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Republicans Will Cave On Tax Hikes For High Income Earners

Byron York explains quite simply why President Obama will end up winning the current stand-off over House Republicans over the fiscal cliff and increasing tax rates on high income earners:

Republicans will cave on the question of raising the tax rate for the highest-income Americans. The only question is whether they do so before or after the government goes over the so-called fiscal cliff.

First, many in the GOP do not believe that raising the rate on top earners from 35 percent to 39.6 percent (the rate before the Bush tax cuts) would seriously damage the economy. Second, they know that most Americans approve of higher taxes on the top bracket, and President Obama, having campaigned and won on that platform, seems dead-set on higher rates. Third, they fear that if the government does go over the cliff and Democrats propose re-lowering taxes for everyone except the highest earners, Republicans would be in the impossible position of resisting tax cuts for 98 percent of the country on behalf of the top 2 percent.

Even The Weekly Standard’s Bill Kristol sees this as the inevitable endgame as he pushes back against an argument made by the Wall Street Journal:

It’s true that “Mr. Obama also can’t get what he wants without House Republicans. He needs their votes to extend current rates for lower-income taxpayers, as well as to prevent the Alternative Minimum Tax from hitting 27 million more taxpayers.” But think for a minute about the implications of what the Journalseems to be saying. The Journal editors believe that after January 1, when taxes will have gone up for everyone, House Republicans will block Democratic legislation that would cut taxes—that would restore the lower 2012 rates for the vast majority of taxpayers, fix the Alternative Minimum Tax, and for that matter would probably offer a compromise on dividends and the death tax better than what will be the new dividend rate of 39 percent and death tax of 55 percent with a $1 million exemption.

Will Republicans really oppose such legislation? President Obama will be beating the drums for this tax cut. Senate Democrats will pass this tax cut. If Senate Republicans vote against it, it won’t be “Senate Democrats running for re-election in 2014″ who will have a tax hike on their resumes. It will be Senate Republicans who will have voted against cutting taxes. And if House Republicans block such legislation, it will be they, and they alone, insisting on higher taxes.

Of course they won’t. Republicans will fold with lightning speed after we go over the tax cliff on January 1.

York and Kristol are exactly right, of course. If we’re unable to reach a deal to avert the nation from going over the fiscal cliff, one of the very first things you can expect from the President and the Senate Democrats would be a bill that returns tax rates to their “Bush Tax Cuts” level for all taxpayers except those earning more than $250,000 per year in taxable income. Moreover, this bill would be different from a mere extension of the Bush Tax Cuts in that it would be a permanent lowering of the rates for all affected taxpayers. The GOP could respond to this with a bill that lowers tax rates for everyone, but does anyone seriously believe that Republicans are going to die on the hill of an increase in the marginal tax rates for 2% of the population by opposing a tax cut? Of course they won’t.

First of all, in such a situation the Norquist tax pledge would not be an issue at all. There’s nothing in the pledge that talks about lowering tax rates, and nothing in there that requires those who have signed it to oppose an tax cut that only applies to certain income groups. The outside pressure on the GOP to resist the President’s efforts to increase the top marginal tax rate would no longer exist, and the lobbying power of people like Norquist in this type of situation would be non-existent. Second, Republican leadership is no doubt well aware of the polling that shows that the public supports increasing rates on high income earners and, I’m certain that similar polling that the public would overwhelmingly support reducing taxes on the middle class. Were the GOP to seriously attempt to block the President’s efforts to cut taxes for the vast majority of Americans, they would suffer a political disaster of immense proportions.

President Obama knows all of this, of course, as do the Democrats on the Hill. They also know that the Republicans are most likely to get blamed if the nation does go over the fiscal cliff. The Republicans know it too, which is why you continue to hear Republicans in both the House and the Senate discussing the idea of putting revenues on the table in a much more substantial way than the negotiators in the House have done so far. The GOP has two choices at this point. They can either make a deal that includes an increase in the tax rate for high income earners while at the same time extracting in the bargain something that they want like additional spending cuts or entitlement reforms. Or, they can insist on their anti-tax orthodoxy, watch the nation go over the cliff, and then pay the price in January when Obama will be able to win this argument quite easily.  They don’t have much longer to decide which way to go.

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About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. OzarkHillbilly says:

    Been saying this ever since Obama got re-elected. And I am not a genius.

    Also:

    Moreover, this bill would be different from a mere extension of the Bush Tax Cuts in that it would be a permanent lowering of the rates for all affected taxpayers.

    But I am smart enough to know better than that.

    Like or Dislike: Thumb up 5 Thumb down 0

  2. Xerxes says:

    Just let the Fiscal Cliff hit. It is not a big deal at all. This is a Nation of Whiners

    Like or Dislike: Thumb up 1 Thumb down 2

  3. Ron Beasley says:

    Boehner still has to deal with the Tea Party suicide bombers which means a bill that will get most of the Democratic votes and 30 Republican votes. That sort of deal could cost him his job.

    Like or Dislike: Thumb up 3 Thumb down 0

  4. Tsar Nicholas says:

    Definitely. Obama and the Dems have aces. The GOP has a 2-7, unsuited. You don’t need to be Doyle Brunson to figure out the correct play, although ironically enough there are those on the right side of the spectrum who not only are insouciant but who would remain insouciant even after you’d explain all of this to them, using a puppet show. Don’t overestimate the cocooned right wing.

    Obama also is likely to cave, however. That’s been his history. And the Dems don’t want Zombieland to know what higher tax taxes look and feel like, even if only temporarily. That would not be consistent with the narrative, if you catch my drift.

    So those earning $250k or more per annum will get hosed. Guaranteed. And the media-Internet-campus-K-12-rich liberal cabal will erupt with glee. They’ll gloat. They’ll preen. They’ll beat their chests.

    But always keep in mind the laws of unintended (and unwanted) consequences.

    A lot of those folks earning $250k or more are owners and operators of small businesses. They make hiring decisions. They make firing decisions. They determine what if any benefits their enterprises will offer to their workers. They determine whether their workers get raises. They also determine whether to stay in business or simply to cash out and to go elsewhere for their troubles.

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  5. stonetools says:

    I put the likelihood of us going over the fiscal gradient at above 75 per cent. I think these Tea Party morons are in their own reality bubble and don’t know what the he!l they are doing. I expect them to wake up January 2 thinking they are going to be praised for “standing up to No-bama.” That’s how out of touch I think they are .
    I expect that Boner will serve them a big helping of ” I told you so” when they outrage starts January 2.

    Like or Dislike: Thumb up 5 Thumb down 1

  6. michael reynolds says:

    @Tsar Nicholas:

    They also determine whether to stay in business or simply to cash out and to go elsewhere for their troubles.

    Where exactly is “elsewhere?”

    Highly-rated. Helpful or Unhelpful: Thumb up 25 Thumb down 0

  7. Brummagem Joe says:

    With all due respect Doug this has been the completely obvious outcome if Obama won the election since long before the election. Messrs York and Kristol only seem to have woken up to this fact recently. And the extraction of some deal on spending that is going to satisfy Republicans is also a mirage whether it’s before or after December. The notion that Obama is going to give Republicans a get out of jail free card prior to December 31 that enhances their leverage from Jan 1 onwards is total fantasy. In fact it’s this wider part of the deal, not the principle of tax rates going up, that imho is more likely to delay any settlement past year end. Obama and the Democrats are going to be seeking an overarching deal and the combination of the expiry of the Bush cuts and the defense sequestrations gives them huge leverage. I’m betting the final deal will be 90% of that Geithner has put on the table. Of course this is going to cause ructions in the GOP but that’s another matter.

    Like or Dislike: Thumb up 7 Thumb down 1

  8. Brummagem Joe says:

    @michael reynolds:

    Where exactly is “elsewhere?”

    This of course is a purely rhetorical question since no answer will ever be forthcoming……if you catch my drift.

    Like or Dislike: Thumb up 4 Thumb down 0

  9. stonetools says:

    Obama and the Democrats are going to be seeking an overarching deal and the combination of the expiry of the Bush cuts and the defense sequestrations gives them huge leverage. I’m betting the final deal will be 90% of that Geithner has put on the table. Of course this is going to cause ructions in the GOP but that’s another matter.

    I tend to agree. It just may be that Obama put a tough offer on the table not just as a negotiating tactic, because they know they have all the leverage. Boehner has tried to move Obama off those tough terms by schmoozing with him privately, but it doesn’t seem to be working ( much to relief of liberals).
    I’ve heard trial balloons floating various compromises but the Administration doesn’t seem to be biting at any of these either. Of course, its early days yet. Despite breathless media coverage, there is still a fair amount of time left between now and December 31. I expect to see no serious movement till after Christmas.

    Like or Dislike: Thumb up 3 Thumb down 0

  10. Mikey says:

    @michael reynolds:

    Where exactly is “elsewhere?”

    Galt’s Gulch, obviously.

    Highly-rated. Helpful or Unhelpful: Thumb up 19 Thumb down 0

  11. stonetools says:

    @michael reynolds:

    Where exactly is “elsewhere?”

    LIBERTOPIA!

    Like or Dislike: Thumb up 4 Thumb down 0

  12. grumpy realist says:

    @Tsar Nicholas: And a hell of a lot of those more-than-$250K/year people are going to be hedge fundies, Masters Of The Universe, and all the other Wall Street ilk that produce absolutely nothing in the way of actual products for the country but simply skim off their salaries from finagled income streams.

    Somehow I think we’ll survive.

    Like or Dislike: Thumb up 8 Thumb down 0

  13. michael reynolds says:

    As I mentioned on the other thread, I can cut my income taxes just by moving to Florida or Washington state. Which I don’t seem to be doing. One’s humid, the other’s overcast.

    Like or Dislike: Thumb up 4 Thumb down 0

  14. OzarkHillbilly says:

    @Tsar Nicholas:

    They also determine whether to stay in business or simply to cash out and to go elsewhere for their troubles.

    Is that a promise? Cause if the useless d!cks aren’t going to help push the car out of the ditch they drove us into, then by all means,

    “At least get the fwck out of the car.”

    Like or Dislike: Thumb up 10 Thumb down 0

  15. stonetools says:

    Dave Wiegel puts his finger on the difficulties of compromise:

    When I carp about Meet the Pressistan, this is what I’m talking about — a mobius strip conversation among the same handful of people, giving the illusion that a broader conversation must also be moving the same way. For two weeks, Tom Cole has been on the record for raising the top rate. Tom Coburn has been talking this way for two years. When will somebody sit down the Sunday show bookers and tell them that the votes of reluctant House members, very vulnerable to primaries, matter more than whatever a compromise-friendly Republican senator is re-re-re-re-stating?

    IOW, the right wing whacko House members won’t compromise because they are worried about facing even more right wing whacko primary opponents in 2014. Its a downward spiral into greater right wing insanity, aided and abetted by gerrymandering out left wing and moderate voters and by the right wing reality distortion machine .
    After reading this, I’ve rethought . Its now 90 per cent likely that we’ll go over the fiscal whatever.

    Like or Dislike: Thumb up 1 Thumb down 0

  16. Barry says:

    @Tsar Nicholas: “They also determine whether to stay in business or simply to cash out and to go elsewhere for their troubles. ”

    No, they don’t – the economy and the competition determine that.

    Like or Dislike: Thumb up 5 Thumb down 0

  17. stonetools says:

    Can you please take my comment out of moderation? Thanks.

    Like or Dislike: Thumb up 0 Thumb down 0

  18. Just Me says:

    I am fine with raising taxes on high earners, and I would also very much like to see some of the loopholes and deductions that mostly benefit high earners closed and/or capped.

    I think at the moment the wealthy are still rather insulated against the current economic conditions and would continue to be so. I just don’t think the deal the GOP accepts should be a “Raise taxes now and at some point in the future we will talk about spending cuts” deal.

    That said raising taxes on the wealthy and closing some of the loopholes and/or capping deductions alone aren’t going to cure the spending problem in Washington.

    Entitlement reform is a must. This doesn’t mean benefits necessarily have to be cut, but how we tax and how we pay for them can be.

    I also think there are places and areas to cut with regards to the military, but as large as the military budget is, it is still a small piece of the pie compared to entitlements.

    Like or Dislike: Thumb up 0 Thumb down 0

  19. Drew says:

    @michael reynolds:

    Ah, yes.

    The “we will tax you not because it is equitable, or because it makes economic sense, but we have you by the balls” argument.

    Unfortunately for you, most of the entrepreneurial business class are already rich, and can say………………see you on the first tee, my bank account is just fine as it is.

    Your world view is cruel.

    Poorly-rated. Helpful or Unhelpful: Thumb up 1 Thumb down 20

  20. Brummagem Joe says:

    @stonetools:

    My guess (pure speculation of course) is that it goes beyond December 31.The light bulb is coming on for a few of the chatterers (Kristol, York, etc) but the bulk of them in congress don’t get it and their view is crystallized in today don’t panic oped in the WSJ. Although I think Boehner does. Talk about fantasy land. This whole thing is as much about political symbolism as anything else. Obama is just about to deliver a lesson in power politics that says look guys I won the election whether you like it or not. In life you get your blows in when you can and Obama is about to deliver a whack with a 6×6.

    Like or Dislike: Thumb up 3 Thumb down 0

  21. Brummagem Joe says:

    @Drew:

    The “we will tax you not because it is equitable, or because it makes economic sense, but we have you by the balls” argument.

    It’s purely your rather subjective opinion that this is neither equitable or makes economic sense…….in fact it’s both……having them by the balls just ensures commonsense prevails for once.

    Like or Dislike: Thumb up 8 Thumb down 0

  22. An Interested Party says:

    This is a Nation of Whiners

    Indeed, that was made crystal clear on November 5th and in the days after the election when there were plenty of people whining about the results…

    So those earning $250k or more per annum will get hosed.

    Cry us all a river, why don’t you? Maybe you could start a charity or organize a telethon to help those poor, unfortunate souls…

    A lot of those folks earning $250k or more are owners and operators of small businesses.

    Bullshit…where is the proof that anyone with a “small” business earns $250k or more…

    Your world view is cruel.

    Oh, you poor, innocent lamb…let us all shed a tear for you…

    Like or Dislike: Thumb up 9 Thumb down 0

  23. Brummagem Joe says:

    @Drew:

    The “we will tax you not because it is equitable, or because it makes economic sense, but we have you by the balls” argument.

    Btw Drew for a macho man like you this is a singularly self pitying, panty waister, argument…….Mommy Mommy that nasty Kenyan communist is taking my toys away….boo hoo

    Like or Dislike: Thumb up 3 Thumb down 0

  24. grumpy realist says:

    @Drew: It makes sense to tax the rich–they’re the ones who have reaped 99% of the benefit of lowering production costs. When we used to have unions, such benefits were spread more equally over workers and management. Now it’s benefitting people at the top and as for the people at the bottom….?

    They just have to lump it.

    What you don’t seem to understand is that having an economy with a strong middle class is not something that occurs out of passive equilibrium, much as the glibertarians would like to think so. You have to have the system set up so as to continually defend against what IS standard: the inclination of the people with power to hog more and more for themselves. Hence, progressive taxation and continued whacking away at tax loopholes.

    Like or Dislike: Thumb up 14 Thumb down 0

  25. Brummagem Joe says:

    @Just Me:

    After social programs defense is the next largest piece of the pie…….700 billion out of 3.6 billion is not “small” by any stretch of the imagination.

    Like or Dislike: Thumb up 6 Thumb down 0

  26. Brummagem Joe says:

    @Brummagem Joe:

    Oops 3.6 trillion

    Like or Dislike: Thumb up 2 Thumb down 0

  27. Whitfield says:

    What percentage of the citizens are paying income taxes ? Is there some tax reform that could bring more people into the system ? Any one who has an income should have to pay something.
    Income being salary for work, supplements, and any sort of public assistance. It just seems that the statistics show that the number of taxpayers is decreasing while the numbers receiving assistance are increasing. If this keeps on, we are headed toward an economic doomsday with Mad Max scenarios. And let’s make sure that there is none of this sending money to Swiss bank accounts to hide it or some schemes that allow rich people to opt out of the tax system.

    Like or Dislike: Thumb up 2 Thumb down 11

  28. David M says:

    @Whitfield:

    Just to be clear, you are arguing for the following:

    ** Increased taxes on the very poor
    ** Increased taxes on college students
    ** Increased taxes on the elderly collecting social security
    ** Increased taxes on yourself personally

    Like or Dislike: Thumb up 11 Thumb down 0

  29. Rafer Janders says:

    @Just Me:

    I just don’t think the deal the GOP accepts should be a “Raise taxes now and at some point in the future we will talk about spending cuts” deal.

    The GOP doesn’t have to accept any deal. Taxes are going up, period, no matter if the GOP likes it or not. That’s the law as they wrote it ten years ago.

    Like or Dislike: Thumb up 9 Thumb down 0

  30. john personna says:

    @Whitfield:

    Someday, when you grow up, you’ll argue based on total personal tax burden as a fraction of total personal income.

    Like or Dislike: Thumb up 6 Thumb down 0

  31. Rafer Janders says:

    @Drew:

    Unfortunately for you, most of the entrepreneurial business class are already rich, and can say………………see you on the first tee, my bank account is just fine as it is.

    And, this being reality, there are no hungry, talented up-and-comers both here in the US and in places like China just waiting for the chance to take their place…oh, wait, yes there are.

    Like or Dislike: Thumb up 12 Thumb down 0

  32. john personna says:

    Really Drew and Whitfield both have their games. For Drew it’s the old “34% tax capitalism, 39% tax communism” thing. For Whitfield it’s “income tax is the only taxi I can see.”

    Like or Dislike: Thumb up 7 Thumb down 0

  33. Rafer Janders says:

    @David M:

    To be fair, he’s also arguing for increased taxes on the disabled.

    Like or Dislike: Thumb up 9 Thumb down 0

  34. Rafer Janders says:

    @Whitfield:

    Is there some tax reform that could bring more people into the system ? Any one who has an income should have to pay something.

    From each according to their ability, huh?

    I’m so old, I can remember when the Republicans used to be AGAINST taxing people….

    Like or Dislike: Thumb up 5 Thumb down 0

  35. Just Me says:

    Bullshit…where is the proof that anyone with a “small” business earns $250k or more…

    While I wouldn’t necessarily call an business owner who makes 250k per year a small business owner (although some legal and medical practices would likely qualify in terms of size of business and income of the doctors and lawyers who own the practice) the majority of the nations wealthy are self employed and often began at the small business level and grew their businesses.

    700 billion out of 3.6 billion is not “small” by any stretch of the imagination.

    Nope but compared to a debt of 16 trillion is is small and the entitlements are a larger chunk of the budget and those numbers are only going to start taking up larger and larger chunks of the budget pie.

    Like or Dislike: Thumb up 0 Thumb down 6

  36. john personna says:

    I guess the funny thing, stepping back to the high level view, is that we center and left guys won.

    A few feel compelled to show up and taunt us with what is now a minority and losing view.

    I guess that is the consolation prize.

    Like or Dislike: Thumb up 9 Thumb down 0

  37. just 'nutha ig'rant cracker says:

    @Tsar Nicholas: Sadly, significant numbers of them have the math skills of Joe the Plumber, too. If your side had any people who were something other than scam artists and Baron von Munchhausen wanna bees (yes, I am thinking of you in this case) they would be a force to reckon with.

    Like or Dislike: Thumb up 3 Thumb down 0

  38. Andy says:

    While I think it’s quite likely the GoP will grudgingly accept this moderate increase in marginal rates, I don’t think it’s going to be the slam dunk in the House that some are suggesting. We’ll find out soon enough.

    The bigger question though, is what will the GoP be able to get in return – ie. will they be able to get the other side to “cave” in some way?

    Not that any of this matters a whole lot since this is almost purely a partisan political battle over marginal concerns.

    Like or Dislike: Thumb up 0 Thumb down 0

  39. bill says:

    it’s all about “winning” now? what about paying our bills with a real plan? it’s been four freakin years already and the only “plan” he has is a leftover temporary tax cut (that was slammed as favoring the wealthy by dems back then!) that won’t raise jack to pay for anything.

    Like or Dislike: Thumb up 1 Thumb down 7

  40. David M says:

    @bill:

    The Democrats passed health care reform, which reduces the deficit. They support increasing the income tax rates for higher income levels, which will reduce the deficit. Winding down the wars in Iraq and Afghanistan reduces the deficit.

    Like or Dislike: Thumb up 12 Thumb down 0

  41. Andy says:

    Hey Doug, this is kind of an interesting bookend to this post and to the fiscal cliff drama.

    Like or Dislike: Thumb up 0 Thumb down 0

  42. Just Me says:

    The bigger question though, is what will the GoP be able to get in return – ie. will they be able to get the other side to “cave” in some way?

    Why would compromise be considered “caving” by the left? No wonder nobody wants to compromise on anything, because apparently any compromise on the part of one side or the other is considered to be “caving.”

    As a voter and a tax payer I would like to see compromise on this issue rather than posturing and believing the only way to “win” is to fail to compromise.

    Like or Dislike: Thumb up 1 Thumb down 0

  43. john personna says:

    @bill:

    The winners want to pay the bills, with a combination of higher tax and lower spending.

    That was quite moderate all along

    Like or Dislike: Thumb up 2 Thumb down 0

  44. michael reynolds says:

    @Drew:

    Oh, Drew, that’s just such transparent horsesh!t. You’ll keep investing, and the businessmen will keep chasing a buck, and guess what? If they don’t? Someone else will come along to take their place. Maybe someone a bit less whiny and self-pitying.

    It seems likely that I’m starting a business. And I’ll start it whether my tax rate is 35% or 39.6%. And you know who else will be back investing regardless of his tax rate? Your buffoon of a candidate. Mitt’l have to do something with all that money and here’s what I think he’ll try to do: make more.

    So, baloney.

    And by the way, you don’t even get the argument, but I’m used to that. We’re all used to it.

    Like or Dislike: Thumb up 10 Thumb down 0

  45. Andy says:

    @Just Me: I put “cave” in quotes for a reason. As I noted at the end of my comment, I think this is a fight that is strong on posturing and short on substance.

    Like or Dislike: Thumb up 0 Thumb down 0

  46. michael reynolds says:

    The logic behind Drew’s Galt fantasy is just wonderful, by the way. It goes like this: “If you guys don’t stop being mean to me I’ll stop trying to get richer!”

    Right. Because they’re irreplaceable,you see. They’re precious little greed lords and we all feed on the crumbs from their table. The stupidity, the arrogance, the weepy self-pity, the staggering ignorance of business itself implied in this is just jaw-dropping.

    And they wonder why their avatar lost by five million votes. Jesus. Idiots.

    Highly-rated. Helpful or Unhelpful: Thumb up 18 Thumb down 0

  47. Rafer Janders says:

    @Drew:

    Unfortunately for you, most of the entrepreneurial business class are already rich, and can say………………see you on the first tee, my bank account is just fine as it is.

    You’re aware, aren’t you, that people that lazy and disinterested in holding onto first place don’t become rich entrepreneurs to begin with?

    Like or Dislike: Thumb up 11 Thumb down 0

  48. An Interested Party says:

    What percentage of the citizens are paying income taxes ? Is there some tax reform that could bring more people into the system ? Any one who has an income should have to pay something.

    Pardon me, but that line of reasoning is quite foolish…people who don’t pay income taxes pay plenty of other taxes–state, local, and sales taxes, as well as FICA…perhaps you have heard of all of these? And the reason that so many people with low incomes don’t pay income taxes is because of the conservative idea of a negative income tax to help alleviate poverty…and now a bunch of “conservatives” are bitching about it…fancy that…

    …the majority of the nations wealthy are self employed and often began at the small business level and grew their businesses.

    Do you have any data to back up the first part of this claim? And when it comes to taxation, it doesn’t matter where anyone started, what matters is where they are now…in other words, it’s a bull$hit claim to say that those who make $250K or more are part of “small” businesses…

    what about paying our bills with a real plan?

    Perhaps Republicans and conservatives could be taken more seriously when they worry about this issue if they worried about it all the time, rather than only when a Democrat is in the White House…

    Like or Dislike: Thumb up 8 Thumb down 0

  49. Jeremy R says:

    First of all, in such a situation the Norquist tax pledge would not be an issue at all. There’s nothing in the pledge that talks about lowering tax rates, and nothing in there that requires those who have signed it to oppose an tax cut that only applies to certain income groups.

    What’s really irritating about this is we’re already in the situation, prior to the fiscal cliff, where we’d be voting on a tax cut, not just an extension. It’s just that the media’s reporting has been so terrible that the public doesn’t generally understand that, which shapes the politics of the any potential vote.

    The Republicans didn’t have the votes, when the passed their two major tax cuts, to make them permanent, so in order to only need the 50 votes under a reconciliation budgetary dodge, they only passed the cuts for 10 years. Obama passed them for another couple years, but in both cases the cuts were passed for limited periods. So even if the Democratic tax plan was voted on today, it would be a vote on tax cuts for everyone (on their first 250,000$ of income) and the Norquist pledge doesn’t apply.

    Like or Dislike: Thumb up 2 Thumb down 0

  50. michael reynolds says:

    @Rafer Janders:

    No, no: guys who’ve spent their entire lives desperately trying to get from 100 million to 200 million will storm off in a snit if we raise their taxes 4.6% They’ll stamp their little loafers and quit, then pout for 30 years while their fortunes slowly dwindle in the savings account where I have to assume they’ll park their money.

    And the sad thing? No one will step in to take their market share from them. Papa John Schnatter and his ilk are just gonna go Galt. And no one else will step in to make pizzas for us. No one I say! We will be pizzaless!

    Then, finally, when the chastened, pepperoni-deprived masses finally come to their senses, Drew and Papa John will ride back in on golden golf carts to rescue us.

    “Massa Drew! Massa Papa John! Please, sirs, more cheese?”

    Like or Dislike: Thumb up 9 Thumb down 0

  51. Brummagem Joe says:

    @michael reynolds:

    What I always find most interesting about the comments from our Republican friends about the wonders of capitalism is that they generally have absolutely no idea of how businesses work, the processes by which business decisions are made and the sort of criteria upon which they are based. This entire small businesses will not hire, they will relocate or their owners will go on strike if their top marginal rates go up slightly is a classic. It doesn’t begin to pass the sanity test and yet they believe it implicitly or appear to like the virgin birth or the earth being 6000 years old. It’s bunk…..why are we even bothering to enter into conversations about it.

    Like or Dislike: Thumb up 9 Thumb down 0

  52. michael reynolds says:

    @Brummagem Joe:

    In addition to that, they utterly lack self-awareness. Do they not understand that after a certain point adding to your bank account is just a game? Do they think billionaires are still trying to pay the rent? They’re competing with the next billionaire. And they’ll go on competing because that’s who they are.

    Like or Dislike: Thumb up 8 Thumb down 0

  53. michael reynolds says:

    By the way, here’s a chart showing the precipitous drop in the price of gas. Does anyone else remember way back in like, oh 90 days ago, when the price of as was going to kill us all? And it was Obama’s fault? Because it seems to be down 50 cents a gallon. And yet, amazingly, astoundingly, no one mentions it.

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  54. michael reynolds says:

    as = gas. I deny any knowledge of the price of as.

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  55. Ben Wolf says:

    @michael reynolds: They’re competing with the next billionaire. And they’ll go on competing because that’s who they are.

    I expect it’s about pure power when someone is warping public policy just to rack up their 26th billion. They see themselves as gods, hence the job “creator” title they award themselves.

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  56. Just Me says:

    Michael Reynold-you realize that the Papa John’s owner isn’t making cuts because his personal income taxes might go up, but because the requirements for Obamacare are expensive for his business.

    These aren’t the same debate.

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  57. Brummagem Joe says:

    @michael reynolds:

    Because it seems to be down 50 cents a gallon. And yet, amazingly, astoundingly, no one mentions it.

    That set of lies surrounding gas prices no longer has utility so now Republicans have to invent some new ones. For a reality check on the entire “we’re doomed” budget debate and Republicans denial of the importance of revenue here’s an useful corrective from Republican apostate Bruce Bartlett

    http://economix.blogs.nytimes.com/2012/12/11/the-real-long-term-budget-challenge/?

    Like or Dislike: Thumb up 2 Thumb down 0

  58. Brummagem Joe says:

    @Just Me:

    Michael Reynold-you realize that the Papa John’s owner isn’t making cuts

    I suspect this entire story is more about grandstanding than reality but let’s assume it’s accurate. The consequence of these actions over the long term will ultimately damage/shrink the business. This is the beauty of the marketplace because it applies equally to labor as to the other factors of production. Ultimately if this genius employs less people or lower quality people who are the only ones willing to work there because of inferior benefits then the quality of his product and service will suffer. Thus demand for his product will fall in a market as competitive as that for pizzas and profits decline. Also part of the market for his product (students?) might become disaffected by his treatment of employees (as happened at Dardens causing them to beat a hasty retreat) thus further damaging revenue. This guy’s blustering doesn’t make much business sense and even at the lowest level because if you’re going to shaft your workers it’s probably a good idea to keep quiet about it.

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  59. Rob in CT says:

    They’re competing with the next billionaire. And they’ll go on competing because that’s who they are.

    Indeed. And if they don’t, fine.

    The central myth here is that they’re just so super duper awesome that they’re irreplaceable, and if they flounce from the economy (what, cash under mattresses or something?) no one smart, skilled and ballsy enough will step up and take their place – at least not as well.

    Which is transparent bullshit.

    I love the “by the balls” comment, myself. It speaks to the delusion of the powerful who think they are persecuted… simply because their special pleading doesn’t work as well as they’d like.

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  60. Rob in CT says:

    All that said…

    What “our” side is basically arguing is that the pendulum should swing back to the left a bit on tax policy (meaning higher progressivity and less preference given to investment income over wage income), in conjunction with benefit cuts, some military cuts, and – hopefully – a reasonable conversation about healthcare cost control. Note: “reasonable” does not mean screaming “death panels!”

    We have a serious problem with healthcare costs. It pretty much dwarfs the other issues. Social security is a minor problem. I think military spending is too high, but in historical terms as a % of GDP it’s not crazy high, meaning it’s not killing us (it’s too high, and % of GDP isn’t a great measurement to use for defense spending, but it’s not THE PROBLEM. Stupid wars are problematic. Total boondoggle weapons programs can be problematic, though I think we might benefit from R&D even for stuff that looks silly – that concerns me a lot less than “hey, let’s do some regime change, because why not?”).

    THE problem is that we have a Rube Goldberg healthcare “system” that even with the ACA reform will probably continue to be extraordinarily expensive while providing little or no benefit over cheaper systems commies other people use. More work will likely be required, and it would be nice if we could talk about the issues like grownups.

    I also have higher education cost and the trade deficit on my list of issues that are worth worrying about. Notably absent is the issue of lucky duckies who don’t pay income taxes…

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  61. john personna says:

    @Rob in CT:

    Notably absent is the issue of lucky duckies who don’t pay income taxes…

    As a throw away line in another thread, I said “and you know Mitt isn’t the only guy with a $100M IRA.”

    The GOP has been telling voters that they could just cut taxes and magic would happen. It was their old 3-step plan (cut taxes, magic, balanced budget).

    Even as they were selling that to the rubes, they were looting like mad.

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  62. michael reynolds says:

    @Just Me:

    Except actually Papa John has backed off that claim and now proclaims that they’ll be opening stores and paying same wages as always.

    I was using Papa John as an exemplar of the whiny rich.

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  63. Brummagem Joe says:

    @michael reynolds:

    Except actually Papa John has backed off that claim and now proclaims that they’ll be opening stores and paying same wages as always.

    So it was grandstanding…..what a surprise.

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  64. Rafer Janders says:

    @Brummagem Joe:

    This guy’s blustering doesn’t make much business sense and even at the lowest level because if you’re going to shaft your workers it’s probably a good idea to keep quiet about it.

    Do I want to eat at a place where I know management mistreats their workers and where as a consequence there’s a chance those workers might not be all that careful about food safety and handling? No, I do not.

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  65. john personna says:

    @Rafer Janders:

    Amazing that Papa John did not expect that. It’s a well-known thing that pizza delivery folk get best tips on poorer neighborhoods. Worker sympathy.

    Like or Dislike: Thumb up 2 Thumb down 0

  66. OzarkHillbilly says:

    @Brummagem Joe:

    So it was grandstanding…..what a surprise.

    The only thing they do better is whine.

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  67. Brummagem Joe says:

    @Rafer Janders:

    there’s a chance those workers might not be all that careful about food safety and handling?

    The last thing a food purveyor does is tell his staff he’s going to screw them……all kinds of nasty stuff could end up in the food……I’ll leave your imagination to work on that…..LOL

    Like or Dislike: Thumb up 0 Thumb down 0

  68. Rafer Janders says:

    @Brummagem Joe:

    No need for my imagination. I’ve worked in restaurants in my younger years. I’ve seen what can happen.

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  69. michael reynolds says:

    You know easy it is for workers to hurt a restaurant chain? YouTube video of an employee blowing his nose on a pizza. That all by itself could cost Papa John’s millions. Do it twice, three times, four times in different locations? It would take years to recover.

    Like or Dislike: Thumb up 1 Thumb down 0

  70. Brummagem Joe says:

    @michael reynolds:

    These hard nosed (haha) business party Republicans are so naive about the dynamics of running a business I wouldn’t trust them to run a pretzel stand on 5th avenue let alone the country.

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  71. Coop says:

    What annoys me about this debate is that it has degenerated into a moral argument about who should pay and who deserves what. This gets us nowhere. You have one group of people yelling “the wealthy should pay more, those greedy bastards are rich enough!” and another group of people screaming “all those moochers and deadbeats should pay more – all they do is take, take, take.” A debate framed in this manner is not constructive, and unlikely to solve anything.

    Instead the focus needs to be on the effect the rates will have on the economy and our employment situation. Most empirical research shows that allowing the rates go from 35% to 39.6% on households making over $250K will have little to no effect on GDP or unemployment, but bring in lots of revenue to help pay down our debt. (http://www.washingtonpost.com/blogs/wonkblog/wp/2012/11/08/cbo-letting-upper-income-tax-cuts-expire-would-barely-hurt-economy/) Studies have also found that the top income tax rate has practically no measurable effect on entrepreneurship. The tax rates that matter for purposes of small business job creation are (1) employer wage and salary payroll tax rate (2) corporate tax rate, and (3) capital gains rate (in descending order of importance). (http://link.springer.com/article/10.1007%2Fs11187-005-5602-8) This is consistent with what some entrepreneurs have said about their investment decisions – their decisions are mostly based on underlying economic conditions, not the personal tax rates they have (especially when the difference in question is only 4.6%). (http://blogs.wsj.com/wealth/2010/09/20/tax-me-more-says-wealthy-entrepreneur/).

    Like or Dislike: Thumb up 1 Thumb down 0

  72. michael reynolds says:

    @Coop:

    It becomes a moral argument because the Republicans make it one. Their belief is that the country is divided into the productive and the moochers. Romney didn’t misspeak, he just stated Republican beliefs without the usual bull. Republicans worship at the altar of Ayn Rand, basically, and see greed and selfishness as virtues. They see dependency – however arrived at – as vice.

    The Democrats believe that we are “all in this together” to use that tedious phrase, and that we are all pulling on the oars — with the big muscular guys pulling harder since they’re able, and the little guys pulling with less force, but still pulling. We don’t despise the guys who can pull harder. We wish everyone could pull harder. But Republicans do see the poor and working class as morally inferior. And they see the rich as morally virtuous.

    In order to win elections, Republicans have to take their”screw everyone but me,” philosophy and disguise it in ways that will attract votes. So they race bait to pick up scared whites. And they immigrant bash to earn some nativist votes. They sow fear in order to tighten the bonds of their rural and religious voters who are generally afraid of the future. They hype the notion of “the other” so that any deviation from orthodoxy becomes not just a political disagreement, but treason against the clan.

    At the moment they’re terrified because the strategy they’ve pursued with great success since the 60′s is falling to demographics and social liberalization. They are utterly at a loss. Their tactics have failed, and worst yet, their patina of ideology has rubbed off and revealed the naked contempt and greed beneath it. To go to a historical metaphor, they’re Hannibal* who, having successfully rampaged around Italy begins to realize that no matter what he does there will always be more Italians than Carthaginians. So now it’s all incoherent muttering and ludicrous threats. (I’ll run away! I’ll go Galt! Then you guys will miss me.”) We’re watching a historic meltdown.

    Anyway, I agree entirely we should be looking at this pragmatically. I’m a pragmatist. I wish we had that kind of discussion. But the Republicans are nowhere near rational yet, and most likely won’t make it there.

    * Hannibal, see, because elephants. See what I did there?

    Like or Dislike: Thumb up 4 Thumb down 0

  73. Rob in CT says:

    So, to extend this metaphor, what was the battle of Cannae? The “Reagan Revolution” ?

    “Two Santas” strategy = double envelopement?

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  74. Mikey says:

    @michael reynolds:

    But Republicans do see the poor and working class as morally inferior. And they see the rich as morally virtuous.

    The Democrats do the exact converse.

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  75. OzarkHillbilly says:

    @michael reynolds:

    But the Republicans are nowhere near rational yet, and most likely won’t make it there.

    Indeed, Michael. You know how I can tell? Because…

    Their belief is that the country is divided into the productive and the moochers.

    They have this part right, they’re just so deluded they can’t tell which is which.

    Which one is productive: The guy on the assembly line working his a$$ off for his pay? Or the guy at the top of the corporate tower sucking a little bit of blood from each and every guy or gal who works that line.

    The Democrats believe that we are “all in this together” to use that tedious phrase, and that we are all pulling on the oars —

    If only that were true.

    with the big muscular guys pulling harder since they’re able, and the little guys pulling with less force, but still pulling.

    But the big muscular guys are pulling. They are called the “working class.”

    We don’t despise the guys who can pull harder.

    No, but they do. Or at least that is what they tell themselves. The truth is, they are scared sh!tless of us. That is why they try to suppress our votes. That is why they want a “Right to Work” country. It is why they hate Obamacare. Medicare. Medicaid. Social Security.

    But Republicans do see the poor and working class as morally inferior. And they see the rich as morally virtuous.

    You got that right. But then I see Republicans as morally bankrupt. And they just keep proving me right.

    Like or Dislike: Thumb up 1 Thumb down 0

  76. Brummagem Joe says:

    @Mikey:

    The Democrats do the exact converse.

    Absolute nonsense. The Democratic party is full of rich or comfortably off people or how do explain the fact NYC is a citadel of liberalism.

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  77. Mikey says:

    @Brummagem Joe: They simply do what just about everyone does: they add an implicit, unspoken “except for me and my friends.”

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  78. Brummagem Joe says:

    @michael reynolds:

    But the Republicans are nowhere near rational yet, and most likely won’t make it there.

    They’re certainly not rational as their entire cliff strategy illustrates. They’re going to the stake over raising the top rates to 39.6% and ignoring all the other stuff that’s going to happen and affect them. Capital gains are going up to 20%, Divs are going to be taxed as ordinary income so potentially that’s 39.6% instead of the current 15%, and then there are changes in estate taxes which look ugly although there are ways of getting around these with blind trusts and so forth. Now I think the impact on the economy is being exaggerated but if we take Republicans at their word the potential affect on wealth because of declines in the values of equities, real estate etc would be significant. It’s completely stupid but then they are party of stupid.

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  79. Mikey says:

    @Brummagem Joe: Also, note that there are working-class Republicans. Does that mean the assertion I responded to @here “absolute nonsense?”

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  80. Brummagem Joe says:

    @Mikey:

    They simply do what just about everyone does: they add an implicit, unspoken “except for me and my friends.”

    You mean you’re just making it up

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  81. Brummagem Joe says:

    @Mikey:

    Also, note that there are working-class Republicans. Does that mean the assertion I responded to @here “absolute nonsense?”

    Yes there are many of them in the 47% that Romney dismissed as moochers.

    Like or Dislike: Thumb up 1 Thumb down 0

  82. Mikey says:

    @Brummagem Joe: No, I’m not “just making it up.”

    In fact, the implicit “except for me and my friends” is a well-established mental trick in which many people engage. For example, any time someone makes an obviously racist statement and tries to deny racism by saying “but I have black friends,” they’re doing it.

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  83. Brummagem Joe says:

    @Mikey:

    In fact, the implicit “except for me and my friends” is a well-established mental trick in which many people engage.

    But not one I engage in. Obviously there’s the lunatic fringe of Democrats who regard the rich as the accursed aristos but that’s what they are….. the fringe. Whereas in the case of Republicans we have presidential candidates and many fellow leaders dismissing 47% of the country as moochers. It’s an order of difference that’s kind of hard to miss.

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  84. michael reynolds says:

    @Mikey:

    I’ve admitted to being toward the bottom of the 1% and you know what? I’ve never, ever had a single liberal ever fault me for it, or accuse me of being morally suspect because I make a good living. Never. Not once.

    But I have seen endless instances of conservatives trashing the poor just for being poor.

    No liberal ever tried to stop me from voting, or stop well-off people from voting. Republicans engaged in blatantly racist, anti-poor, anti-youth vote-blocking efforts. There is no “both sides do it.” There’s Republicans do it, and we don’t.

    Like or Dislike: Thumb up 6 Thumb down 0

  85. OzarkHillbilly says:

    @michael reynolds:

    I’ve never, ever had a single liberal ever fault me for it, or accuse me of being morally suspect because I make a good living. Never. Not once.

    Except for me, Michael. I don’t trust you. I think you are a piece of sh!t. ;-)

    Like or Dislike: Thumb up 2 Thumb down 0

  86. Mikey says:

    @michael reynolds: You move from the specific (“I’ve never had a liberal fault me for it”) to the general (“I’ve heard plenty of conservatives fault the poor for being poor”). People apply moral assign-by-default to groups, not individuals, so it’s not surprising they wouldn’t zing you personally.

    But I run in both conservative and liberal circles, and I hear both sides engaging in moral assign-by-default ALL THE TIME. Most of them don’t even realize they’re doing it. And these are smart, educated people (yes, even the conservatives).

    Even OzarkHillbilly, whom I consider one of the sharpest and most reasonable commenters on OTB, did it in this very comment. The working class are doing all the pulling and all the guys up top do is suck their blood. The working class are the virtuous producers, the guys on top the epitome of evil: vampires.

    And if you still don’t think liberals do it too, spend a little time over at /r/politics and read what the Reddit hivemind thinks of conservatives.

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  87. OzarkHillbilly says:

    @Mikey:

    Even OzarkHillbilly, whom I consider one of the sharpest and most reasonable commenters on OTB, did it in this very comment.

    Mikey, if you think me sharp or reasonable, you have not been paying attention. I am neither.

    The working class are the virtuous producers, the guys on top the epitome of evil: vampires.

    This is how I honestly feel. I been working all my life. All my life, I felt it to be my job to make other people money. Unfortunately they thought they need not keep me working.

    Do you understand, now?

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  88. OzarkHillbilly says:

    And to explain a little further, when my mother was dying, I went to my riding boss and I said, “I may need a few days off. My Mother is dying.” and he said….

    “OK”

    And the next day I was laid off.

    Get it?

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  89. Brummagem Joe says:

    @Mikey:

    I note you don’t respond to my point about equivalence. Perhaps you can’t discern the difference between leftwing bloggers and Republican presidential candidates……I’d have thought it fairly easy but apparently not in your case.

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  90. Jackie says:

    Eastern Washington is suntan/boater’s paradise. Florida without the humidity. :) Welcome!

    Like or Dislike: Thumb up 0 Thumb down 0

  91. Mikey says:

    @Brummagem Joe: I didn’t get to it, Joe, because I had to take my eight-year-old son to the emergency room and run him through a CAT scan to try to figure out what was causing his fever, vomiting, and abdominal pain, which can indicate appendicitis.

    Fortunately, his appendix was normal, so we’re not putting him into surgery this morning.

    Anyway, to your point: it is far more than just the fringe of Democrats who engage in assignment-by-default. Was OWS a fringe movement? As I recall, it had the support of the great majority of Democrats. Its entire message was based on assignment-by-default of moral virtue to “the 99%” and moral evil to “the 1%.”

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  92. Mikey says:

    @OzarkHillbilly: Don’t sell yourself short, OH. Perhaps I’m unusually easy to please, but I think your comments are generally interesting and reasonable, even when I disagree.

    I can understand why you feel that way–believe me, I’ve been down that road too. I watched a CEO’s perfidy destroy a 110-year-old company in a matter of a couple years, and 50,000 jobs with it, including mine. I have no problem labeling that specific guy a bloodsucker, and it chaps my ass that he’s still not rotting in jail.

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  93. Mikey says:

    @OzarkHillbilly: I’m really sorry to hear that. I’d like to have something smart and profound to say, but there really isn’t much that could address a betrayal like that at such a time.

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  94. Brummagem Joe says:

    @Mikey:

    Was OWS a fringe movement?

    Er…..a resounding yes….. it was a fringe movement which is why it never gained national traction…and your recall is wrong…..it didn’t have the overwhelming support of the Democratic party or it leadership…..in fact several Democratic mayors took a leading role in evicting OWS squatters…..the tea party on the other hand was not a fringe movement within the Republican party despite it’s rather obvious nativism, racism and homophobia.

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  95. Rob in CT says:

    OWS basically accomplished 1 thing, and one thing only: they helped inject 99%/1% into the conversation. People had been talking about the (~40-year) trend of rising inequality, but there wasn’t really much buzz over it. OWS helped amp that up. As far as I can tell, they’ve had basically no electoral results, and they were determined to not be “co-opted” by the Dems. In that sense, they chose to be a fringe.

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  96. Mikey says:

    @Brummagem Joe:

    it didn’t have the overwhelming support of the Democratic party or it leadership

    It certainly did: House Democrats Ask for Support of Occupy Wall Street

    “The Democratic Congressional Campaign Committee sent out an email this afternoon asking supporters to sign a petition backing the Occupy Wall Street protests in Lower Manhattan.”

    And: Pelosi Supports Occupy Wall Street Movement

    Nancy Pelosi is the leader of House Democrats, and a former Speaker of the House. It doesn’t get much more “Democratic leadership” than her.

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  97. Mikey says:

    @Rob in CT: I agree, OWS was not co-opted by the Democrats as the Tea Party was by the GOP. But it still enjoyed widespread support among Democrats and the Democratic leadership in Congress.

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  98. swbarnes2 says:

    @Mikey:

    But it still enjoyed widespread support among Democrats and the Democratic leadership in Congress.

    And this support was made manifest in the election of which explicitly OWS politicians?

    And the passing of what legislation?

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  99. Mikey says:

    @swbarnes2: @swbarnes2:

    And this support was made manifest in the election of which explicitly OWS politicians?

    None, but it doesn’t matter to my point.

    I asserted OWS had broad support among Democrats and even the party leadership, and I provided support for my assertion. I didn’t assert anything beyond that.

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