POWIP Piece of Work In Progress – Former Abode of Dan Collins

Breaking: House Democrats defy Obama and table the tax compromise bill

Respect my authoritah!

So is this standard DC kabuki fare, or something much more foreboding:

Defying President Obama, House Democrats voted Thursday not to bring up the tax package that he negotiated with Republicans in its current form.

"This message today is very simple: That in the form that it was negotiated, it is not acceptable to the House Democratic caucus. It's as simple as that," said Democratic Congressman Chris Van Hollen.

The vote comes a day after Vice President Biden made clear to House Democrats behind closed doors that the deal would unravel if any changes were made.

Rep. Peter DeFazio of Oregon said: "They said take it or leave it.  We left it."

The conventional wisdom among economists is that this will definitely hurt the stock market since there will probably be a great deal of selling before the years end to avoid the increased tax burden on incomes,  But more importantly, this will also ultimately hurt an already fragile economy.  The American people have long considered this Obama's economy, so one must assume that any serious reversal of what is, at best, a tenuous recovery in progress will be blamed on Obama and the Democrats.  As Jim Pethokoukis suggests this is slo-mo suicide for the Democratic party, since the voters will take out their frustrations over the progressives tanking the economy at the ballot box in 2012.

And the episode begs a larger question.  Over the last two weeks, several high ranking Democrats, such as President Obama, Bob Menendez, and Chuck Schumer, have essentially called the Republicans gangsters, thugs, and terrorists for insisting that all the current tax rates be extended based on the notion that it's not a good idea to raise anyone's taxes during a weak post-recession recovery; which they contend is "holding all America hostage" for the sake of ideology.  But based on the almost certain damage that raising taxes will have on any recovery in 2011, and rest assured it will since the lowest level tax rates will increase by a staggering 50%, and send the stock market lower almost immediately as well as the concomitant value of many people's 401k's, all to assuage their political egos or to include some earmarks for pet projects or "wish-list" items of legislation I ask you; who's "taking hostages" now?   You know, for the sake of ideology...

And since the tax increases will disproportionately impact the lower and middle class more than the rich, who's really the champion of the "little man" ?

And could this be a case of theme generating another crisis that, of course, they won't let go to waste; are they esentially going Cloward-Piven on the US economy?  Or is that too far into tin-foil-hat-conspiracy territory :)

What is your opinion, kind reader?

Rocketman