White House Compromises On Battle Congress Avoided To Obtain Economic Stimulus

The White House had wanted to wage a battle over taxes for months but Congress was unwilling to hold a vote before the elections. I bet this was because Congressional leaders felt they could not win because some of the more conservative Democrats were unwilling to support the position of only renewing the cuts on income under $250,000. It turned out that many of these conservative Democrats still wound up losing and might have stood a better chance by supporting a cause supported by the majority of American voters.

After failing to take up this fight before the election when it should have been, there is suddenly a lot of noise coming from both the House and Senate. While the compromise is far from perfect and is not going to make everyone happy (which is the nature of compromise), critics are focusing too much on the extension of the tax breaks for the top ten percent while ignoring all the benefits for everyone else. As Ezra Klein has explained while discussing both the benefits and opposition from the liberal base:

If you’re worried about stimulus, joblessness and the working poor, this is probably a better deal than you thought you were going to get. “It’s a bigger deal than anyone expected,” says Bob Greenstein, president of the Center on Budget and Policy Priorities. “Both sides gave more expected and both sides got more than expected.” The White House walked out of the negotiations with more stimulus than anyone had seen coming. But they did it in a way that made their staunchest allies feel left behind, and in many cases, utterly betrayed.

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.

Bill Scher from the Campaign for American’s Future has more on reasons why the left should support the deal to help the poor and to help the economy. The Center for American Progress predicts the deal will create or save 2.2 million jobs. The biggest downside is the amount that the tax breaks to the upper ten percent adds to the deficit. How come the tea party supporters who are so concerned about the deficit aren’t protesting the Bush tax breaks?

It is risky to predict what issues will determine future elections, as we have seen with unexpected events such as 9/11 and Katrina. However, baring anything unexpected, Barack Obama might have taken a major step towards his reelection. Obama’s support is already well above that of either party in Congress. If the deal fails due to Congressional opposition, the unemployed will see their extended benefits dry up and the middle class will see more money taken out of their paychecks in January. That will only increase the gap between Obama’s approval and the disapproval of Congress. On the other hand, if the deal does pass Obama gets a bigger economic stimulus than he ever could have gotten through Congress on its own. Simply managing to get any deals through with the Republicans enhances Obama’s reputation as being effective at compromise, and most voters will not share the opposition to compromise seen on the extremes.

Passing the deal also moves the battle over taxes to the 2012 presidential election, giving the Democrats an issue supported by most voters. As this debate continues over the next couple of years, here is a handy table which demonstrates the differences in the tax plans of the two parties (via Ezra Klein):

Under the Democratic plan those with incomes under $200,000 get the larger tax breaks. Under the GOP plan the winners are those making over $500,000 per year, with the big winners being those making over $1,000,000 per year. Unless people really believe in trickle down economics, the Democratic plan looks like the winner in the 2012 campaign.

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