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Preemptive Capitulation

Obama’s idiotic tax-cut strategy.

WASHINGTON—As I was passing through security at Boston's Logan Airport on Tuesday night, a TSA worker discovered a penny in one of the bins that had just gone through the screener.

He picked up the coin, turned to a colleague and said with a grim smile: "This is your Obama bonus."

Which made me wonder: Is President Obama's strategy of offering pre-emptive concessions destined to make enemies of his potential friends in the electorate without winning over any of his adversaries?

The idea of freezing the pay of federal workers could be a sensible part of a larger, long-term deal that would combine spending reductions with tax increases. It's an obvious element in any negotiation. But Obama simply threw in the federal workers in exchange for—well, as best I can tell, nothing. And in the short term, shouldn't jobs and rising incomes be a higher priority than austerity?

Worse, every signal out of the White House is that it is prepared to cave in to Republican demands for a temporary extension of all of the Bush tax cuts, including those for millionaires who are in rather less need of additional income than security workers at Logan or nurses at government hospitals.

The dance toward a capitulation on the tax cuts was perfectly timed for the release of the fiscal plan put forward by the chairs of the deficit commission, Erskine Bowles and Alan Simpson. Bowles and Simpson are having trouble rounding up votes for their plan, and in truth, how can anyone take a deficit-reduction proposal seriously when the main order of business in Congress is to make sure we widen the deficit by keeping all of the Bush tax cuts alive? 

What we are witnessing here is the political power that comes from the Republican Party's single-minded focus on high-end tax cuts and the strategic incoherence of a Democratic Party that is confused and divided—and not getting much help from its president.

Obama seems to have decided that showing how conciliatory he can be is more important than making clear where he stands. The administration's strategy is rooted in a fear of what the Republicans are willing to do, which only strengthens the GOP's bargaining position.

The president figures the Republicans would be quite happy to let taxes on the middle class rise on Jan. 1 if that's the price of continuing to fight for the tax cuts for the rich. In a game of chicken, Republicans are willing to gamble—even if the economy would take a hit.

Lacking confidence that Senate Democrats would hold together and force the Republicans to vote to kill the middle-class tax cuts, Obama is trying to get what he can in exchange for the extension.

He's right to fight for a restoration of unemployment compensation for about 2 million Americans whose benefits have now expired, and for other stimulative measures. And, yes, the Senate should ratify the New START treaty with Russia before the end of the year—though it doesn't make us look very serious as a country when it seems the president has to offer a tax cut payoff to get a key foreign policy initiative through.

As for Bowles and Simpson, they put some good ideas on the table (taxing capital gains at the same rate as other income, for example, and taking a run at cutting military expenditures) and some not-so-good ones (raising the Social Security retirement age, capping government expenditures at 21 percent of GDP at a time when the population is aging and government will inevitably have to pick up more of our health care costs).

But the commission now seems a sideshow in a Washington circus where Republicans set the agenda in the main ring. Obama's party is in this end-of-session fix because neither he nor congressional Democrats could agree on what to do about the Bush tax cuts when they held the initiative—and now Democrats have no idea where Obama will go next. 

The best gloss on all this is that the president is engaged in a holding action aimed at getting out of this lame-duck period with something to show for his efforts and a chance to regroup. But he will soon have to decide whether he wants to be a negotiator or a leader. You have to hope at least that he doesn't want to spend the rest of his term issuing apologies to Mitch McConnell and John Boehner.  

E.J. Dionne, Jr. is the author of the recently published Souled Out: Reclaiming Faith and Politics After the Religious Right. He is a Washington Post columnist, a senior fellow at the Brookings Institution, and a professor at Georgetown University.

(c) 2010, Washington Post Writers Group

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