This is why more people need to be involved with the party, helping to stage primary challenges. And why a LOT more people need to actually learn a little about economics and politics, and pay some damn attention.
Obama's plan to limit itemized deductions for the richest 1.2 percent of taxpayers (including the top 1.9 percent of small business owners) to 28 percent, starting in 2011, is also in trouble on the Hill. Wealthy contributors and friends of congressional leaders involved in setting tax policy have balked. So Congress is telling the White House to look elsewhere for the $320 billion it needs over ten years to finance half of the tab for health care reform. Congressional leaders have also informed the White House that they don't have the votes to pass Obama's proposal for treating the earnings of hedge-fund and private-equity managers as income rather than capital gains.
Angry populism thrives on stories about the rich and privileged who use their influence to get cushy deals for themselves at the expense of the rest of us. AIG's bonuses provide a perfect example. It's too bad the same populist outrage doesn't extend to issues involving far more money, affecting many more people, and entailing far more insidious abuses of power. Congress's potemkin populism over AIG's bonuses disguises business as usual when it comes to the really big stuff.
I am not even 100% convinced I agree that it's a good idea to claw back the AIG bonuses (probably so, but possibly we should be doing it a different way, e.g. by asserting out ownership rights and saying that the contract is invalid because it was entered into with AIG Financial Products in London misrepresenting its situation to its corporate parent in America). I am definitely a bit concerned about how they're going about it. See Nate Silver, here and here, for details.
But more importantly, I think the AIG story is a distraction from stuff that really matters: saving the financial system (also, ARGH! -- are we really going to let this torpedo the entire progressive agenda in the first six months of the new administration?!), fundamentally changing our tax structures to stop favoring wealth over work, reinvesting in human and natural capital, and reinventing/rebuilding our crumbling infrastructure and manufacturing sector.
This is why I'm a liberal/progressive, not a "bipartisan moderate". I'm totally open to hearing ideas from other perspectives. Sometimes I even change my mind, or think that a compromise solution is a good idea. Like, on healthcare -- I'm totally open to the market-based type of solution that all three major Dems were proposing during the campaign, which I think would reduce the number of people uninsured, cut costs, and save lives. I still think universal care is the best solution and the ultimate goal, but let's experiment a bit and see what happens.
However, sometimes the conservatives with whom we're being asked to compromise, are just wrong, and dangerously so. This is one of those times. Even if half a loaf is better than none, it is not enough better. If you pass a crippled version of a good solution, the politics are going to be such that it's harder to pass the effective version later. And passing the crippled version and then waiting six months means that the effective version will cost no less (and possibly more) than if you passed the good version now. This sort of thing is how Japan got itself a "lost decade" -- by repeatedly taking half-assed measures that were never actually up to fixing the problem. Ten years of half measures is WAY worse than doing something twice as big, once, and then being back on track.
If Dems refuse to pass key elements of Obama's tax reform plan, I'm inclined to think he should veto the budget and make them do it over, and start threatening to back primary challengers. People voted for him on the basis of a promise to get a change in exactly these sorts of priorities.
As for the banking plan, I'm terribly disappointed in Geithner, and really worried that Obama is, himself, one of the fool moderates on this issue, and is going to self-destruct over it and turn into Jimmy Carter.
As I said before: ARGH!