Yesterday evening President Obama announced that he had come to an agreement with Republican leaders to extend the Bush tax cuts for the wealthiest Americans by two years. A two-year extension, given the current political landscape, almost guarantees that those tax cuts will stay in place long after that as Republicans will try to extend them again. Surely if the Democrats couldn’t stand up against it now, they won’t in the heat of a presidential campaign. President Obama said in announcing the decision, "sympathetic as a I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do." But on that point the president is dead wrong. This compromise isn’t a solution. This compromise, to extend these tax cuts for two years for the rich while extending unemployment benefits for a year, only exacerbates our toughest challenges. The president said that fighting this would only result in a "symbolic victory," but from the depths of campaign promises, we can see how this compromise is unlike any other.
During the 2008 Presidential campaign, Barack Obama made it a point to emphasize that while his Republican counterparts may stand with the wealthy, he stood with the middle class. His primary argument in making that case was that as president he would allow the tax cuts on the rich to expire and use the funds to pay for huge chunks of his other agenda items, health care, education spending- things that would have a greater impact on middle and lower class citizens. He also promised to help use the savings from the Bush tax cuts to lower the deficit. After all, the Bush tax cuts are the single largest part of America’s structural deficit at this moment. The Republican tax plan, as FirstRead pointed out yesterday, would in fact add more to the deficit than the stimulus did- the target of so much conservative contempt. But this compromise is so different from the others because this president used his opposition to extending the Bush tax cuts as the basis for arguing to enact much of the rest of his agenda. It was the answer to almost every "but how are you going to pay for it?" question that came his way on the campaign trail. Well, he would say, "we will start by allowing the tax cuts for the wealthiest Americans to expire." Now, after following through on campaign promises both large and small, the president wants to pull the fiscal rug out from under his achievements. This is both politically and fiscally irresponsible. Without letting the Bush tax cuts expire our fiscal situation will get gravely worse over the medium and long term. We knew the Republicans were willing to let this happen, but for President Obama to play along is devastating.
This compromise isn’t a done deal. Democrats in congress could surely hold this up, mainly in the House where liberal Democrats are staunchly against any tax cut extension for millionaires. But as the deal stands, it is a practical and political nightmare for Democrats. This debate gets more at the real divisions between our two political parties than almost anything else. Outside analysts on both sides had concluded that if ever there was a ripe political moment for the Democrats to seize, it was this one. The Democrats and President Obama could come out swinging on behalf of the middle class and clear show Americans that while Republicans kick and scream on behalf of their wealthy friends, the Democrats are standing up for them. It was a golden opportunity.
Democrats also have the facts on their side. Despite the overheated rhetoric and outright lies from the right, the real tax situation in American is ironic. Taxes right now are the lowest they have been in 60 years. As a Reuters report revealed yesterday, that finding "gives you a pretty good idea of why America’s long-term debt ratios are a big problem. If the taxes reverted to somewhere near their historical mean, the problem would be solved at a stroke." In addition, wealthy Americans clearly are not hurting one bit. This past summer in the midst of this recession corporate profits hit their all-time peak. Literally they are at the highest level since the government started counting over a half-century ago. And yet, despite all of that and a recent election in which the Republicans ran and were elected on a promise of addressing the deficit, they now draw heavy lines in the sand declaring they will not permit their wealthy and big business friends to be subject to a tax increase that would help solve the deficit and aide the middle class and small business. As the moderate Democratic former Ohio Governor Ted Strickland said, "If we can't win that argument we might as well just fold up."
Just yesterday several key Obama campaign organizers from 2008 expressed strong disappointment in the proposed deal saying that it makes recruitment of volunteers much more difficult and takes away a central plank in any re-election campaign- narrowing the differences between the President and the Bush economic policy he once ran against.
The fight over these tax cuts isn’t just about President Obama. This fight is about who the Democratic Party is and what they stand for. To understand how central this debate is you need look no further than the 2004 campaign for the presidency. After Bush tax policy had been legislated in both 2001 and 2003, Democrats from across the spectrum spoke out against the tax cuts for the wealthiest Americans as a serious blow to America’s deficit and our ability to enact critical programs that help the middle class. From Howard Dean to Joe Lieberman, they all promised to repeal the Bush tax cuts for the wealthiest Americans to enact their agenda. For as long as these tax rates have existed it has been a central plank of the Democratic Party agenda to either repeal them outright, or at worst let them expire on January 1st, 2011.
Compromise is good. Compromise is how government functions. But this president’s inclination to compromise right off the bat has left him with no cards to play against an opponent who has no shame in standing up for what the vast majority of Americans are against and an ability to then make Americans believe they just took their side with out and out falsehoods. The President of the United States just got rolled, and so did most Americans. There was nothing serious or adult about this compromise, except the revelation for far too many that the leader of the Democratic Party and the leader of their country won’t stand up for them when it counts- even when it’s easy. How is that for a campaign ad?