Thursday, December 09, 2010

Obama, the Democrats, and the Tax Cut Compromise

President Obama's compromise with the Republicans should have been a huge win for the President. He got a re-imposition of the estate tax, extension of unemployment benefits, and a moderate stimulus. True the Bush tax cuts were extended for everyone but only for two years and the estate tax is less than it would have been without the deal. The deal also clears the way for the rest of the Democrats' lame duck agenda (the Dream Act, DADT, STARTetc.) This is the sort of compromise that you expect from a "post-partisan president". You would think that the Congressional Democrats would be celebrating. Instead they are revolting. The story has gone from a triumph for the President to a battle. What happened? This probably relates to the President's disinterest in political compromise and his delegation of control. His previous anti-rich rhetoric didn't help either.

From the first, Obama undercut himself. In the press conference announcing the deal he started talking about negotiating with hostage-takers. He was pissy. It was obvious that Obama personally hated having to compromise with the Republicans. I'm guessing that he delegated the negotiations and only accepted the deal because his economic team told him that his presidency depended on supporting it. Since then the message from the White House has been mixed. The President himself appears to be conflicted but his economic team insist that the compromise is the only thing standing between us and a double-dip recession.

The reaction from the Congressional Democrats is illuminating. Many of them have indicated that they would rather see taxed rise for the entire country than see the "rich" keep the Bush cuts. After two years of complaining that the Republicans will not compromise, they have revealed their own reluctance to compromise. For the record, they did not compromise with the Republicans over health care. They compromised with their own moderates and shut out the Republicans.

The Democrats have only themselves to blame for their dilemma. More specifically, they should blame Nancy Pelosi. President Obama delegated most of his legislative agenda to her. She was the one who delivered health care after Obama seemed to give up in November, 2009. She was also the one who decided that the most controversial elements of the Democratic agenda would be put off until a lame duck session. This gave the Republicans the extra bargaining power they needed to force the compromise. The Democrats stuffed months of work into a few weeks. They do not have time for a significant fight. The Republicans used that to threaten to hold up everything.

So, why did Pelosi put off so much until a lame duck session? Dishonesty. She knew that many of these issues will hurt the Democrats. Don't Ask/Don't Tell (DADT) has been controversial since 1993. The Dream Act is a form of amnesty for illegal aliens.

The tax cuts are the most contentious issue and the one that the left believes most strongly in. Pundits have been calling for Obama to fight hard to raise taxes on the rich. Obama has been pledging to do this since he was a candidate. Pelosi would have had little trouble getting this through Congress a few months ago. Why didn't she?

This was probably a cold-hearted political calculation. The Democrats like to call the Republicans the "party of the rich" but for the last several years people making more than $200,000 have contributed a great deal more to the Democrats than to the Republicans. Many of these people voted for Obama and were shocked to be demonized by him. With a tough election, the last thing the Democrats needed was to alienate this group further and cut off a source of campaign contributions. A lame duck session is as far from an election as is possible and Pelosi probably hoped that by 2012 rich donors would have forgotten and/or forgiven being singled out for a tax hike.

The whole lame duck session is inexcusable. No new emergency happened to make this so urgent and the current Congress lost its mandate in the November election. Everything under consideration could either have been taken up months ago or could wait until Congress's next session. The only reason that so much business is being conducted is that Pelosi wanted the cover of a lame duck session for legislation that would hurt her party. They are more interested in pushing an agenda than in representing the electorate.

That means that they cannot start fighting with the Republicans over principle. The sacrificed those months ago.

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