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More cowardice?

I am probably not the only person who has been wondering if the word "cowardice" fits Democratic behavior, in the White House and/or on Capital Hill, since the Massachusetts election news. I agree with others who find it overwhelmingly obvious that having the House pass the Senate healthcare bill, even without mutually agreed changes through reconciliation, both (1) is in the Democrats' electoral self-interest for this November and thereafter, given the votes already on record, and (2) for anyone who supported the House bill, is far superior as policy to doing anything less.

Thus, it seems to me that only panic and cowardice could explain their failure to take this obvious step - although I recognize that they may still do it, and that perhaps the muted response so far simply reflects ongoing internal negotiations. Frankly, I would bet a lot of money that (1) they will end up doing virtually nothing, (2) they will pay a huge price for this in November (even though the bill is currently unpopular!), and (3) never in the next 10 years (at least) will they come close to passing anything similar.

These guys make the New York Mets ownership look good, which isn't easy.

I thus had a mental frame in mind when I heard the latest discouraging news, which is that the Obama Administration, in floating a supposed draft version of the State of the Union speech, is proposing to expand the child tax credit WITHOUT making the expanded credit refundable.

As Brad DeLong notes, this means that, "if you earn less than $30K, you get zero. If your cash income is between $30 or $40K, there are nine chances in ten you get zero. If your cash income is between $40K and $50K, there are two chances in three you get zero. Even if your cash income is between $50K and $85K, there is still one chance in four you get zero."

Policymakers in the Obama Administration understand perfectly well that, merely because you put a transfer based on household circumstances into the income tax, there is no good reason why it should be nonrefundable, i.e., limited to this year's income tax liability. It would appear that they are afraid to argue for the policy design that they know is the better one, and for which there are powerful arguments of equity. But even if they suspect that Congress wouldn't enact the credit with refundability, why not at least propose it? Is the lesson they learn from one quirky special election that, from now on, they must talk like anti-income tax, anti-"spending" (based purely on form) Republicans? The battle to be the more Republican-like party in the November election is not one that they can expect to win.

Full post as published by Start Making Sense on January 25, 2010 (boomark / email).