web analytics

In an ideal world (or at least a country whose institutions were set up for the exercise of actual democracy), the Bush Tax Cuts for upper-income earners would be on their way to an end. But that’s not where we are. Passing any extension of the upper-income cuts was going to require at least some Republican support in the Senate, and they successfully filibustered the vote to preserve just the middle- and lower-income cuts. So, it was going to be all or nothing.

But clearly, it couldn’t be nothing. I don’t think that hiking taxes modestly on the wealthy would hurt the economy too much, as the Bush 41/Clinton hikes showed. But raising taxes on everyone else during economic times such as these would simply be a disaster. It’s contractionary fiscal policy, for one thing, that takes money out of the economy and reduces demand. But aside from the abstraction, it means that a lot of real people and real families would take a beating when they’re already down. Nate Silver put the whole problem aptly:

We know what the Democrats’ first preference is: extending the tax cuts below $250,000 only. But what is their second preference? If forced to make a choice, would they rather extend the tax cuts for everyone, or for no one?

Republicans, evidently, believe it is the former; this is why they unanimously voted against cloture in the Senate today. By taking the Democrats’ first choice off the table (extending some of the tax cuts), they figure, they can force them to vote for their second choice — extending all of the tax cuts, rather than letting all of them expire.

Suppose, instead, that the Democrats could credibly demonstrate that they’d prefer to let the tax cuts expire for everyone, rather than extending them for everyone. This would make their bargaining position stronger since that is what will happen in the status quo if no action at all is taken.

But Democrats are likely to have trouble convincing the Republicans of this, for at least four reasons.

This is no betrayal by Obama. Sure, he and (especially) congressional Democrats could have played this better. The Blue Dogs have found deserved electoral ignominy as a result of prevaricating over this issue. But ultimately, what we must realize is that this was a setup. Taking the risk of taxes going up on the poor, on the working class, at a time such as this is unwise. If you want a decent chance of ditching just the tax cuts for the rich, you have to be willing to threaten to kill them all. And if you threaten to do something, you should actually be willing to do it. Because if you aren’t and your bluff gets called, you look like a fool. Everyone seems to be talking about Obama’s poker playing skills, but despite legitimate public support I think this was just a crappy hand. The deal he got was probably about as good as he could have gotten, maybe a bit better even. We’ll see how things shake out with Congressional support–it is amazing how Democrats are going on the record to bash Obama’s deal, and nobody would go on the record to back him when the first round of this fight was going down in September. With friends like these…

In any event, I don’t doubt progressive activists will be infuriated. It’s unavoidable at this point. What goes unsaid is that part of effective leadership lies with choosing your battles. Sometimes, it’s just not the right time to try to achieve one of your goals. Think Thatcher laying off the unions during the early part of her tenure when the economy was generally awful, or Reagan hiking taxes in 1983 when inflation was peaking. No doubt many of their supporters felt betrayed at the time, and understandably so, but those strategic compromises led to much greater victories down the line. Leadership isn’t just about grand gestures and big rhetoric, it sometimes means this sort of grudging compromise. Otherwise it’s just theater. There has admittedly been a lot of compromise, which is really the price of getting things done. Ben Nelson can be an aggressive jerk because he had something we wanted, but Obama hadn’t the luxury. Have all of Obama’s strategic decisions been wise? Not by any means: the honeymoon period would have been the best time for closing Guantanamo and buttressing civil liberties, and labor law reform should have been pushed through during the Dems’ supermajority days. The president’s decision to put off these battles (ostensibly due to the divisiveness they would entail) was simply wrong and means a longer wait until we get another shot at them. That’s the critique that hits.

Ultimately, though, I’m not here to offer an exhaustive list of all the strategic decisions made by Barack Obama and his political team. Some were good, some were not. His style has turned out to be distressing to many confrontational progressives, I know. Sometimes it does feel like there’s not much urgency on his part at all. As for the specific issue at hand: maybe dealing with the Bush tax cuts back in 2009 would have been the best move, I don’t know, though I don’t think the votes to overcome a filibuster would have been there even with 60 Democrats. But given that we are where we are, I think this deal represents good leadership by Obama, and while I don’t expect all progressives to agree now, in the long run I think it will prove to have been the right decision.

P. S. Having said all this, I’m forced to agree with Ezra Klein:

“I think there’s a good case to be made that the White House struck a pretty good, and certainly better-than-expected, bargain with the Republicans. But the president certainly didn’t look like a man who’d cut a good deal during his news conference. He was, by turns, touchy about the questions and scolding toward his base. He also still seems to be smarting over the public option debate.”

Aren’t we all? In any event, people talk about conservatives being obsessed with tactics, and rightfully so, but there are times when liberals are just as bad. The obsession some segments of the activist left have with wanting Obama to draw a line in the sand, get up to the bully pulpit, and (often implicitly stated) take a righteous defeat rather than a 1/2 or 3/4 victory baffles me. I’m not sure how these people could question what side he’s on after, say, reading all this, but it never ceases to amaze and annoy me. The public option was (and is) a tactic. The objective was (and is) health care reform. Strategy is built around accomplishing objectives and not around using tactics. The technocrats–Krugman, Klein, Yglesias–they all got this. But it was all beside the point to some people.

Update: This strikes me as a concise and effective job of messaging by Obama:

{ 1 comment }
  1. Gherald says:

    Was about to post a quote on the subject, so I’ll piggyback instead.

    From “How the White House cut its deal and lost its base”:

    That the Obama administration has turned out to be fairly good at the inside Washington game of negotiations and legislative compromise and quite bad at communicating to the public and keeping their base excited is not what most would have predicted during the 2008 campaign. But it’s true.

    Do read the whole.

    (or this for catharsis humor)

Leave a Reply

Your email address will not be published. Required fields are marked *