Obama announces tax hike compromise

Posted on December 6, 2010


After much indignant foot-stomping by Harry Reid, Nancy Pelosi, and many other Congressional Democrats, President Obama went in the opposite direction and announced a compromise on the expiring Bush tax cuts by extending all rates for two years in exchange for a 13-month extension on unemployment benefits. Other concessions to the GOP include temporarily lowering the payroll tax and reducing the increase of the estate tax.

Congress still has to pass the cuts, and while Republican support is assured, the liberal wing of the Democratic party is undoubtedly livid at what they see as a weak-kneed cave-in to unreasonable GOP demands. In truth, the President is acknowledging the economic reality that raising any sort of taxes during an economic slowdown would be disastrous for the health of the nation.

Conservatives may not like extending the unemployment benefits on fiscal grounds without a way to pay for them, and it’s hard to dispute that logic. But with all due respect to Michelle Malkin and others like her, I think their pessimism toward the compromise is unfounded when you look at the big picture.

After three years (including the 2008 campaign) of selling the shortcomings and despicable nature of Bush’s so-called “tax cuts for the rich,” President Obama has now had to do a complete 180 and is now on record in calling for their extension, even going so far as to say this compromise will cause greater momentum in the economic recovery. So not raising taxes = better for the economy? Welcome to conservatism, President Obama.

It will be a bitter pill for the left to swallow as class warfare has been their bread and butter for a long time. No doubt this compromise is going to exacerbate the internecine battle between liberals and moderates within the Democratic party, especially when Sen. Claire McCaskill is calling for “pitchforks” if Obama bends on the tax cuts. Guess it’s time to get out the farm implements, Senator.

Conservatives shouldn’t be too down on this deal. Of course it would have been better if more had been done on the tax front, or if the unemployment extension wasn’t included, or whatever would make this into an ideologically “pure” compromise. The political reality is that until January 2011, Democrats still have the White House and sizable majorities in both Houses. Even with a historic midterm victory, in terms of political power, the GOP only has one house to work from next year. Strictly speaking, Democrats could have simply done what they wanted on taxes and unemployment with Republicans left to stand outside again – something that couldn’t happen next year, but would have been another legislative loss for the GOP. 

Instead, the GOP can use their increased strength to leverage greater influence, which is exactly what they’ve done here. It’s not perfect, but that’s why it’s called a compromise, and in my opinion the GOP has worked out a pretty good one here.

Image credit: Pablo Martinez Monsivais, AP.

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