JONATHAN CHAIT DECEMBER 8, 2010
I understand why liberals are so angry about the tax deal, despite the fact that President Obama won far more economic stimulus than he gave away in upper-class tax cuts. It's the culmination of a huge blown political opportunity. But the conservative glee is, on the other side, bizarre. The Republican spin is that Obama has given up on his economic strategy and embraced the Republican approach.
Here's Karl Rove gloating that Obama gave Bush's supply-side tax cuts the thumbs-up:
The fact that these have been identified as right policies by an administration that has [had] a knee-jerk response that if Bush promulgated it, we have to be against it — it’s a recognition of how sound these policies are and how necessary they are
Identified as right policies by Obama? Here is what Obama said as his press conference:
I’m as opposed to the high-end tax cuts today as I’ve been for years. In the long run, we simply can’t afford them. And when they expire in two years, I will fight to end them, just as I suspect the Republican Party may fight to end the middle-class tax cuts that I’ve championed and that they’ve opposed. ...
the fact of the matter is the American people already agree with me. There are polls showing right now that the American people, for the most part, think it’s a bad idea to provide tax cuts to the wealthy. ...
I’ve said before that I felt that the middle-class tax cuts were being held hostage to the high-end tax cuts. I think it’s tempting not to negotiate with hostage-takers, unless the hostage gets harmed. Then people will question the wisdom of that strategy. In this case, the hostage was the American people and I was not willing to see them get harmed.
I really don't see how this could be more clear. Explicitly comparing a policy to a ransom payment is not what we call an endorsement, unless gnized the Rove thinks that the Reagan administration's arms-for-hostages deal in the 1980s was a public recognition that U.S. reconized the need to qualitatively upgrade the Iranian military.
Mr. Obama has implicitly admitted that his economic strategy has flopped. He is acknowledging that tax rates matter to growth, that treating business like robber barons has hurt investment and hiring, and that tax cuts are superior to spending as stimulus. It took 9.8% unemployment and a loss of 63 House seats for this education to sink in, but the country will benefit.
In this sense, the political symbolism is as important as the policy. Mr. Obama is signaling that businesses must be encouraged to make profits again so they can hire more workers, that "the rich" he so maligns should be able to keep more of what they earn, and even that wealth built up over a lifetime shouldn't be confiscated wholesale at death. In policy if not in Presidential rhetoric, class war and income redistribution are taking a two-year holiday.
A two year holiday? Obama is preserving the same policies that are already in place! Do they really not realize that the Bush tax cuts have been in effect the last two years? I've seen some Republicans attempt to wave away this fact by suggesting the fact that they're being phased out causes "uncertainty" and therefore cancels out the massively positive incentive effect that supposedly has been in place since 2001. But they're still being phased out, so the policy is no less uncertain than before, the only change is the timing of the uncertainty.
I don't know if this is a pathetic attempt at spin or merely a total lack of understanding as to what Obama's policy goals actually are. I lean toward the latter. Look at this logic from Podhoretz:
How to explain the extent to which Barack Obama moved toward a Republican position on the Bush tax cuts he clearly detests, especially considering a major, major cave-in on estate taxes? It can’t be because he so wanted the extension of unemployment benefits that he gave in over and over again. Nor can it be because he was so desperate for the one-year lowering of the payroll tax.
Why would they be paying a ransom to terrorists? It can't be because they want to release the hostages!