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The Deal

[ 157 ] January 1, 2013 |

I’m not prepared to make a sweeping judgment of the deal Obama worked out with Republicans over the fiscal slow incline. Obviously there’s some major problems with it. Higher taxes should probably start at less than $250,000 and certainly not $400,000. It only buys us 3 months before yet another round of absurdity over the debt ceiling (let’s hope something on immigration can get done before then. I’m skeptical since the Republicans are going to try and reject nearly every one of Obama’s cabinet nominations). On the other hand, rich people will pay more in taxes and cuts to social programs were avoided.

I do think though that Michael Cohen’s piece blaming the entire mess on Republican extremism makes sense.

Was it worth risking austerity policies that squeeze the middle class simply to lock in even higher tax revenues? Perhaps. People can certainly disagree, and personally, I’m not completely sold on my own rosy take. But when you’re dealing with House Republicans, who could have very easily passed a tax cut bill after going over the cliff that ignored EITC or unemployment insurance, or even set the tax threshold at $500,000 and dared Democrats in the Senate to block it, I find it very difficult to criticize the president too harshly.

In the end, Obama went with the bird-in-hand of a certain deal. Arguing that he could have gotten a better agreement had he held out sounds reasonable, but it ignores the potential obstacles in dealing with a political party that has no interest in the plight of working people or the responsibilities that come with running a large country.

And the consider this: about two weeks ago, the left was up in arms over the possibility of benefit cuts to social security and Medicare. None of that happened – the country’s social insurance programs will remain largely untouched. At least, for the time being.

In fact, when one looks at the likely deal that will resolve this latest fiscal crisis, it is only further evidence of the GOP’s utter hypocrisy on fiscal matters. Consider the major concessions the Republicans got from Obama: a less onerous change in estate taxes, which most directly affect the wealthiest Americans, and a tax break for those making between $250,000 and $400,000.

That’s right: we fought this entire battle so Republicans could make it harder for rich people to avoid paying more of their fair share in taxes.

A party that has made deficit reduction its clarion call, and in particular, reducing the size of government spending, appears to have received virtually nothing in the way of major spending cuts in this deal or deficit reduction for that matter. When push came to shove, reducing tax burdens was all that mattered to the GOP.

Of course, this result is neither startling nor unexpected, at least to those who have paid close attention to the Republican party over the last four years. It is ironic that on the 150th anniversary of Lincoln’s emancipation proclamation, a party that was formed by courageous slavery abolitionists has become, 150 years later, a party that is courageously fighting to ensure that wealthy Americans do not pay one penny more in taxes.

Like Cohen, it’s really hard for me to have a rosy view of the American future so long as one party (either really) takes a position that it will completely shut down the country for political purposes. I don’t know how this ends either, not with the science of redistricting ensuring Republican control in many states they receive the minority of votes, the very real possibility of Republican-led states changing election laws to split up their electoral votes before 2016, and an increasingly radical agenda. In the longer term, I feel better knowing that people of my generation and younger are beginning to play a larger role in politics. I may well be too optimistic here.

Krugman notes:

So why the bad taste in progressives’ mouths? It has less to do with where Obama ended up than with how he got there. He kept drawing lines in the sand, then erasing them and retreating to a new position. And his evident desire to have a deal before hitting the essentially innocuous fiscal cliff bodes very badly for the confrontation looming in a few weeks over the debt ceiling.

If Obama stands his ground in that confrontation, this deal won’t look bad in retrospect. If he doesn’t, yesterday will be seen as the day he began throwing away his presidency and the hopes of everyone who supported him.

Of course, I had no hope for Obama when I voted for him and I’m not sure why anyone would. We all knew what Obama was by November 2012 and there’s no reason to think what we don’t like about him will change. Voting is not a morality tale–it’s a choice of who is less evil. That choice was clear. I’m not at all confident over his behavior in the debt ceiling. But at the very least, this bill does raise more revenue and taxes the rich more fairly without cutting social services. From a short-term view then, I guess this leans more toward a win. But short-term views aren’t the most valuable and real judgment should be withheld until the debt ceiling it resolved.

Comments (157)

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  1. Semanticleo says:

    Yeah, ordinary income. That has been the very public gad-fly, in the ointment. The issue that escapes attention is CapGains, or UNearned income.

    It went up 5 points, as well….but wait…..it went from just 15% to 20. How can this escape everyone’s notice?

    It has been ridiculously underreported, for a reason. CapGains was the genuine winner in this.

    • c u n d gulag says:

      I still think that 5% increase will cause Mitt more tears than losing the election this year.

      • Semanticleo says:

        I think it was just as verklempt for Dems; hence, invisible on the radar screen.

      • Davis X. Machina says:

        That’s an increase of a third. On cap gains. GOP gospel is to tax cap gains at zero.

        Sure it’s not what it should/could be, but real playas don’t worry about earned income – W2 money is for chumps — that’s not how the real money comes in.

        OTOH, it looks like dividends, which were slated to return to being taxed at the same rate as earned income, are now permanently blended with cap gains at the lower rate (20% v. 35-40%)

        • Semanticleo says:

          Dividends can still have the tax delayed by opting to use them to buy more shares. I think the lower incomes (wtf am I talking about) below 250k are more likely to cash out. That’s not as much of an issue for me.

          What I hate is having Joe Lunchbucket pay ordinary income rates and payroll taxes.

          Especially payroll taxes. What happened to removing the cap @ 200k agi?

          • Davis X. Machina says:

            Dividends can still have the tax delayed by opting to use them to buy more shares.

            Yeah. I have two small DRIP’s…

          • Xenos says:

            Especially payroll taxes. What happened to removing the cap @ 200k agi?

            Was this a serious proposal supported by the White House or anyone in the Senate?

            That payroll tax is a premium payment. If you take the cap off the tax you are also taking the cap off the benefit payment. Since the wealthy often live so much longer they would suck a lot of the wealth out of the system. The only to stop that would to redesign SS as a welfare entitlement, wich would be the kiss of death.

            Just let a social insurance program be a social insurance program, already.

            • Semanticleo says:

              You can still have means testing. The Promissory Note has never been repaid from the raids of the 80′s

              Time to honor your promises, Congresscritters.

            • Steve LaBonne says:

              Your understanding of how Social Security works is, to say the least, defective. The numbers have been run many times, and the effect of the increased revenue from raising the cap greatly outweighs the outgo in benefit increases, to the point of making the system almost 100% solvent indefinitely without any other changes.

              • Semanticleo says:

                I think I see where you’re coming from…

                There is, however, a difference, as Mr Krugman points out, and it’s political, not economic. Basically, means-testing cracks apart political support for the programme. It slices away at support among the moderately wealthy, who are the most politically influential class in the country. As Mr Krugman puts it, means testing would create “class warfare—not between the rich and poor, but between the filthy rich and the merely affluent”: where a rise in top marginal tax rates costs progressively more as you go up the scale, means-testing medicare costs millionaires just as much as billionaires. Billionaires won’t notice the extra expense. Millionaires will, and they’ll drop their support for the programme. One can rest assured that the people who launched the push to means-test Medicare while fanatically opposing a hike in marginal tax rates for rich people are entirely aware of these political effects.

                http://www.economist.com/blogs/democracyinamerica/2011/07/entitlement-reform

                • Steve LaBonne says:

                  I oppose means testing and accept that raising the cap will raise benefits (greatly outweighed by the new revenue) for people who don’t need them, if that’s what you mean. It’s a small price to pay for simultaneously maintaining the political basis of the program while making its finances whole.

                • Mpowell says:

                  Means testing is totlally unnecessary. SS pays 10 cents on the dollar at the top end and 70 or 90 cents on the dollar at the low end. Raising the cap would greatly increase revenues over outlays. This is actually really simple if you know how the program operates.

              • Semanticleo says:

                Well, it would help if you provided some corroboration, because the picture is turning grey.

          • cpinva says:

            the GOP mantra is no taxes, ever, on anything.

            GOP gospel is to tax cap gains at zero.

            if you buy into the canard that decreasing tax rates generates greater tax revenues, this makes absolute sense. it would logically follow that a marginal rate of -0- should generate a gazillion dollars in tax revenues.

            that math doesn’t work that way is irrelevant, when you firmly believe in the efficacy of the “trickle-down” theory.

            this is something that’s irked me for the past 30 years, ever since reagan made a big deal out of “joe sixpack” being the mainstay of the country.

            What I hate is having Joe Lunchbucket pay ordinary income rates and payroll taxes.

            he is, as long as he keeps subsidizing the wealthy.

            are you referring to the social security trust fund?

            The Promissory Note has never been repaid from the raids of the 80′s

            they aren’t “promissory notes”, they are special, non-tradeable bonds, and it was specifically established to provide for the anticipated extra needs of the “baby boomer” generation. there were no “raids”, other than those funds being used, like most of the multi-trillion dollar national debt, to subsidize the wealthy and corporations.

            • Semanticleo says:

              The concept of money is ephemeral, as well, so let’s not get all wordy.

              Money deducted from payroll taxes, right now, goes directly to recipients, like those greedy Boomers. You seem to be corrective, rather than instructive. I welcome correction, but reject condescension.

              Iamnotataxlawyer.com could be my nym, so I try to offer cites when I make noises of a superior knowledge, and experience.

              I come here to learn, so if you are a teacher, then teach, or fuck the fuck off.

    • CapGains was the genuine winner in this.

      The green energy tax credits are nice, but you’re right – that’s a big item.

  2. c u n d gulag says:

    I’m still not sure if the House will pass this, or not.

    But, either way, you can bet that after losing the stimulus and healthcare debates a few years ago, and then getting their billionaires to fund the Bircher/Jesus-freak/Teabagger’s in 2010, enough to win the House, and then, after this year, expecting to win big, and instead losing in epic and embarrassing fashion, to President Obama, as well as some win-able Senate and House seats, they will do whatever they can in the upcoming “Debt Ceiling” frothing-at-the-mouth, wailing, shrieking, and tearing at the hair and garments, hissy-fit, to make the lives of Obama and the Democrats as miserable as humanly possible.

    And that, if the results of their endless intransigence and hostage-taking, the country declines, or goes back into another steep Recession/Depression, they figure they can always shift the blame to anyplace and anyone, except where it clearly belongs – on themselve, the members of ‘The Repbublican Clown-car Congressional Caucus.’

    Party over country!

    PARTY UBER ALLES!!!

    • LosGatosCA says:

      Party before country, money above all.

      It’s been the conservative Republican TeaBagging credo for several generations now.

    • cpinva says:

      i guess this (in part) explains why i’m not a politician,

      they will do whatever they can in the upcoming “Debt Ceiling” frothing-at-the-mouth, wailing, shrieking, and tearing at the hair and garments, hissy-fit, to make the lives of Obama and the Democrats as miserable as humanly possible.

      i’d either just ignore them, or point and laugh. both, i suppose, are considered (by the village people) bad form. apparently, none of the dems in the house or senate have children, or it’s been so long since they were young, they’ve forgotten how to deal with this kind of nonsense, which is to either ignore or laugh at it.

  3. Steve LaBonne says:

    All you have to know about the deal is that it only kicks the spending can down the road for 2 months and does nothing to prevent debt-limit hostage taking. The Dems have given away their major bit of leverage for a very unimpressive (and very temporary) return, and will be taken to the cleaners (and many ordinary people to the poorhouse) very shortly.

    • Semanticleo says:

      I keep hearing about ‘leverage’. Do you mean the public lashing by the Bully pulpit?

      • Steve LaBonne says:

        No, I mean all tax rates reverting to Clinton levels if no action was taken.

        • There’s a certain amount of superficial logic to this to be sure, but the two complicating factors I see is that it assumes that a) House Republicans will feel compelled to make some sort of deal on tax cuts and, b)that House Republicans will respond to changing baselines rationally in the first place.

          I don’t think it’s any better than 50-50 on either point.

          • Steve LaBonne says:

            That’s better than the certainty that they can now go back to the well in 2 months without worrying about taxes at all.

            • Perhaps. On the other hand, as Cohen points out there’s absolutely nothing to say that House Republicans would agree to “fix” the EITC, child tax credit, unemployment benefits, or anything else that benefits the working class once you go over the cliff. All things considered (as, admittedly, as someone who has a great deal of vested interest in those tax credits), I’m happy to trade them for a smaller tax increase on the rich.

    • The Republicans have given up most of their leverage, too. There will be no expiration of Unemployment Insurance, green energy tax credits, or middle-class tax cuts for the Republicans to dangle over the White House’s head.

      As far as giving up leverage goes, it looks like more or less of a push.

      • tonycpsu says:

        The unemployment insurance and green tax credits were only extended for a year. Democrats gave up more leverage than Republicans did over the medium term, even if it’s a push short term.

        • I was just responding to Steve’s comment about the next round of deals.

          • tonycpsu says:

            Fair enough, but can a push even be considered a good outcome after Obama specifically campaigned on the $250k rate?

            One of the more famous quotes to come out of these negotiations was when Boehner asked him what he gets for putting $800B in revenue on the table, and Obama said “I get that for free”, or “my offer is this: nothing.” But guess what — he settled for $600B! Even the one time he seemed like he was specifically asking for something in exchange for a very decisive election victory, he caved.

            He’s shown he will always fold to get a deal, so excuse me if I don’t see a short-term push and a medium-term loss of leverage as a good outcome.

            • What’s missing here is an explanation as to why increased taxes on the rich, rather than forestalling benefit cuts to the non-rich, should be the hill the White House insists on dying on.

              • tonycpsu says:

                Why the false choice? Remember that the Bush tax cuts were already set to expire. It took an affirmative action to restore them for the middle class. Also, more money in the general fund means more money to support benefits. (Obviously some of the benefits have their own income streams, but that’s sort of out the window when we’re doing these year-long payroll tax cuts.)

                • “Also, more money in the general fund means more money to support benefits. ”

                  If wingnuts in the House vote for them, anyway.

                • tonycpsu says:

                  Yeah, my point is that while they’re trying to starve the beast, you can try to keep finding food for it and daring them to say that money should go to something else. They probably will, but they also aren’t giving any ground on these programs in these deadline deals, so I don’t see one strategy or the other as more effective.

                • ” they’re trying to starve the beast, you can try to keep finding food for it…”

                  “Food” bought through borrowing is every bit as good as food bought through taxes, and even better in the current circumstances.

                • tonycpsu says:

                  I disagree, because (a) I want the tax code to be more progressive as an end itself, not just as a means to an end, (b) though we can borrow (almost) for free now, we do have to roll the debt over at some point, and (c) Congress tends to look at deficit reduction through spending cuts in a “last in, first out” manner, so the safety net spending will be first on the chopping block when the next deficit fight happens. Borrowing for infrastructure works better because you probably don’t axe a road or bridge project when it’s 40% done.

              • Davis X. Machina says:

                Because they ran on it. Twice. And if they don’t do it, their e-mail servers explode?

                There are people all over my internets who who will swap having the emergency unemployment extension time out, or the child tax credit time out, in exchange for higher top marginal rates of income tax in a heartbeat.

                • Alternatively there are people who would trade lower taxes on the rich for smaller benefit cuts for the non-rich. And there’s no actual policy argument for prioritizing tax increases at the moment.

            • Fair enough, but can a push even be considered a good outcome after Obama specifically campaigned on the $250k rate?

              I used the word “push” to describe the effects of the deal on the leverage each side brings to the next negotiations, not the deal as a whole.

              I’m still making up my mind on the deal as a whole. I’d rather have the level at $250,000 than $450,000, but that difference doesn’t seem that big a deal to me.

              The 1/3 increase in capital gains tax rates and the extension of the green energy credits are nice plums. Finding one thing you don’t like in the deal and not talking about it as a whole isn’t worth a whole lot.

              • And again, note that the whole “leverage” argument assumes that House Republicans aren’t willing to simply walk away from a deal to “fix” the cliff and blame Obama for higher taxes and austerity.

  4. Joe says:

    I had no hope for Obama

    … that he would be my kind of lefty.

    OTOH, he helped bring forth some pretty good stuff, but like those who say this has “nothing,” skipping over (unlike the post) what it does have (including stuff for the people those with “no hope for Obama” say they care a lot about, which imho means one should have hope for Obama that he will leave the presidency with many in the country better off than if he wasn’t there.

    Such things made me not have a bad taste in my mouth when I voted for him. It wasn’t just “best I can do” either.

    • Joe says:

      That was a bit garbled. Welcome to 2013. Still in need of an after the post edit button.

    • Erik Loomis says:

      “I had no hope for Obama

      … that he would be my kind of lefty.”

      Yes, but that’s not quite my point. Rather, I had no hope that he would be any different than he was in the first term. Same strengths, same weaknesses.

      • I don’t know: on the whole this looks like a pretty good start. Republicans agreeing to some level of higher taxation on the uber-rich while also extending tax credits for the working class and unemployment insurance (which, remember, wingnuts not only oppose but are philosophically opposed to) seems like a pretty decent deal in a world where Republicans have a majority in the House.

        As you say though, the real verdict will come based on how Obama handles the debt ceiling, but I feel like he has more leverage there if he’s actually willing to force the House to shut down the government.

      • Joe says:

        I’m not quite seeing the difference there but okay.

      • Mark Jamison says:

        Yes, Mr. Obama’s problem is that he is more like Reagan than many would care to admit. At this point I’m not sure what he believes beyond pragmatism for the sake of pragmatism which can unfortunately mean getting something done for the sake of getting something done rather than actually addressing the problem.
        The concessions in this deal greatly ignore the problems we face with economic inequality, essentially ceding the terms of the argument to the Right (see estate tax).
        As articulate as he is, Mr. Obama’s call for taxes on the wealthy has been ham-handed and incoherent. He hasn’t done a very good job of explaining why a rising tide ought to lift all boats and he’s done a poor job of building on his better rhetoric, like the 2004 convention speech.
        I think he’s honest and sincere which is far better than the Republicans but I’m not sure he’s really very different than Reagan in many ways.

      • cpinva says:

        for a (very) brif moment, i had some hope that he’d realized the whole “post-partisany” thing wasn’t going to work with this crowd. compromise is not a term in their lexicon, and time shouldn’t be wasted in attempting it. it was a very faint hope, and i didn’t vote for him with that in mind.

        as it is, i still don’t expect the house republicans to vote for anything, that isn’t a complete giveaway to them. the members of that asylum represent an even larger asylum, who just don’t care. regardless of the affect on them personally, they’ll blame obama and the democrats. we aren’t talking exactly rational people here.

        • Anonymous says:

          Anyone care to weigh in on the likelihood of this deal actually getting through the houses? I can’t see republicans passing it. Too many are too scared of being primaried by teabaggers.

          We might be going off the rather shallow fiscal curb after all, which IMHO just makes the progressive position slightly stronger, and the democratic position greatly stronger.

          • DrDick says:

            I am also not sanguine it will get through the House. It still has not been voted on as of 12:42 MST.

            • tonycpsu says:

              I think it gets through tomorrow or Thursday with a couple of GOP amendments that the Senate probably accepts since it was such a lopsided vote in the upper chamber.

              • DrDick says:

                The House conservatives are rebelling and it is unclear it will get through. The GOP are talking about taking a vote tonight as of 6:20 EST.

          • Mark Jamison says:

            Will Boehner keep his promise to bring it to the floor without sufficient minority votes to pass? If the answer is no, which would be classic Boehner, then they don’t even vote. If the answer is yes then it’s still a tough hurdle. I don’t think Pelosi can round up the entire Democratic caucus (and I hope that’s the case) so the bill will need forty, fifty, maybe even sixty Republican votes.
            That’s a lot of people with some very nasty primary fights ahead.
            And if they do pass it the Republicans will be loaded for bear come the debt ceiling debate.
            I know the consequences are scary but maybe it’s time for an all out ideological war. Maybe it’s time for Democrats to stand up and actually act like Democrats.

          • Rhino says:

            Anyone care to weigh in on the likelihood of this deal actually getting through the houses? I can’t see republicans passing it. Too many are too scared of being primaried by teabaggers.

            The post starting with the above paragraph was me. Bloody cookies

  5. And his evident desire to have a deal before hitting the essentially innocuous fiscal cliff…

    As an aside: you know how I know Krugman isn’t a member of the working class/working poor?

    • Steve LaBonne says:

      Before you crow too loudly, let’s see how that works out for you (and the working poor) in 2 months and beyond. It’s entirely possible that we’re heading fr piecemeal adoption of the Ryan budget as a condition for the government being allowed to operate at all.

        • I third the proposal that people not crow too loudly too soon.

          That’s been sort of a problem when it comes to commenting on the implications of deals Obama cuts – too much crowing too soon.

          For instance, remember how popular Lucy-and-the-football metaphors were right before the lame duck Senate repealed DADT?

      • Maybe, maybe not. As it stands now, my tax return will be meaningfully larger thanks to the deal, something that makes quite a difference to people who aren’t making as much money as Krugman annually.

        • Jeremy says:

          Neither the fiscal cliff nor the deal affect your 2012 taxes. And a deal after going over the cliff would most likely be backdated to affect rates for all of 2013. So, you’d pretty much see the difference in your withholding reverting to Clinton-era levels for the time it takes to get a new deal.

          The long-term unemployed would be screwed, but the working poor should end up in the same situation regardless when the deal is made.

        • Jeremy says:

          I was forgetting about the stimulus tax cuts. Those would be harder to restore in a post-cliff deal, because the Republicans hate tax cuts for poor people. So the Democrats would have less leverage on those by waiting. On the other hand, the biggest part of the various stimulus tax cuts is the payroll tax holiday, which ends in this deal. So, I guess it’s the long-term unemployed (definitely) and those getting the EITC (probably) that waiting to go over the cliff will have a large effect on.

        • Rob says:

          And your weekly check will be smaller because the payroll tax was increased.

    • Chatham says:

      Considering we already went over the fiscal cliff and very few people seem to have noticed suggests that Krugman is correct.

  6. DrDick says:

    I would generally agree with this assessmnet and Krugman’s. Like you and him, I am rather apprehensive about what happens in the debt ceiling negotiations. Obama has shown no substantial ability to hold the line (indeed, I think he prioritizes making a deal – any deal- over principles) and the other side (at least in the House) is willing to blow themselves and everyone up if they do not get their way. Also, we still not know if this deal will even pass in the House.

  7. LosGatosCA says:

    With the House yet to vote and the debt limit/sequester deadline in March, it’s not even halftime in this game.

  8. elm says:

    I have to give this deal an Incomplete. As many other point out, it only delays both the sequestration and debt-ceiling debates. If he gets through both without benefits cuts to SS or Medicare and without anything more than nominal cuts to social services, then I’ll give this deal a B.

    The tax threshold is too high, he got no additional stimulus, and, even if he wins the debt-ceiling debate, he wasn’t able to take it off the table completely so we will have to have this idiotic fight year after year.

    On the other hand, he did raise income taxes on the super rich, he raised estate taxes and capital gains taxes, he capped deductions, and he did it all without (as of yet) sacrificing any spending or other Democratic priorities and principles.

    If he has to sacrifice those two things in the next two debates, then his grade goes substantially down. My hunch is, I’ll give him a C when all is said and done, as he’ll have to give something up to get the debt ceiling raised and avoid sequestration, but it won’t be too substantial.

    • And note also that, since “the debt’ isn’t an actual pressing problem that the country faces right now and mass unemployment and demand crunches are, cutting programs that benefit that long term unemployed and non-rich solely to raise taxes on the rich has no sound basis from a policy standpoint whatsoever.

      • elm says:

        I don’t disagree. A B is a very good grade and he gets it (provisionally) by extending UE insurance and not cutting other spending while raising some taxes on some people.

        Had he been offered his campaign platform of higher taxes on those makes more than 250K, but only in return for abandoning UE insurance, it would have been a mistake to take it. But I doubt that deal was ever on the table anyway.

  9. spencer says:

    We all knew what Obama was by November 2012 and there’s no reason to think what we don’t like about him will change.

    It’s because some people have the ability to convince themselves that the second term will be different because he won’t have to run for reelection again and that he will now be free to unleash his inner progressive that they just *know* is straining to get out and yearning to breathe free.

    I remember seeing the same thing in 1996. It’s a thing a lot of leftish people do to make them feel okay about voting for someone more conservative than they’d like.

  10. Steve S. says:

    On the other hand, rich people will pay more in taxes

    Please let’s put this in the proper perspective. Rich people will pay more in tax than they did last week but far less (income, capital gains, estate) than they did in recent living memory. Forget the Ds vs. Rs for a moment, this is a massive victory for the rich. Far lower rates than what they’d pay in a sane, decent society are close to being etched in stone.

    • There’s no such thing as etched in stone, though, because Congress can always change the rates. So sure, let’s say Obama drew the line in the sand on repealing all of the Bush taxes at, say, $150k in income. That would be ideal from a fairness standpoint, and it would also be totally undone the second that a Republican won the Presidency.

      • Steve S. says:

        There’s no such thing as etched in stone, though, because Congress can always change the rates.

        True, so the next time the Ds get a large majority in government — I don’t what that would be, but hypothetically let’s just say the Presidency, 250+ seats in the House, 58-60 seats in the Senate — I’m sure it will happen.

        • Why would you be expecting a specific change to tax rates without any knowledge of the economic circumstances at the time.

          Gosh, I’m so old I remember when internet lefties were Keynsians!

          • T02 says:

            Apparently you forgot that Keynes favored increased government spending. Remember additional spending is 4 to 5 times more stimulative than tax cuts.

    • Far lower rates than what they’d pay in a sane, decent society are close to being etched in stone.

      Far lower rates that what the rich would pay in a sane, decent society would have been etched in stone if we’d gone over the cliff, too. I just can’t grok the huge moral difference between $250k and $450k.

      • Steve S. says:

        I said “forget the Ds vs. Rs for a moment” but apparently you are incapable of doing such a thing.

        • There is nothing that remotely touches on Ds vs. Rs in my comment.

          Your argument has a hole in it. I told you what it was. Respond, ignore, whatever, but please stop the whining.

          • Consumatopia says:

            You’re comparing this deal (450K) to the main Democratic proposal (250K).

            Sure, I guess Steve S would have to concede that both this deal and what Obama proposed in the first place represent a major victory for the rich. Happy?

            • No, because even the complete absence of any deal, and the complete reversion to all of the Clinton-era tax rates, would have resulted in “Far lower rates that what the rich would pay in a sane, decent society.” In fact, allowing taxes to rise on middle-class people would have been worse from a distributional perspective. However, cutting a deal that raised taxes only on the rich, and on unearned income, without raising taxes on the middle class is an improvement from a distributional point of view – both an improvement from today, and from the threatened across-the-board increase.

              Both this deal and Obama’s proposal represent worse deals for the rich than going back to the Clinton tax rates, so it makes no sense to call it a victory for them.

              • Consumatopia says:

                Both this deal and Obama’s proposal represent worse deals for the rich than going back to the Clinton tax rates

                No, they don’t. Rich people are going to pay the lower rates on every dollar they make less than $450K.

                • Sherm says:

                  Correct. Plus capital gains were 28% during a majority of the Clinton years. He had raised them before he lowered them.

                • Sherm says:

                  And let’s not forget the lower rates and higher threshold for the inheritance tax. This is a great deal for the rich. I’m withholding judgment on the merits of the bill, but the wealthy will certainly benefit.

    • socraticsilence says:

      Yes and no, some rich people will actually pay more in long-term capital games taxes than they did under most of Clinton’s term- add in the taxing of divdends as normal income and its actually a higher effective rate for the Mitt Romney types than they’ve paid for the better part of 2 decades.

    • Anonymous says:

      From the point of view of economic turmoil, I would rather see several smaller increases than one big one, and I see signs that the people of the western nations are going to be insisting on increasingly progressive taxation, and tax reform wrt things like tax shelters, capital gains, and inheritance, into the future.

      Taxes and income inequality have become major issues to the 99%, and I expect that to continue.

  11. Consumatopia says:

    My main problem is that the debt ceiling and the sequester will be fought at the same time. It means that it’s now impossible to set any kind of precedent against caving over the debt ceiling–because however you respond to the sequester, that can be interpreted as a caving over the debt ceiling. Even if Obama holds a hard line on the sequester and lets it go into effect, that would count as a cave on the sequester–spending cuts unbalanced by tax increases.

    Basically, the lines in the sand are incompatible. For the debt ceiling, Obama insists that spending cuts must be matched by tax increases. The sequester assumes that domestic spending cuts are matched by military spending cuts.

    Fighting both issues at the same time means that both sides can find some way to interpret the outcome to claim a victory. That’s doubly bad for progressives–it means conservatives can claim a victory, and therefore there will be future debt ceiling fights. It also means that Obama can find some logic (e.g. “that wasn’t a cave on the debt ceiling, that was a concession on the sequester”, or “the spending cuts in the sequester were already made, they don’t represent new spending cuts”) that justifies nearly any compromise. Doing both issues at the same time means everyone can spin things basically however they want.

  12. Dilan Esper says:

    Voting is not a morality tale–it’s a choice of who is less evil.

    No, if you pretend your vote even counts, voting is a choice of long-term outcomes, which are sometimes maximized by electing the lesser evil and sometimes are not. And more generally, because no one person’s vote ever matters anyway, voting can be a morality tale, or can be used for any purpose the citizen wishes it to.

    • Scott Lemieux says:

      which are sometimes maximized by electing the lesser evil and sometimes are not.

      They are, in fact, never maximized by voting the greater evil.

      And more generally, because no one person’s vote ever matters anyway, voting can be a morality tale, or can be used for any purpose the citizen wishes it to.

      If you want to think about voting like an atomistic economist, that’s your privilege, but this obviously doesn’t apply when you’re trying to persuade others.

      • Joseph Slater says:

        They are, in fact, never maximized by voting the greater evil.

        This.

      • Chatham says:

        “If you want to think about voting like an atomistic economist, that’s your privilege, but this obviously doesn’t apply when you’re trying to persuade others.”

        It depends on what you’re trying to persuade them to do. If you’re trying to persuade them to do more than just vote, it’s not a bad thing to point out.

    • tt says:

      no one person’s vote ever matters anyway

      This isn’t true. Stop saying it.

      • DrDick says:

        Everyone who says that is another victory for conservative voter suppression.

        • Rhino says:

          The ultimate dupe: not only have you sacrificed your most powerful tool, but now you seem determined to get others to throw their vote away too.

          Individual votes matter because aggregate votes matter. What do you suppose the aggregate vote totals from?

        • Consumatopia says:

          Wait, this is the same definition of “voter suppression” that Karl Rove was using. Making you feel bad about voting or your candidate is not voter suppression.

          • DrDick says:

            When you say “my vote does not count,” voter suppression wins, because it encourages people not to vote or to make stupid symbolic votes that everyone else ignores.

            • Consumatopia says:

              You’re trivializing the biggest scandal of the past election season–Republicans changing election laws to make it harder for their opponents to vote. That’s voter suppression. Telling people to make symbolic votes is not voter suppression.

    • Erik Loomis says:

      Can you name a single case where voting for the greater evil made a positive difference down the road?

    • “….because no one person’s vote ever matters anyway…”

      Hmm…if that’s the case, then why were the GOP so damned gung-ho in trying to strip many voters of their right to cast a ballot in the 2012 election? I mean, if no person’s vote ever mattered, then the GOP would never have done this.

      Oh well. Seems like I’ve heard that mantra time and time again, even though it’s a false face.

    • Consumatopia says:

      Yeah, how could you be so stupid as to ask as to vote for the greater evil?!

      Wait, you didn’t actually ask us to do that? But…but…that would mean a couple of people responding to you need help reading!

      • DrDick says:

        No, you and Dilan need some help with comprehending reality. In American politics, not voting for the lesser evil is tantamount to voting for the greater one since you only have two viable choices. Casting a vote for a third party in the US is equivalent to not voting. No one pays any attention to you and you effectively endorse whoever actually wins.

        • Consumatopia says:

          not voting for the lesser evil is tantamount to voting for the greater one

          Look, I voted for the lesser evil. I even canvassed for that guy. But if voting for the lesser evil is the same as voting for the greater evil, then why bother to lie and pretend that someone had said to vote for the greater evil?

          Say the election system is completely fraudulent, your only choices are the current dictator and an “opposition” candidate hand picked by the current regime. And say that the dictator always wins with 101% of the vote. Under those circumstances, the moral thing to do is to refuse to vote–and that’s not remotely “tantamount to” voting for the dictator. (Don’t bother with “in American politics” because Dilan already said “which are sometimes maximized by electing the lesser evil and sometimes are not”, emphasis added).

          • Consumatopia says:

            But if voting for the lesser evil is the same as voting for the greater evil

            Should be not voting for the lesser evil, of course…

          • Rhino says:

            When that theoretical situation arises in an election we plan to vote in, we can revisit your contention. Until then, why are you bothering with the absurd hypotheticals?

            • DrDick says:

              +1,000,000

            • Consumatopia says:

              Because it proves that refusing to vote for the lesser evil is not the same as voting for the greater evil. If you want to argue that in some case voting for the lesser evil is good or necessary, make that case. Otherwise, don’t bother with any nonsense talk about voting for the greater evil–that’s not what anyone is advocating.

              • Malaclypse says:

                Because it proves that refusing to vote for the lesser evil is not the same as voting for the greater evil.

                This is true. Mathematically, refusing to vote Lesser Evil = 1/2 of a vote for the Greater Evil, rather than a whole vote.

          • tonycpsu says:

            DrDick said “not voting for the lesser evil is tantamount to voting for the greater one”, but you’re starting with “if voting for the lesser evil is the same as voting for the greater evil…”

            • Consumatopia says:

              If you aren’t saying that voting for the lesser evil is the same as voting for the greater evil, then you’re admitting that I’m right: some people above need help reading.

              I don’t care what you think is “tantamount to” anything else–nobody said to vote for the greater evil. Period. Learn to read.

              • DrDick says:

                I am sorry, but that statement is absolutely incoherent and bears no relationship to anything anyone else said.

                • Consumatopia says:

                  “that statement is absolutely incoherent”

                  It’s already well-established that you’re bad at reading. You don’t have to keep working to establish it further.

                  But go on–you can keep arguing against the imaginary post that asks you to vote for the greater evil.

                • DrDick says:

                  No. You have a problem with comprehension and with writing anything rational and coherent.

          • chris says:

            Say the election system is completely fraudulent

            Well, obviously that’s different from an election system that is only partially fraudulent. In a completely fraudulent election system it really is true that one person’s vote never matters. Or one million people’s votes either, for that matter.

            But this has no applicability outside that specific situation, so why bring it up except as a derail from the point you originally argued and lost?

  13. I’ve learned that it’s unwise to make a snap judgment about Obama’s deals, because there are always other shoes dropping a few days or weeks down the line. When the 2010 tax cut deal was made, it was assumed (in certain quarters) that that was the end of the deal and the Democrats wouldn’t actually get any more bills through the lame duck Senate as a result. A couple weeks later, the deal looked very different.

    Similarly, the April 2011 deal was contained cuts that were almost entirely on paper, and reduced spending by about 1% of the official price tag. There was a big freakout immediately, which then went away as the actual implications of the deal came out.

    When the debt ceiling deal happened, people judged it by making all sorts of predictions about what was going to happen the Super Committee, but then nothing happened in the Super Committee. We’re still waiting-and-seeing what the final tally on that deal is.

    That said, the deal looks pretty meh at this point. The difference between $250k and $450k doesn’t strike me as all that big a deal. Meanwhile, the capital gains rate rises and the green energy tax credits get extended.

    • “I’ve learned that it’s unwise to make a snap judgment about Obama’s deals, because there are always other shoes dropping a few days or weeks down the line.”

      You’re right, Joe. Of course, we complain too many times about the _surface_ details about these deals, but when one looks under the hood, there’s a lot more to them than meets the eye. It’s easier to gang up on Obama and sneer that he sucks (add whatever body part you want) and that he’s an idiot or just plain stupid–but as things play out, the egg’s on our face instead.

      This deal might not look like much now, but don’t forget that 1) the GOP looks REALLY bad in the eyes of the public, and 2) sadly, we also brought this on ourselves. Remember the Election of 2010 when these TBers took over the House because people stayed home to “send a message”? Well, this and the Debt Ceiling mess from 2011 are the two biggest results.

      Do I wish more from Obama? Sure. But then I realize that he’s where he is because he’s got the political skills and the long view….and let’s face it, the rest of us don’t.

      Just saying.

      • Thanks.

        This isn’t really true, though:

        2) sadly, we also brought this on ourselves. Remember the Election of 2010 when these TBers took over the House because people stayed home to “send a message”?

        The number of disenchanted, activist lefties who stayed home to send a message in 2010 couldn’t swing a state senate race in Montana. There just aren’t enough such people. If you want to find meaningful numbers of voters that the Democrats lost between 2008 and 2010, you have to look elsewhere. The “stayed home to send a message” claim is a lot of hype.

        • Steve LaBonne says:

          +100. It’s time to kill that zombie legend.

        • Murc says:

          2010 was actually pretty banal.

          It was a combination of being a non-Presidential election for the party in power and the out party being massively, incredibly fired up.

          That’s happened a million times. It’s well-understood. People didn’t stay home out of a well-calculated desire to send a message to Obama; they stayed home because people stay home during off-years.

          • elm says:

            2010 was also a consequence of the Dems having so much low hanging fruit from wins in 06 and 08.

            But, yes, almost all midterm elections see losses for the incumbent party. Personally, I think Obama and the Dems as a whole could have done more to minimize the damage, but not by much, and the damage wasn’t caused by progressives staying home out of spite or a desire to ‘send a message.’

            • chris says:

              Still and all, it’s clear that Obama has considerable ability to mobilize unlikely voters, which he used to good effect in 2008 and 2012, but was nowhere in evidence in 2010. If he can’t or won’t get those people to the polls in 2014, it doesn’t look good.

  14. SN says:

    “Obviously there’s some major problems with it. Higher taxes should probably start at less than $250,000 and certainly not $400,000.”

    Going back to Clinton’s tax code in toto should be the start for anyone claiming to be pro-labor. Taxes are crazy low in the US. You are hedging at the outset so as to diminish your own cognitive dissonance further down.

    “I do think though that Michael Cohen’s piece blaming the entire mess on Republican extremism makes sense.”

    A) you mischaracterize the piece. Cohen also points to the role of Senate Democrats here. B) Notice how in Cohenland we should be glad that Social Security didn’t get cut instead of being pissed at the POTUS, Durban etc. for even mentioning the possibility. This is a strategy for cutting Social Security, not defending it.

    “Like Cohen, it’s really hard for me to have a rosy view of the American future so long as one party (either really) takes a position that it will completely shut down the country for political purposes.”

    Mealy Mouthed centrism. First, the cliff/slope wasn’t going to completely shutdown the country (more hyperbole covering cognitive dissonance).
    Second, I guess you are not a supporter of strikes that shut down a business for “political purposes.”

    “I feel better knowing that people of my generation and younger are beginning to play a larger role in politics. I may well be too optimistic here.”

    Fortunately, the young people I deal with are much less inclined to call a turd a flower. They don’t have nearly as much invested in apologizing for Obama as you do.

    “Of course, I had no hope for Obama when I voted for him and I’m not sure why anyone would. We all knew what Obama was by November 2012 and there’s no reason to think what we don’t like about him will change. Voting is not a morality tale–it’s a choice of who is less evil. That choice was clear.”

    In other words you wish there was a topical ointment for cognitive dissonance.

    “But at the very least, this bill does raise more revenue and taxes the rich more fairly without cutting social services. From a short-term view then, I guess this leans more toward a win.”

    The tax increases only fall on the top 1% and the estate tax increases effect an even smaller % of Americans. We are far from a tax code that would undermine economic growth. Rather, our tax code is one that forces the public sector into perpetual fiscal crisis and austerity. Either you gut the public sector or you raise taxes. This is the choice. Obama’s fudge on the tax side and agreement to make cliff negotiations go on for the foreseeable future is a huge loss from any putatively progressive position.

    The deal in its details is a turd. The deal’s time frame makes deficit reduction to main policy to debate for the forseeable future, makes it a turd, as pushing other progressive policies becomes less likely.

    The logical consequence of invoking the meme “green lantern” against anyone who criticizes the Democrats and POTUS for acting like country club republicans is that you end up making excuses for them, until eventually you become one yourself. Lying to yourself to avoid cognitive dissonance will eventually turn you into an opportunist hack.

    Good Luck.

    Green Lantern!!!

    • Murc says:

      The logical consequence of invoking the meme “green lantern” against anyone who criticizes the Democrats and POTUS for acting like country club republicans

      Erik’s done this? When?

      I’d like to see some cites.

    • xxy says:

      You go to negotiations with the politics you have, not the politics you might want or wish to have at a later time.

      Or something like that.

      • SN says:

        Exactly. And you never ever allow yourself to think about wider scale or longer term patterns because looking at the circumstances from any other perspective than the crushing immediacy of the next 20 twenty and at the very tip of your nose is….wait for it…. GREEN LANTERN!!!

        Also, Notice how Cohen and Loomis suggest that Dems were taken hostage by Republicans willing to destroy the country (i.e. let the fiscal slope happen for a few weeks) unless Democrats caved.

        Remember when Obama was taken hostage in December of 2010 and just had to let the Bush Tax cuts continue or the very mean republicans would have let unemployment insurance expire right before the Christmas holiday. Additionally using this situation to call Republicans aholes or Grinch’s right before Christmas in order to secure unemployment insurance without caving on Bush tax cuts would have constituted ….wait for it….
        Green Lanternism!!!

        LGM’s politics of policing criticism of Obama from the left as ineffective and pointless green lanternism has the effect making LGM Obama’s Dr. Pangloss. So this fiscal cliff turd magically becomes an admittedly small and delicate flower, but a flower nonetheless.

        • Bijan Parsia says:

          Exactly. And you never ever allow yourself to think about wider scale or longer term patterns because looking at the circumstances from any other perspective than the crushing immediacy of the next 20 twenty and at the very tip of your nose is….wait for it…. GREEN LANTERN!!!

          Nope. The species of magical thinking which appeals to the Magic of Long Term Thinking is generally met with a “heighten the contradictions” not a “GREEN LANTERN”. Green Lanternism posits that, roughly, force of presidential will will have beneficial effects now. “Heighten the contradictions” posits (negatively) that letting things get worse will provoke an overwhelming backlash (provided the right people can take advantage of it) or (positively) that standing tall for principles will galvanize supporters (in the long run).

          The latter can be converted into Green Bully Puliptism by shortening the timeline to before the next election.

          LGM’s politics of policing criticism of Obama from the left as ineffective and pointless green lanternism has the effect making LGM Obama’s Dr. Pangloss. So this fiscal cliff turd magically becomes an admittedly small and delicate flower, but a flower nonetheless.

          Usually the question is whether the deal or action is within the space of the best one can reasonably hope for, all constraints considered, or whether there was a substantial tactic or strategic error, not whether there are better policies. We know there are. We know what they are. The question is how to get them past congress(+the courts, eventually), typically. Absent a realistic mechanism for that, whether Obama is pro or con a good policy is less important and often indeterminate. There are some cases where Obama does support a bad policy (wiretapping, anyone) but it is also the case that his not supporting it doesn’t matter too much as there is no realistic alternative.

          There are cases where Obama is worse than he needs to be and that worseness makes a difference. But, c’mon, you really need to make that case!

          • Semanticleo says:

            not supporting it doesn’t matter

            He just won re-election with a substantial margin. How long shall we tolerate his dearth of principled leadership; by that I mean, display the courage of his convictions.

            We chided Mitt for having no moral core, and laughed at his social retardation arising from having no rudder. I see a glint of that(moral core) in Obama, but I don’t see a fire, I see cool, and I don’t mean blue

            I don’t sense he wants anything except a legacy of ‘do no harm’ demonstrated with the necessary blandness and contempt for radicalism. Maybe he is the Jackie Robinson of politics, but I recall even Jackie was known to bare his cleats, from time to time.

          • Chatham says:

            “Green Lanternism posits that, roughly, force of presidential will will have beneficial effects now.”

            Well, critics of Green Lanternism often often set the standard not on whether or not it will have beneficial effects, but whether it on its own can change policy. Which seems like an absurdly hight bar to me, but, whatever.

            • tonycpsu says:

              I think the anti-Green-Lanternists have been clear that the BULLY PULPIT can be used set the agenda and perhaps push things over the top, but it can’t create momentum where there is none.

              With this deal, you have an entire conservative movement that has decided now is the time to go
              all-in against any agreement that doesn’t include significant spending cuts to entitlement programs. How on Earth was Obama to put forth a more progressive deal and have it get past these nihilists?

              This is definitely in the category where wanting it more doesn’t get it done.

            • Bijan Parsia says:

              I was, indeed, non-specific about the beneficial effects, but I was thinking about the change in policy line.

              I’m not sure what you mean by it being a high bar…it’s the Green Lanternites that posit that policy battles (such as a public option) can be won with substantial contributions from the bully pulpit. Now that is clearly bonkers, but that bonkerness is what the critics are pointing out.

              Is there any substantial benefit to presidential rhetoric (in a policy determinating way)? I’m not sure. In short terms, big presidential pushes against the tide tend to polarize rather than effectively galvanize. I suspect it’s hard to tease out whether the rhetoric is causal or epiphenomenal (e.g., if the pres is winning the rhetoric seems more effective).

              • Chatham says:

                Well, “Green Lanternite” isn’t a term that anyone uses to describe themselves. It’s been used to describe people with very different positions. Not everyone who thinks the president should make more use of the bully pulpit in a particular situation thinks that it will change policy.

                And I agree that the effects of speaking to the public aren’t necessarily going to always be positive. But there are real positive affects. We can at least see how the rhetoric affects the enthusiasm amongst certain supporters.

                Of course it will be hard to gauge the direct affect of any one thing, be it rhetoric, a television ad, or a campaign rally. But I don’t think that means that none of those are important.

                • Bijan Parsia says:

                  Well, “Green Lanternite” isn’t a term that anyone uses to describe themselves.

                  I don’t think that matters as long as it has a reasonably identifiable meaning that captures and interesting set of positions. Of course, it’s meant as pejorative, but it’s up to proponents of such positions to come up with a positive term :)

                  It’s been used to describe people with very different positions.

                  Really? AFAICT, it’s systematically used for any position where “will” or “resolve” are held to be strongly determinative of policy outcome regardless of the obstacles. Thus, in foreign policy, we must show resolve or everything falls apart (or conversely, things can be salvaged by sufficient shows of resolve).

                  Not everyone who thinks the president should make more use of the bully pulpit in a particular situation thinks that it will change policy.

                  I don’t think that all making use of the bully pulpit is doomed to have no effect on policy, at least in principle. Just advocating for presidential speechifying does not make you a Green Laternite, by any means.

                  For example, I wish Obama would speak out even more about gay marriage, have gay married couples to the White house, etc. I sincerely doubt that such actions would significantly speed legalization, but I think it would have other beneficial effects (e.g., on gay couples!).

                  And I agree that the effects of speaking to the public aren’t necessarily going to always be positive. But there are real positive affects. We can at least see how the rhetoric affects the enthusiasm amongst certain supporters.

                  Sure! Keeping your side’s morale up is a good thing. But it rarely, as I understand it, is a net positive (e.g., because of polarization).

                  For example, consider Obama’s double bind on being a tough negotiator (at least, talking tough): If he doesn’t then it’s said that he’s signalling weakness to the Repubs and they won’t compromise. OTOH, if he’s tough, then their feefees are hurt so they won’t compromise. I think there’s some benefit to being seen as the former because there are some (democratic) senators who demand that sort of line toeing. Since they have real power, there’s no upside to picking the alienating posture.

                  Contrariwise, the fiscal cliff was a real leverage moment…mostly. The leverage wasn’t all one sided though, hence it being difficult to dictate terms. Furthermore, the crazies were still crazy.

                  It’s nice to think that if the republican’s crash the economy that that will destroy them sufficiently that we could return to more sane governance. But there’s really little evidence that we can take back the House of the state courthouses even in a maximal blame-the-republican situation.

  15. MosesZD says:

    Of course, I had no hope for Obama when I voted for him and I’m not sure why anyone would. We all knew what Obama was by November 2012 and there’s no reason to think what we don’t like about him will change.

    No. I knew what Obama was like, and spread it near and far WITH CITATIONS AND DOCUMENTATION only to be called names for it from the time he was in the Senate and announced his run. Of all the Democrats, he was the one I feared the most would win for precisely the reason he’s been such a d-bag.

    He is, and always will be, a capitulating wimp who will stab his base in the back so he can look good to the Repubicans who hate him and will never cut him an inch of slack.

    • Murc says:

      Of all the Democrats, he was the one I feared the most would win

      Really? I’m interested in your rationale as to how Hillary would have governed any differently. The Clintons didn’t exactly have a reputation for governing in a liberal fashion, you know.

  16. 4jkb4ia says:

    Didn’t read any of the comments, but this post reflects the quote that Jared Bernstein gave to the NYT. If you knew that entitlement cuts were on the table you could be pretty relieved with this deal. The squeezing of the middle class is from the payroll tax which goes to SS, so the middle class will benefit in the long run. Why Krugman is worried and Scheiber is worried and Bernstein is worried is the known Obama negotiation pattern. Obama transferred from a situation where he could stop what Republicans wanted by doing nothing into a situation where the Republicans can stop the full faith and credit of the US by doing nothing. Obama has to really believe that the House Republicans won’t be rewarded for this kind of behavior.

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