President Obama could have worn a cape. Speaking to reporters about a deal to extend the Bush tax cuts and unemployment insurance, he offered a dire narrative of what might have been. Ideologues in both parties were locked in a dangerous game with no concern for the welfare of the American people. “Without a willingness to give on both sides, there’s no reason to believe that this stalemate won’t continue into next year,” he said. A stalemate would mean a tax increase for everyone, and tax cuts for the hardest-hit would expire, along with unemployment benefits.
In the nick of time a hero arrived to save the parties from themselves. Who was that quick-thinking citizen? Why, it was Man of Reason! “I know there’s some people in my own party and in the other party who would rather prolong this battle, even if we can’t reach a compromise. But I’m not willing to let working families across this country become collateral damage for political warfare here in Washington.”
Obama ran in 2008 as a man who would bring both parties together. Monday night he presented himself as a pragmatic leader who had done just that. The difference was that two years ago it sounded like a process where everyone locked arms. This time it was more of a headlock, and any collateral damage is likely to be among the president’s own liberal base.
Obama presented himself as a warrior for agreement. He was also a lecturer. “The American people didn’t send us here to wage symbolic battles or win symbolic victories,” he said. “I want everybody to remember over the course of the coming days, both Democrats and Republicans, that these are not abstract fights for families that are impacted. … We cannot play politics at a time when the American people are looking for us to solve problems.”
The White House holiday party for its liberal friends might be awkward (or empty). Liberals were already upset with the president when it looked like he was going to cave on his previous opposition to extending tax cuts. They are not likely to enjoy this lecture about the need for putting the middle class ahead of playing politics.
On the substance, there are parts of the $900 billion deal that liberals should find attractive: a reduction in the payroll tax, extension of unemployment benefits for 13 months, and extension of the Earned Income Tax Credit. These programs will pump hundreds of billions of stimulus into the economy over the next two years, which many liberals want. A senior White House aide promised it would create “a very significant positive impact on job growth and unemployment.” Another administration official pointed out that these achievements were greater than any of their allies had expected would come out of the deal: “After we all realized some compromise was going to happen, the agreement we got is actually damn good.”
The lesson from the president is one White House aides have been making one way or another since last month’s election: The world is different. The things we want will come with a price determined by the GOP. The questions for liberals are a) whether they buy that formulation and b) whether they think the president overpaid. Not only did Republicans win on extension of tax cuts for the wealthiest Americans; they also won a new lower rate of 35 percent for the estate tax and a higher exemption of $5 million for it. Democrats in the House and Senate made it clear Monday night that they had not yet signed on to the president’s deal.
The president said the tax cuts for the wealthy would not last beyond the two-year extension, because after the coming deficit debate, Americans would see how the country just can’t afford them. He said he would “engage in a conversation” about the choices to help them get to this position. But he’s been engaged in that conversation about these tax cuts for months. Americans already agreed with him. Only 26 percent favor the GOP view in a recent CBS poll. It was the need to get a deal when faced with an immovable opposition (including some in his own party) that caused Obama to give in on his tax cut position. That kind of dynamic isn’t going to change in the next year, when the GOP will have more control.
Washington has been flooded with deficit reduction plans of late. They have different ideological shapes, but most require everyone to sacrifice something they want. That wasn’t how this deal came together. Both sides agreed to give each other largely what they wanted. It is financed entirely by adding to the national debt. (Whee!)
As the president spoke, he sounded like he did when announcing his Afghanistan policy: We have to escalate this war in order to end it. The majority of economists seem to agree that this kind of stimulus is necessary now before we buckle in for that grueling conversation about austerity. This may be the last agree-and-spend deal of its kind. Maybe the next grand bargains will be measured in terms of dollars saved. Of course, that will depend on political courage, which will in turn depend on what voters think. Right now the American families President Obama talked about are grateful, but they might also learn a lesson that will make things harder for him: Even in the Age of Austerity, there’s always room for pie.
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