The majority opinion here, and in the rest of the liberal blogosphere, seems to be that Congressional Democrats should reject the deal negotiated by the President, and demand something better. I start from the position that no negotiation ever gives either side everything they want. When I was actively practicing law, and considering a settlement proposal, I always found it useful to look at what was likely to happen if I rejected the deal. It might be useful to do that here.
This proposal gives both sides something that they want: The Republicans get to keep tax cuts for the rich, which seems to be their primary goal in life. Democrats get continued unemployment compensation for the long-term unemployed (albeit not for those who have been unemployed for more than 99 weeks, but that's still a lot better than cutting it back to a 26 week maximum and immediately throwing 2 million people into severe crisis). Democrats also get an extension of tax cuts for ordinary working people.
Let's say we reject the compromise, and demand something better. What's likely to happen then?
First, I think what's likely to happen in THIS Congress is NOTHING. There really isn't time to go back to the drawing board and negotiate a new compromise, even if the Republicans were willing to do it. And as has been repeatedly demonstrated, we don't have the votes in the Senate to get the proposal that we all would really prefer. We don't even have the votes to get it limited to the first million dollars of income.
If we reject the deal, my prediction is that the Republicans will say, "OK, we'll deal with this as the first order of business in the new Congress." At that point, the two million people will be kicked off of unemployment insurance, and everybody's taxes will go up on January 1.
And what's likely to happen in the new Congress? I predict that the Republican-controlled House of Representatives (which is where all tax bills must originate will pass a bill extending the Bush tax cuts for everybody, AND DOING NOTHING ELSE (with the possible exception of adding even more tax cuts for the wealthy). It then goes to the Senate, where that bill will have the support of all Republicans and probably a handful of Democrats. The question then becomes, do the Democrats filibuster the bill? If they do, they're filibustering to preserve a tax increase for EVERYBODY.
While we've heard a lot about how a majority of the public would prefer preserving the tax cuts only for those making less than $250,000 per year, what has been less remarked upon here and in the rest of the liberal blogosphere and by liberal pundits is that there are far more Americans, according to all except the recent Bloomberg Poll, who want to preserve the tax cuts for everybody than who want to see them expire for everybody.
In a Gallup Poll taken on 12/3-12/6, 66% of respondents would extend the tax cuts for everybody for two years. In a Pew Poll taken on 12/1-12/5, 33-34% of respondents want to preserve the tax cuts for everybody, while only 11-14% want to end them for everybody. (The remainder either want to preserve them only for those below incomes of $1 million or $250,000, or have no opinion.) In a CBS News poll taken on 11/29-12/1, 26% of respondents wanted to preserve the tax cuts for everybody, while only 14% wanted to end them for everybody. In an AP-CNBC poll taken on 11/18-11/22, 34% of respondents wanted to see the tax cuts extended for everybody, while only 14% wanted them ended for everybody.
If this drags on until the new Congress, Democrats will be in the position of having to filibuster to preserve an intensely unpopular tax increase that will have arrived on January 1, and that will immediately be felt in everybody's paychecks. And they'll be doing it with no real hope of getting the other good things for our side that were in this deal.
Some may think that's a formula for electoral success, but I think it's one for disaster -- electoral disaster in 2012, but even more importantly, disaster for the millions of families who are barely making it on unemployment insurance or what's left of a paycheck even without increasing their taxes.