First off, I want to send my condolences to the Edwards family on the occasion of the passing of Elizabeth at age sixty-one. That is far too young, and I know her children will sorely miss her presence in their lives.
I’m back home now, somewhat exhausted from my trip from Orlando. I see that progressives are flipping out over the deal the president struck with the Republicans. Before you get all huffy, consider Ezra Klein’s point:
If you look at the numbers alone, the tax cut deal looks to have robbed Republicans blind. The GOP got around $95 billion in tax cuts for wealthy Americans and $30 billion in estate tax cuts. Democrats got $120 billion in payroll-tax cuts, $40 billion in refundable tax credits (Earned Income Tax Credit, Child Tax Credit and education tax credits), $56 billion in unemployment insurance, and, depending on how you count it, about $180 billion (two-year cost) or $30 billion (10-year cost) in new tax incentives for businesses to invest.
But that’s not how it’s being understood. Republicans are treating it as a victory, and liberals as a defeat. Which raises two separate questions: Why did Republicans give Obama so much? And why aren’t Democrats happier about it?
It’s interesting to look at it that way. Who got paid? How much did they get paid? Why did the Republicans decide to grab the short end of the stick? What was in it for them?
Here’s Ezra’s answer:
A number of sources with direct knowledge of the negotiations have fingered the estate tax as the major player in the size of the deal. “Republicans were extremely eager to get benefits for the top tenth of a percent of Americans,” says one senior administration official.
It was the estate tax, in this telling, that secured Republican support for, among other things, the two-year extension of the refundable tax credits and the payroll tax cut. Republicans believe that the two-year extension of the estate tax at Lincoln-Kyl levels will turn into a permanent extension of the estate tax at Lincoln-Kyl levels.
So, here we are in this down economy with millions out of work and losing their homes, and the Republicans are willing to offer a little relief if, in exchange, they can lower the tax on estates worth over five million dollars. That’s their big ‘ask.’
Meanwhile, on the other side, there are still too many people griping about not getting a pat on the head.
My conversations with various progressives over the past 24 hours have convinced me that the problem is less the specifics of the deal — though liberals legitimately dislike the tax cuts for the rich, and rightly point out that Obama swore to let them expire — than the way in which it was reached. Put simply, Obama and the Democrats didn’t fight for them. There were no veto threats or serious effort to take the case to the public.
Instead, the White House disappeared into a closed room with the Republicans and cut a deal that they’d made no effort to sell to progressives. When the deal was cut, the president took an oblique shot at their preferences, saying “the American people didn’t send us here to wage symbolic battles or win symbolic victories.” And this came a mere week or two after the White House announced a federal pay freeze. The pattern, for progressives, seems clear: The White House uses them during elections, but doesn’t listen to, or consult them, while governing. In fact, it insults them, and then tells them to quiet down, they got the best bargain possible, even if it wasn’t the one they’d asked for, or been promised.
I have concerns about how this deal will impact the budget deficit, how it will frame questions about Social Security’s solvency, progressive taxation, the estate tax, and the president’s willingness to pick (and win) a fight. But I don’t care that progressives weren’t ‘consulted’ or that we were supposedly ‘insulted’ (again). He got a better deal than I thought was possible. In fact, because I thought no decent deal was possible, I advised him to just threaten to let all the taxes expire and see which party blinks first.
I wanted that fight, and I think progressives are itching for a real fight. But just because I want a fight doesn’t mean that a fight is the best idea at any given time. The long-term structural deficit is important. But the economy is also important. And the president needs to be creative to get any kind of stimulus out of the Republican Party. So, I have concerns about this deal, but I think it was actually some pretty savvy bargaining.
What’s funny about it is how little say the Tea Partiers had. Evidently, they were not consulted or respected either.
Republicans have argued that it’s not the policies they oppose — it’s that Democrats aren’t paying for them. But perhaps the most important enabler of the deal is that Republicans don’t care about paying for them, either. The basic deal was that if the Obama White House would give the Republicans their unpaid-for tax cuts, Republicans would give the Obama White House their unpaid-for tax cuts.
To put this in perspective, consider that last week, all Washington could talk about was the potential for a deal on deficit reduction. This week, it actually got a big deficit deal — but it was a deficit-expansion deal. In the world that politicians claim they live in — where the deficit is the overriding issue — the deal couldn’t have worked. But we don’t live in that world. In this world, tax cuts, not deficits, are the Republicans’ central concern, and stimulus, not deficits, obsesses the Democrats.
I know this is exactly what the country voted for in November. Not.