals, loyal liberal Democrats who once saw Barack Obama as the savior of their Party but now see him as an ideological Benedict Arnold.

If President Obama can not find a way to get fellow Democrats on board with this omnibus spending bill, his already shaky house of cards will fall. It will be evidence of his losing support and confidence in all quarters and the fallout from it will only cause what support is left to hemorrhage.

Most dramatic of all the fallout will be that which comes with a government shutdown. Such an event will produce a total lack of confidence in President Obama. It will help enforce the impression that he is losing control of government and his ability to govern and as the establishment of the Congress approaches, President Obama will be severely wounded as he tries to work with a Republican controlled House of Representatives.

It is more than likely that the rules for the vote on this omnibus spending bill will be established before this weekend. The rules are essentially a blueprint for how the inevitable vote in support of the bill will take place. This will probably be resolved by allowing a bit more debate on the bill and giving those who oppose it, the chance to enter their objections in to the record. But the most pressing aspect of the rules for this vote will be how amendments to it are handled.

Right now the rules would force any amendment to it, to go directly to the Senate for a vote. Democrats who oppose the extension of the Bush era tax cuts on estate taxes , are particularly unhappy with such a course. They would rather see a full house vote on the spending bill that includes their amendments.

It is this hurdle which will be the hardest to overcome.

My prediction is that a couple of the rare ultra-left Democrats who are returning in January, will be promised some major benefits by outgoing Speaker Pelosi. Most interesting will be what if anything, conservative Congressman Mike Pence might be promised by incoming Speaker John Boehner. Pence is one of the handful of Republicans who have been quite vocal in opposing the Obama compromise due to its many spending measures. If overcoming the procedural hurdles comes down to or three votes, Republicans like Pence may be pivotal to allowing the bill to come to the floor for a full vote.

Either way, the situation is not a good one.

Our national economy is now holding its breath and as new polls show that only 35% of the voters believe President Obama deserves reelection and 53% believe we would be better off without him, the President faces one of the biggest hurdles he has encountered during his time in the White House. Can he prove that he can work with Republicans while also still having influence in his own Party? Or will he prove that he is unable to work well with either Party? At the moment it is not looking good for the President. He has pulled out all the big guns on this vote. He has even exhausted the credibility and reputation of former president Bill Clinton and tis deal still isn’t done. Maybe the only one left to turn to is Hillary Clinton. After all, many Democrat primary voters are still saying, it should have been Hillary in 2008. I can only wonder how many are thinking that it should be Hillary in 2012.

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