Democrats have no choice but to accept an irresponsible tax deal
Approve the lousy deal.
It pains me to write those words, because the agreement President Obama negotiated with Republicans on tax cuts is really quite awful. I know that some progressives have come to see the package as a cleverly disguised "second stimulus," but they're just rationalizing. The fact is that nobody would start from scratch and design an economic boost offering so little bang for so many bucks.
For a two-year cost of nearly $1 trillion, we get a bit more than $300 billion worth of measures that are truly stimulative: a cut in the payroll tax, a provision allowing businesses to write off capital investment and an extension of unemployment benefits. We'll spend the rest - I should say borrow the rest, then spend it - to continue existing tax breaks that obviously are not roaring engines of job growth.
The deal invests basically nothing in the nation's future. We need to be channeling money into education and clean energy, where it can help the United States remain competitive against China and other economic rivals - not into the well-stuffed bank accounts of the rich.
Yet congressional Democrats have no real choice but to hold their noses, approve the thing and live to fight another day. The opportunity to shape a better deal - one without those unnecessary, unfair and supremely galling tax cuts for households making more than $250,000 a year - is long gone.
As a practical matter, I don't see how Democrats could possibly think they have leverage to exact concessions before the end of the year. Republicans can simply wait them out, knowing that Democrats will be in a much weaker position when the new Congress convenes in January.
The Democrats do have public opinion on their side - or had it, at least. Polls showing that a substantial majority of Americans opposed extending the Bush tax cuts for the rich were far more meaningful before the deal was announced. Now the calculus has shifted, and not in a good way.
Looking at the agreement, you'd never imagine the federal government was running a deficit. Before the deal was sealed, Democrats argued that it was unconscionable to continue a huge tax break for the rich when the nation is so deeply in debt. Republicans argued that it was irresponsible to keep extending unemployment benefits without paying for them by cutting something else. The solution? Do both. I guess this makes the package unconscionable and irresponsible, but never mind. Oh, and let's extend the middle-class tax cuts, too.
It's as if a shiny, expensive, prettily wrapped present has been placed under the Christmas tree. The political question is whether anyone will dare to snatch it away.
Six months ago, Democrats could have refused to compromise - and forced the GOP to play its hand on the "millionaires' tax cut" before the election. Obama and congressional leaders could have gotten a better deal and maybe - who knows? - even saved a few seats.
But as much as I sympathize with the progressives who are ready to man the barricades, let's be real. Killing the deal now would mean a middle-class tax increase, no extended unemployment benefits and no payroll tax holiday. Voters would surely feel they had been robbed - and Democrats, perhaps unfairly, would get the blame.
As I said, this is painful. Democrats in Congress are understandably irate at being lectured so sternly by a president for whom ending the tax cuts for the wealthy was so important that it was non-negotiable - until he negotiated it away.
It's a sad story, for the country and especially for the Democratic Party. I believe the White House continues to underestimate the anger and disillusionment among the party's loyal base - and the need for some victories, or at least some heroic battles, to lift the spirits of the faithful. Obama needs to train his newfound passion and outrage on his foes in the GOP, not on the friends and supporters that his press secretary once derisively called the "professional left."
Pyrrhic victories don't make anything better, however. And that's what killing the tax cut deal would clearly be.