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Sorry folks, there's nothing ambiguous about this: agreeing to the Republican tax cut plan without putting up a fight would pretty much be the textbook definition of caving.

As everybody knows, President Obama's tax cut proposal would permanently extend middle-income tax cuts but would allow upper-income tax cuts to expire. Everybody would get a tax cut under the Obama plan, but income above $250,000 would return to Clinton-era rates.

Republicans oppose the Obama plan -- they want to extend upper-income tax cuts in addition to the middle-income tax cuts. Moreover -- and this is crucial for them -- Republicans want both tax cuts to remain linked, so that whether they are extended permanently or temporarily, they are not treated as separate tax cuts, otherwise known as decoupling. Republicans know that decoupling the tax cuts would mean the upper-income tax cuts would eventually be phased out because they would not be able to hold middle-income tax cuts hostage, in the process losing their leverage to continue the upper-income tax cuts.

As Greg Sargent points out, any plan that both extends the upper-income tax cuts and fails to decouple them from the middle-income tax cuts represents a clear Republican victory. The Obama administration is now trying to define victory as being any plan that (a) extends middle-income tax cuts and (b) doesn't include a permanent extension of upper-income tax cuts. Implicit in this is the notion that they will accept a temporary extension of both tax cuts without decoupling. As Greg points out, in three separate statements today, the White House has refused to back insist upon permanent extension of the middle-income tax cuts.

Hope isn't necessarily lost. It's possible that things could change. But based on past experience, I wouldn't hold your breath. Assuming that the White House does end up agreeing to the GOP position, we can have a debate about whether or not it was good politics to do so, but we can't debate whether or not it was caving. The compromise position involves both sides making sacrifice. In this case, the compromise position is a permanent extension of middle-income tax cuts and a temporary extension of upper-income tax cuts. But a temporary extension of both is caving. It almost certainly guarantees the upper-income tax cuts will be effectively permanent, and that runs counter to every argument President Obama has made about tax cuts from the early days of the presidential campaign through last Saturday.

Realities may be what they are, but the White House shouldn't try to claim victory when it loses. That's not embracing reality. That's denying reality. The final chapter of this story hasn't been written yet -- there's still time to turn this thing around -- but it's not looking good.

Originally posted to Daily Kos on Thu Nov 11, 2010 at 12:40 PM PST.


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