Entangled Alliances

photo credit: jmtimages

Right now, Obama’s struggle with congressional Republicans feels a bit like a classic movie with the new sheriff. You know, the new friendly Sheriff comes into town, he’s polite, courteous almost to a fault, he tries to be friends, but instead all the powers regard him as a pushover.  They overreach, treat him with contempt, and carry on their old bad habits.

You see, Obama came into Washington after sweeping up the nation with a campaign of hope and a new direction, he promised bipartisanship – dined with conservative pundits, he had a cocktail party with congressional leaders from both sides, he backed this up with more meetings and urged both sides to find some common ground. In return the House Republicans delivered a stunning zero votes, zero, not one house Republican thought the necessity of the stimulus outweighed the cons.

That’s one punch to the face but hey, it might take these guys some time to get used to the new sheriff  and the House is more partisan anyway. The Senate, is the more measured and balance chamber, the wise musings of  men committed to the good of America regardless of party….

But wait, Senate Republicans  bemoan the lack of tax cuts, they want tax cuts to have close to  1:1 ratio in the stimulus.

TAX CUTS! Talk about a broken record.  Still our Sheriff labours on hoping that the Senate can get their act together, probably at this point casting a glance at Minnesota and the devoted public servant that is Norm  Coleman. Who, having no chance of winning has worked tirelessly to ensure the people of Minnesota stay as unrepresented for as long as possible (FiveThirtyEight has the latest here).  Obama labours on, surely they see the danger the US economy is in, surely they must see how a stimulus could work? Heck, even many of their own back it; even devout pork-fighter Palin (couldn’t resist) backs it.

But instead they delay and propose pointless alternatives that need to be cleared. Then, perhaps the final straw, they start pushing around his deputy, Hilda Solis, not once but twice. Nobody, but nobody should pick on the deputy. Oh, and to add insult to injury, guess who’s sniping from the sidelines?

Obama had even given some advance notice – a polite warning shot: ” I won” he noted, as they bemoaned his stimulus. He pointed out his electoral landslide, which in no small part was a vote on the economy,  a landslide that swept many of these Republican Senators states. But they didn’t listen.

Then the fightback begins.  With support from the White House, tired of the delays in Solis’ confirmation hearings, Unions and Hispanic support groups are pushing back. This is followed by the big gun, an open asault on the lunacy of the Republicans, to get the Bill passed.

The Result: This: essentially a minor victory for Republicans who not only trim down spending in areas such as education and science (both vital to the economy and jobs), but get to keep their taxes.

Hopefully our Sheriff has learnt from this experience, as Ed pointed out in an earlier post, there is no point meeting someone half way when their starting point is a terrible idea. They wanted tax cuts, Obama’s Bill actually started with tax cuts, but Republicans then sought to massively expand on the tax cuts, (claiming the whole bill was spending and framing it so by their huge presence in the media). Obama, remember, has also promised not to directly repeal the Bush super tax cuts, in light of the recession.

So despite effectively having had two rounds of tax cuts for free, receiving an electoral hammering and facing a President with exceptional popularity, Republicans defiantly watered down the parts of the stimulus which would actually stimulate the economy and demanded more tax cuts to boot.

He’s got a bloody nose for sure, Nate Silver’s excellent article underlines the cost to Obama of failing to sell his plan (his own punches were too late). But Obama shouldn’t give up on bipartisanship.  He probably got skinned in the first round, but he’s got brilliant media strategists of his own.  Next time he needs to get out early to frame the debate and give Republicans less room for manoeuvre.

photo credit: John Carleton

Imagine if the government’s war on the poor were replicated with a similar ferocity on the rich – it’d be immediately denounced as the ‘politics of envy’. The Public Accounts Committee estimates corporate tax avoidance costs the exchequer £8.5bn a year, and the National Audit Office found that 30% of Britain’s 700 biggest companies paid no corporation tax at all (source). This is all prompted by the Guardian’s current investigation, which is looking at tax avoidance by big business over the next two weeks. It’s strange that cracking down on such obviously unjust corporate malfeasance is taboo for New Labour, while kicking the most vulnerable in society further into the gutter is acceptable. But then maybe I’m being too harsh. According to Derek Draper of LabourList, it’s not Labour’s fault – after all, they’ve been in power for less than twelve years – no, it’s all because of the TaxPayer’s Alliance (via the excellent Chicken Yoghurt).

Now it’s pretty rare that I find myself on the side of the TaxPayer’s Alliance, but this bit of their response is just such an occasion: Mark Wallace points out that there’s no way you can physically force companies to register in one jurisdiction rather than another – which is of course true. It would be nice if companies abided by the spirit of the law, but that’s pretty unrealistic. Companies, like individuals, often take advantage when doors are left open. Unlike Wallace, I don’t think the answer is to lower corporate tax rates, and I don’t think this would help anyway as there would always be a jurisdiction with a lower tax rate. Incidentally, this is separate from an argument about whether lowering corporate tax rates would result in higher receipts – the point is, the rate has been decided on and companies are using not exactly kosher means to circumvent this decision.

So how do you get companies to pay their fair share? Would it require an international agreement with almost every country or is there a way countries can act unilaterally (or, multilaterally but still without unanimous or even majority agreement)?

Update: this has been edited a bit

Google who’s to blame for the economic crisis and you’ll be gifted a bold array of stark headlines from Business Week to the Guardian’s 25 people to blame. I think there is something of a wintry chill to the blame game.  With few pleasant distractions, many people are sharpening their knives for the creators of this mess. No one should be surprised, there needs to be some catharsis of public anger and who better a target than those in power or those with wealth. Nevertheless, while I think blaming is inevitable it’s also premature, and when we eventually pull out of the recession, and look to understand what occurred and how to prevent this kind of event in the future, the blame game as it currently stands will be a distraction from discovering the  underlying causes.

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