Conservatives are bemoaning an agreement that made permanent nearly all the Bush tax cuts, kept the vast majority of estates permanently sheltered from the death tax and maintained a large differential for capital gains even for the wealthy. One conserative wag remarked in disgust to me Sunday evening: “Where did these people get the idea you get everything you want in politics?” Indeed, the right-wing complainers might want to consider how badly the left regards this deal.
Yuval Levin hits the nail on the head:
For liberals, this was not a moment of danger to be minimized but by far their best opportunity in a generation for increasing tax rates (which is the only fiscal reform they seem to want) and for robbing Republicans of future leverage for spending and entitlement reforms. And it is likely the best one they will encounter for another generation. Many on the left have seemed convinced lately that the politics of taxes had changed dramatically in their favor, and that the opportunity presented by the cliff could result in the kind of surge in revenue that could put off the coming fiscal crunch for years (until, they seem to think, it will just magically go away at some point) and so could save our entitlement programs from the need for reform. . . .
But that hasn’t happened here. This deal is projected to yield $620 billion in revenue over a decade—increasing projected federal revenue by about 1.7% over that time. And that’s about it. The Democrats have made the Bush tax rates permanent for 98 percent of the public, which Republicans couldn’t even do when they controlled both houses of Congress and the presidency. . . .
If even under the conditions of the past month—with a very liberal president just re-elected, Republicans in disarray, public opinion on taxes seemingly friendlier to them than it has been in decades, and higher tax rates automatically taking effect—the Democrats can’t get more than a tiny pittance of revenue and no chips to use later, then their basic approach to fiscal issues just won’t work. The idea that they will raise rates again in the Obama years when they don’t have all these factors working in their favor is a fantasy. And the notion that the politics of taxes has decisively changed in their favor has been disproven by their own behavior: Many Democratic senators were as relieved as Republicans to see the threshold for higher rates rise well above $250,000, and would not have stood for it dropping below that level to where their upper middle class voters are. Having discovered an effective political wedge in the tax debate, the Democrats have now basically used it up and gotten awfully little in return.
The answer to why the Democrats did so badly is three-fold. For starters, the president has never been able to rally the public on a major policy initiative and he failed to do so again here, merely annoying his opponents, who dug in their heels. Second, Sen. Mitch McConnell (R-Ky.) knew exactly what he was doing — seeing that Democrats were so focused on one big item (raising the rate for the very wealthy) he recognized that he could scoop up a lot of goodies (estate tax relief, a two-month buydown on the sequestration). And finally, once House Speaker John Boehner (R-Ohio) let on that there would be flexibility on taxes, he found the Democrats’ weakness: a total lack of credibility on spending cuts. Well, if they are not really going to cut much, then the tax hikes have to be moderated, and indeed they were.
The professional class of aggrieved conservatives showed that their obstinacy clears the way for a coalition of practical Democratic and Republican lawmakers to horse trade. That is the best development in national politics in a long time. Let’s see if it is sustainable.