Republicans readily gave up this pretense of fiscal discipline in exchange for the tax cuts for the rich and the lower rate/higher exclusion estate taxes. Sacrificing their phony call for fiscal responsibility on the altar of tax cuts for the wealthy troubles Republicans not at all.
On Monday President Obama announced a compromise deal with Congressional Republicans over Bush era tax cuts. Republicans get a two-year extension of all of the Bush tax cuts and a generous recasting of the estate tax. The President gets thirteen months of extended unemployment benefits, a one-year reduction in payroll tax rates and the extension of other tax breaks and credits originally included in the 2009 stimulus package.
Liberals are not happy. Many Democrats will not support the deal when it comes to a vote in the House and the Senate. They expected the President, who promised during the 2008 campaign to let the Bush tax cuts for the top 2% of American earners to expire, to fight Republicans on this issue, not negotiate it away. There are at least two problems with this position as regards the Bush tax cuts specifically. First, Democrats refused to fight this fight themselves. During the past year they talked plenty about letting the tax cuts expire for the wealthiest Americans, but were too craven to put the issue to a vote prior to the mid-term elections. Secondly, their plan to maintain the Bush rates for everybody but the top tier of taxpayers had no chance of passing in the lame duck Senate. The only option to compromise was to let the current tax rates expire January 1. The public would blame the President for their 2011 tax increases and the political price would be his to pay. This would not be a good thing for Democrats.
Beyond the tax cuts compromise itself, liberals worry that the President will abandon them and move to the right, following the path taken by Bill Clinton after the 1994 midterms, in which Republicans gained their first House majority since the Eisenhower administration. They want him to wage unremitting political war against Republicans. That’s not going to happen. Presidential success requires the genius to pick the right time to fight and the right time to reach out. To date, Obama has struggled to achieve a convincing balance between political warrior and national leader. Liberals may be right that the President enjoys the role of Most Reasonable Person in the Room way too much. He seemed very comfortable in that role during Monday’s brief televised speech announcing the grand compromise. We will learn a lot about Mr. Obama as a leader over the next twelve months, with both Republicans and Democrats at his throat.
Republicans praised the Presidential compromise. Prior to the deal, they took the position that every item on the President’s side of the compromise – extension of unemployment benefits, renewing tax credits from the stimulus, and the payroll tax cut – would have to be paid for by equal spending cuts from the federal budget. Republicans readily gave up this pretense of fiscal discipline in exchange for the tax cuts for the rich and the lower rate/higher exclusion estate taxes. Sacrificing their phony call for fiscal responsibility on the altar of tax cuts for the wealthy troubles Republicans not at all. Pleasing their rich and powerful overlords brings Republicans even more joy than saying one thing and doing another.
The tax deal may harm The Mitch McConnell Project to Destroy the Obama Presidency. In particular, the inclusion of thirteen months of extended unemployment benefits and a one-year cut in payroll taxes will help the working and middle classes and boost the economy, the key to the President’s reelection prospects. The overall package will add hundreds of billions to the national debt, but why worry? For Conservatives it is tax cuts now, tax cuts always and tax cuts forever. Nothing else seems to matter.
Guest post by Jeff Goldberg