The Tax Cut Deal: Beating the Republicans at Their Own Game

At first blush, President Obama's tax cut deal -- trading an extension of tax cuts for the wealthy in return for an extension of unemployment benefits for millions of Americans -- is a setback for Obama and the Democrats. But a closer look at the reality of the deal makes this a clear win for Obama, and probably for Democrats in the long run. Even better, it appears that Obama has finally hit his stride and is now beating the Republicans at their own game.

Granted, it is outrageous to be subsidizing tax breaks for millionaires in the midst of the Great Recession -- not to mention adding to the deficit. But let's look at the facts for a moment -- both of the policy and the politics. First, on the policy front, the tax cut deal amounts to a $900 billion dollar stimulus package at a time when most economists -- notably progressive economists like Paul Krugman -- are calling for continued stimulus to promote economic growth. Can you imagine the reaction from the Republicans and the Tea Partiers -- not to mention Blue Dog Democrats -- if Obama had proposed a $900 billion stimulus package? But that is exactly what the Republicans have agreed to.

This was clearly a case where the White House outfoxed the Republicans by leveraging their own inconsistent ideology against them. At the very same time that the Republicans are screaming about government spending and about lowering the deficit, they were stonewalling any attempt to take away big tax handouts to the wealthiest Americans. Okay, said Obama, have it your way. We'll let you have your tax cut extension in return for extending assistance to the millions of unemployed Americans who desperately need our help. Fine, said the Republicans, perhaps gloating over their tax cut victory, but not realizing that theirs was nothing more than a Pyrrhic victory. The net result -- another $900 billion stimulus package. Try explaining that to the Tea Partiers.

When you look at the politics of the deal, Obama's victory over the Republicans seems even more impressive. Another $900 billion in stimulus funds will certainly help to hasten the recovery, which is already on a slow uptick. By 2012, the economy should be on the upswing, if not in full recovery, which will only help Obama's re-election prospects. Clearly, the single most important factor in the re-election of any presidential incumbent is the state of the economy, and this week's tax cut deal makes Obama's re-election chances look considerably brighter. (For the sake of the country, we must address the deficit for the long term. But I would much rather have rational, progressive approach to deficit cutting than the knee-jerk, inconsistent Tea Party sloganeering).

http://www.huffingtonpost.com/hoyt-hilsman/the-tax-cut-deal-beating-_b_794452.html

but I guess even they can be right sometimes (with the exception of Arianna, of course).

Thanks for sharing!

He completely ignore the fact that the bill enables the destruction of Social Security.

The bill is really bad public policy.

By 2012, the economy should be on the upswing, if not in full recovery, which will only help Obama's re-election prospects.

If that's the case, then Repubs will exclaim how the "upswing" was the result of their tax cuts for the wealthy. Then they'll want to make them permanent.

Why on earth Obama wants to take ownership of supply side failures is beyond any sane person

Where does the '$900 billion' come from? Sounds like voodoo economics to me.