For those who haven’t been following this week’s political drama: the 2001/2003 Bush tax cuts are set to expire at the end of this month (i.e. everyone’s taxes will increase because existing tax cuts will expire). The President and Congressional Democrats have proposed making the Bush tax cuts on the poor and middle class permanent, but letting the tax cuts on the richest 2% expire (i.e. only taxes on the rich go up – and by about 3%). Congressional Republicans, however, have said that if the richest 2% don’t get their tax cuts extended, no one gets their tax cuts extended. Thus, President Obama worked out a deal this week with Congressional Republicans where the tax cuts for everyone – including the richest 2% – would be extended for two years in exchange for a number of extensions on other tax cuts and government benefits that would primarily benefit the middle class and poor: extending unemployment insurance, 2% Social Security payroll cut for one year, etc.
Congressional Republicans see it as a reasonable compromise because they get what they want: the extension of tax cuts for the richest 2%. Congressional Democrats are outraged because they feel that the Republicans have held middle-class tax cut extensions “hostage” in exchange for the extensions on tax cuts for the wealthy. And they’re outraged that the President has given in to Republican hostage-taking demands.
President Obama held a press conference yesterday in which he defended his compromise and called out his critics for their unreasonable expectations about what can be done. The video and transcript of the conference is available here:
“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 will admit, I was fairly persuaded by Obama’s arguments. While I may not agree with every aspects of the deal that he brokered, I cannot fault his motives. It reminds me of the scene in Air Force One when the President Marshall (Harrison Ford) tells the hostage-taker that he’ll never agree to his demands to persuade the Russian government to free the genocidal Kazakhstani dictator (General Radek). The terrorist (Korshunov) points a gun at the President’s daughter… and the President immediately caves to his demands as his lips quiver: “I’ll do it.” No one could fault the fictional president for giving in to the demands of the hostage-takers, and for the same reason I can’t really fault President Obama for giving in on the tax cuts for the wealthiest 2%.
Is this is a “good deal”? Definitely not. At least, I don’t think so. It’s going to add another $900 billion to our national deficit (that’s more than the TARP stimulus package of 2008-2009!), none of which is offset by any spending cuts. This just goes to show how no one, Democrats or Republicans, are really serious about cutting the deficit. If they were, Republicans would reconsider their staunch opposition to a relatively mild 3% tax hike on the richest 2% of Americans that will cost half a trillion dollars over the next two years, and Democrats would reconsider their staunch support of excessive government spending for the sake of “economic stimulus”. Where is the outrage from the Tea Party…?
Then again, if this compromise is able to stimulate the economy to any degree over the next two years, that will only be good for the President, as personal income growth is a fairly good predictor of incumbent party election performance. If the economy starts doing better in the next two years, Obama will have a cake-walk to reelection in 2012.
At any rate, my favorite part of the press conference was the final five minutes. I strongly encourage anyone to watch, as it demonstrated to me a rare example of political maturity. The transcript is below. President Obama:
Now, if that’s the standard by which we are measuring success or core principles, then let’s face it, we will never get anything done. People will have the satisfaction of having a purist position and no victories for the American people. And we will be able to feel good about ourselves and sanctimonious about how pure our intentions are and how tough we are, and in the meantime, the American people are still seeing themselves not able to get health insurance because of preexisting conditions or not being able to pay their bills because their unemployment insurance ran out.
That can’t be the measure of how we think about our public service. That can’t be the measure of what it means to be a Democrat. This is a big, diverse country. Not everybody agrees with us. I know that shocks people. The New York Times editorial page does not permeate across all of America. Neither does The Wall Street Journal editorial page. Most Americans, they’re just trying to figure out how to go about their lives and how can we make sure that our elected officials are looking out for us. And that means because it’s a big, diverse country and people have a lot of complicated positions, it means that in order to get stuff done, we’re going to compromise. This is why FDR, when he started Social Security, it only affected widows and orphans. You did not qualify. And yet now it is something that really helps a lot of people. When Medicare was started, it was a small program. It grew.
Under the criteria that you just set out, each of those were betrayals of some abstract ideal. This country was founded on compromise. I couldn’t go through the front door at this country’s founding. And if we were really thinking about ideal positions, we wouldn’t have a union.
So my job is to make sure that we have a North Star out there. What is helping the American people live out their lives? What is giving them more opportunity? What is growing the economy? What is making us more competitive? And at any given juncture, there are going to be times where my preferred option, what I am absolutely positive is right, I can’t get done.
And so then my question is, does it make sense for me to tack a little bit this way or tack a little bit that way, because I’m keeping my eye on the long term and the long fight — not my day-to-day news cycle, but where am I going over the long term?
And I don’t think there’s a single Democrat out there, who if they looked at where we started when I came into office and look at where we are now, would say that somehow we have not moved in the direction that I promised.
Take a tally. Look at what I promised during the campaign. There’s not a single thing that I’ve said that I would do that I have not either done or tried to do. And if I haven’t gotten it done yet, I’m still trying to do it.
And so the — to my Democratic friends, what I’d suggest is, let’s make sure that we understand this is a long game. This is not a short game. And to my Republican friends, I would suggest — I think this is a good agreement, because I know that they’re swallowing some things that they don’t like as well, and I’m looking forward to seeing them on the field of competition over the next two years.