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Posted at 10:30 AM ET, 12/ 3/2010

Democrats have few options on the tax cuts -- but that's their fault

By Ezra Klein

David Leonhardt makes the case that given their initial bungling on the tax cuts, Democrats have little choice but to extend them now. In part, he's right. Legislative chicken is a game of credibility: If the other side doesn't believe that you're willing to do what you're threatening to do, you're stuck.

No sane observer would believe Democrats have any intention of coalescing around a strategy to merely extend the vast majority of the tax cuts while holding firm against the breaks for the richest Americans. At this point, various Democrats have proposed letting the cuts for the rich lapse, letting the cuts for income over $1,000,000 lapse, extending all the cuts temporarily, and creating a bipartisan working group to negotiate a compromise with Republicans. Democrats can't switch course to a veto-based strategy because the Republicans don't believe they'll stick to it. And that means the Republicans will let the cuts expire. That might be okay, if Democrats were prepared for the resulting stand-off and confident that their more reasonable, more popular, position would prevail. But they're not.

This is the case you're hearing from various Democratic officials, but it really boils down to "we're extremely bad at this and don't expect to get any better, and so legislative strategies that require high levels of political coordination, public communication and tactical confidence need to take into account our deficiencies in those areas." That may be true, but it really raises more questions than it answers.

By Ezra Klein  | December 3, 2010; 10:30 AM ET
 
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Comments

The Democrats CAN switch to a veto-based strategy. You know why? Because it only takes one person - the president, without consulting with anyone else - to adopt that strategy. He should do it!

Posted by: nickrod77 | December 3, 2010 10:47 AM | Report abuse

If they can't win this, with current majorities in both houses, the presidency and strong public support, what battles can they win?

Posted by: fuse | December 3, 2010 10:54 AM | Report abuse

I think Democrats are also considering the risk of letting the tax cuts expire. Remember Democrats are largely Keynesians who are also fretting about the expiration of ARRA.

If unemployment continues to rise, Democrats will be blamed.

Posted by: justin84 | December 3, 2010 10:58 AM | Report abuse

Only a poor general doesn't know when he's lost a battle. This one was lost long before the election. Since July it's been all Dien Bien Phu for us. This lame duck session is a over. Evacuate your troops and look for a better plan in your next action.

Posted by: 54465446 | December 3, 2010 11:07 AM | Report abuse

the tax cut originally passed by reconciliation, just do it again.

Posted by: newagent99 | December 3, 2010 11:13 AM | Report abuse

This argument -- which you seem to have suddenly discovered -- would be much more convincing coming from someone who hadn't spent the last two years defending Obama and Reid from the nasty Left.

Posted by: stonedone | December 3, 2010 11:14 AM | Report abuse

It has nothing to do with Democrats being "bad at this" as you keep trying to argue, Ezra. It has everything to do with the fact that a lot of conservative Democrats simply don't want the tax cuts for the rich to expire.

I'm surprised someone as intelligent as you hasn't realized this yet, and that instead you're rambling over and over about how "the Democrats" are just "losing the game". They're not. Conservative Democrats are winning the game.

Posted by: bigmandave | December 3, 2010 11:17 AM | Report abuse

The Bush tax cuts did nothing to boost the economy; why would we think letting them lapse as planned (for fiscal responsibility) would harm it? And who believes for a moment that the American voter will remember the difference in two years? But if we must extend them for those earning less than $200K, let's get something lasting in return ... and be willing to say "NO" if Republicans balk at the compromise. And by "lasting" we should mean something BIG in addition to unemployment extensions, say meaningful climate/energy legislation.

Posted by: jrwells2411 | December 3, 2010 11:37 AM | Report abuse

Does anyone remember that Democratic pollsters met with the Democratic congressional members in early September and told them that the tax cut issue was a sure fire winner, they had close to 70% of the country agreeing with the President's position and they should make the Republicans vote against tax cuts.

Even with that information the Democrats did nothing. So, I've reluctantly concluded that the Democrats fundamentally are afraid of governing. They could have put out the message that no DCCC or DSCC money would go to anyone that voted against the party

I'm 60 years old and I've given up hope for our country. I think now we semi slide into obsolence.

Posted by: JimHannan | December 3, 2010 11:39 AM | Report abuse

nickrod77 is right.

I'm usually the guy cautioning people not to overestimate the influence of the presidency, but this is different. A veto of the tax cuts isn't unthinkable in the way that a veto of, say, the health care bill would have been -- to the contrary, it would be the most fiscally responsible action. Obama can plausibly threaten to veto a full tax extension.

Conservative Dems might have all the leverage in Congress, but Obama has all the leverage over conservative Dems. He needs to put his foot down, and promise to veto any tax cut for wealthy Americans. No one has to believe that Ben Nelson will vote against extension; they just have to believe that Ben Nelson believes that Obama will veto the extension. For once, the president is holding all the cards that matter.

Posted by: WHSTCL | December 3, 2010 11:41 AM | Report abuse

"we're extremely bad at this and don't expect to get any better, and so legislative strategies that require high levels of political coordination, public communication and tactical confidence need to take into account our deficiencies in those areas."

This is Organizational Failure of Democrats. Where is the accountability? Who 'resigns' for that?

In Parliamentary System Party Head would resign. In case of India it can be nominal head like PM Dr. Singh or some senior Cabinet Minister who is typically a politician elected to Lok Sabha.

Here in American System, that is the problem. Tim Kean to resign? Would even a dog bark for this one? Rahm is already gone (with all the blessing of this President than any lashing). Anyone in Congress? (But then we have Public Communication strategy part which is owned by White House, so why Congress? And in any case they are towing the line of White House?)

Least what Obama can do is to apologize his Dem Supporters here. Well, that is never going to happen. The guy is used for 'use and throw Dem Base' because he got it all so cheap.

Where is the Political Accountability for this fiasco? Is the only accountability in American Party Political System to put a primary challenge for Obama? Russ Fiengold? But that is civil war....

Maturity of the system is determined by 'keeping people accountable' without destroying the entire system. Here in Dem Party, to hold sitting President accountable means wrecking whatever is left of Dem Party.

As Noonan sometime back said - George Bush to GOP as 'battered wife syndrome'; Dems are having their similar blues here at hands of our Messiah who refuses to fight... Man even Mahatma Gandhi was also never so politically naive while practicing 'non-violent' politics...

Posted by: umesh409 | December 3, 2010 11:45 AM | Report abuse

Expanding on JimHannan's comment... The truly discouraging, frustrating and aggravating thing about this is that the public is on the liberal side of ALL of the economic issues -- no SS cuts, yes raise taxes on high incomes, no health-care repeal. Etc. Because the liberals are on the side of the public -- that's what liberalism is, seeking the greatest good of the greatest number. And the public wants focus on jobs not the deficit. But Obama, et al., have fallen in with the Republican narrative, of cut spending, cut taxes. Totally contrary to the desires of the people. Obama is supposed to be leading but instead he is following -- the opposition!!!. Like a lamb to the slaughter. See Krugman today in NYT.

Posted by: jtmiller42 | December 3, 2010 12:06 PM | Report abuse

@jtmiller42"The truly discouraging, frustrating and aggravating thing about this is that the public is on the liberal side of ALL of the economic issues -- no SS cuts, yes raise taxes on high incomes, no health-care repeal. Etc. Because the liberals are on the side of the public -- that's what liberalism is, seeking the greatest good of the greatest number. And the public wants focus on jobs not the deficit. But Obama, et al., have fallen in with the Republican narrative, of cut spending, cut taxes. Totally contrary to the desires of the people."

Then how do you explain the mid-term election results?

The only way a veto comes into this is if both of the current houses of Congress pass a full extension and if that happens in the lame duck I don't see Obama vetoing it.

But it won't even come to that. If the full tax cuts aren't extended, the Republicans in the Senate have made it quite clear that they won't allow cloture on anything including DADT, DREAM, START, etc. The Democrats have zero leverage on this because they lost the election last month. The Republicans are perfectly happy to just pass a continuing resolution to fund the federal government for a couple of months and adjourn Congress.

Posted by: jnc4p | December 3, 2010 12:22 PM | Report abuse

"That might be okay, if Democrats were prepared for the resulting stand-off and confident that their more reasonable, more popular, position would prevail. But they're not."

The dems are weak, and I am fed up with them. Why aren't they trying to stand up for the people who elected them? I hate to be so negative, but, to be honest,I really am starting not to care if Obama gets re-elected in 2012.

Posted by: ania8 | December 3, 2010 12:38 PM | Report abuse

bigmandave has it right. The problem is that too many Dems do not themselves want the tax cuts for the wealthy to expire. If Dems were united, then reconciliation could be used and only 50 Dem senate votes would be needed, but I suspect that they are just not there. Additionally, of course, you could even pass two tax cut laws for under 250 and over 250 and the president could veto the latter thus giving cover to those whose concern was only political. But alas that will not happen because these Dems arent just looking for cover, they truly want to extend the cuts for the wealthy. The president's veto threats are useless if the congressional Dems are not willing to pass the legislation in the first place. Again and again, the President's problem is not the GOP, it is "conservative" Dems who are unwilling to do things that Dems alone could do if they wanted to. Its why I dont blame voters for removing the House from Dems(however much I may dislike it) because the Congressional Democratic party failed to do much of what could have been done on taxes and the economy, not because of any failure by Obama, but because of its own failure. This further restrains Obama because he cant politically attack the Dems, on whom he is dependent for anything. I think that if we get additional stimulus in the form of unemployment insurance and extension of the making work pay tax credit as part of extending the tax cuts for 3 years that is probably what is best for the economy right now. The problem now is that it would really be bad for the economy not to temporarily extend the cuts for the wealthy unless you replaced it with some equivalent spending which is not going to happen. And having all the tax cuts expire would really be an economic disaster now. But in 3 years, the economic situation will be different. Then, if Obama, says under 250 yes over 250 no and I will veto anything else, the veto threat will be more credible because Obama will be in his second and last term so will not have to face the voters again if under 250 taxes go up and the economy wont be hurt if they do(in fact, it might at that point even be helped) which means that conservaDems faced with a true choice of under 250 only or nothing will probably decide that they have to go along and then blame the president to their voters.

Posted by: gregspolitics | December 3, 2010 1:05 PM | Report abuse

The problem they ran into is everyone knows a line in the sand veto treat has no credibility. To do so would violate one of his most prominent campaign promises. It makes instant campaign ads casting him as a liar or in charge of the largest tax increase in US history that would be repeated over and over again.

Posted by: Jenga918 | December 3, 2010 1:19 PM | Report abuse

The GOP has been able to succeed politically in its obstruction because they knew it would make Obama completely dependent on an incompetent, disunited congressional democratic party. Even while passing healthcare, CongDems did so in a way that made the process look as bad as possible. While I do think there may have been some things Obama could have done to make things go better, there was only so much he could do in dealing with the CongDems. The problem again is not that Obama capitulates or negotiates poorly with the GOP, because the GOP was largely irrelevant the last two years, except to the degree that they made Obama totally dependent on CongDems. I do believe that Obama could have better commmunicated his policies to the public and explained where he was trying to go to the country and that might have given him marginally more ability to get CongDems to use reconciliation on the budget, but that was only a problem in the first place because CongDems could not see on their own the merits of using budget reconciliation for tax and stimulus measures. Had CongDems acted more aggressively on the economy, the economy would be better, the midterm losses would have been less (although they might have still lost the House, it would be by a smaller margin) and they could probably look forward to an easy Obama reelect and retaking control of the House in 2012.

Posted by: gregspolitics | December 3, 2010 1:24 PM | Report abuse

@jnc4p: I explain the mid-terms the way the polls explain them -- jobs and the economy. Not deficit, not spending. The polls are crystal clear on that. Noteably, the Republicans campaigned on the theme of "where are the jobs?" And won on that basis. Now that's all forgotten in the frenzy over taxes and spending. "Jobs" was just a slogan that has served its political purpose (to save their own phony-baloney jobs). Unfortunately Obama had and has no viable plan for jobs either, so no basis for a counter narrative.

Posted by: jtmiller42 | December 3, 2010 1:36 PM | Report abuse

"That might be okay, if Democrats were prepared for the resulting stand-off and confident that their more reasonable, more popular, position would prevail. But they're not."

I think a big part of what Obama may be thinking is this:

If none of the tax cut extensions pass because the Republicans play hardball and the Democrats don't cower in the corner (like usual), then this will, all other things equal, make the economy worse off in the short run (not always, but in this case, as aggregate demand is currently inadequate; also note there are far more efficient ways to stimulate the economy like high return government investment).

And even if it didn't, Republicans will loudly and incessantly say it did, so that if unemployment didn't come down a lot by the 2012 elections, Obama's worried that he will be blamed for it, because taxes went up substantially.

So, Obama's scared to let taxes go up broadly, because if unemployment doesn't come down a lot by 2012 he's scared the public will think it was because he let taxes go up, and the Republicans will incessantly hammer this with their giant propaganda machine.

So, I think Obama's plan may be to let the tax cuts extend till after the election, and then veto any further extension at the beginning of his second term (Republicans will never get enough votes to over-ride a veto).

Problems with this plan:

1) We may get a President Palin, although that means gigantic tax cuts for the rich no matter what happens now.

2) Instead, Obama could hold out with an agreement with Bernanke that if he does – tremendously lowering future deficits – in return Bernanke will do far more to stimulate the economy.

3) The deficit, and deficit projections, actually coming down, not just talked about, that can actually be strong amoung the public, and help a lot in 2012. And letting the tax cuts expire means big cuts in the deficits, and maybe even projected surplusses in the not too far future.

4) Other problems – like once again he wimps out and disappoints the base.

Posted by: RichardHSerlin | December 3, 2010 2:02 PM | Report abuse

Also, Democrats have the votes to filibuster, and thus stop, any bill that extends the tax cuts for the rich – only 40 are needed and there are 53 in their caucus.

No one ever mentions this. Why? Is it just assumed that they would never do this against Obama's stated wishes?

Posted by: RichardHSerlin | December 3, 2010 2:04 PM | Report abuse

You know if the Republicans were in an analogous situation there's no question they'd filibuster and win for sure. Again, the benefits of the filibuster are very asymmetric, far greater for the more ruthless and disciplined party, a big reason Democrats should support abolishing it.

Posted by: RichardHSerlin | December 3, 2010 2:07 PM | Report abuse

Richard:

You are talking about a level of generalship that is, all things considered, far beyond the President's expertise

Posted by: 54465446 | December 3, 2010 2:55 PM | Report abuse

It's called the "kicking the can down the road" strategy. It emerges by default in the absence of leadership.

Back to the Carter '70's sense of malaise.

Posted by: tuber | December 3, 2010 3:31 PM | Report abuse

I don't really like allowing the current tax rates to continue for earnings above $100,000. The optimal approach in fact would be to let all the rates expire and put the money into unemployment insurance and other spending.

As far as what is credible, the President could credibly say that he will veto anything that extends the rates currently applied to income in excess of $250,000. He can do that all by himself. He won't of course because he's incompetent at bargaining. Furthermore, he's a coward when it comes to selecting the good policy over the bad when Senate support is less than 60 votes. Additionally, he can't pull his head out of his ass long enough to see how his decisions today likely undermine tommorrow's goals.

Posted by: bcbulger | December 3, 2010 4:02 PM | Report abuse

A popular issue like tax cuts for the rich should be an opportunity to strengthen the things you are bad at because with the Republican-controlled House you will be called upon to use them constantly over the next two years.

(Shabbat Shalom)
(Happy Chanukah)

Posted by: 4jkb4ia | December 3, 2010 4:50 PM | Report abuse

Update:

From the Post:

Republicans are demanding that Democrats extend Bush-era tax cuts at all income levels at least temporarily, not just those that primarily benefit the middle class. They are also pressing Democrats to approve a measure to keep the government funded through September, a move aimed at avoiding a fight with the White House over spending that could provoke a government shutdown.

In return, Obama is seeking Republican support for as much as $150 billion in new spending on the economy, including an additional 13 months of emergency jobless benefits and another year of his signature "Making Work Pay" tax cut for working families.

at: http://www.washingtonpost.com/wp-dyn/content/article/2010/12/02/AR2010120206050.html?hpid=topnews

So, much as it pains me to say it, it's possible Obama is following the best general strategy (let's not underestimate Obama; he did get us a historic universal health insurance bill). If his negotiations result in an additional $150 billion in stimulus spending plus the tax cuts then the economy could be a lot better in 2012 and the probability of a President Palin a lot less. Because if Palin wins, these tax cuts for the rich are passing for sure, and with a few trillion added on top. If Obama wins he can veto the extension in 2013 putting an end to them.

So, what's crucial for the sake of the country in so many ways is that we not go well down the path to being a third world country by electing a President Palin – or any of the Republicans – in 2012. And what dwarfs anything else for that is that the economy is as good as possible in 2012.

Now, Bernanke has asked for fiscal stimulus. I'd get him on the phone and say if I really push and get you this fiscal stimulus, will you #%@!*#% please get me some serious monetary stimulus, or do you want to see a President Palin in 2012 blowing out the debt with trillions in tax cuts for the rich?

Posted by: RichardHSerlin | December 3, 2010 6:07 PM | Report abuse

Richard:

Two things:

1) Doesn't the request for 150 billion in stimulus spending completely undercut the main argument AGAINST extending the tax cuts in the first place?

2)Stop worrying about a president Palin, as she is probably not running and the Republican establishment would never let her win even the nomination.

If you're right and the 150 billion did pass, brother buy all the commodities you can get you hands on because the last one to $4.00-$5.00 gas is it!

Posted by: 54465446 | December 3, 2010 8:36 PM | Report abuse

You know what You guys should stop complaining because, one the health care we have now isnt as good as it was supposed to be. also the law has just been signed so give it some time. so if u want to say u have the right to choose tell that to ur congress men or state official. If you do not have insurance and need one You can find full medical coverage at the lowest price check http://ow.ly/3akSX .If you have health insurance and do not care about cost just be happy it and trust me you are not going to loose anything!

Posted by: bryanmobley | December 4, 2010 3:54 AM | Report abuse

Republicans never like paying their own bills. Borrow from China is their motto!
They'd sell their own grandkids to China for a free ride on some federally subsidised ashphalt.

What a bunch of transparent jokers.

Posted by: hhkeller | December 5, 2010 7:14 PM | Report abuse

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