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Posted at 4:48 PM ET, 12/10/2010

Will 2012 be different than 2010?

By Ezra Klein

Greg Sargent posts a chart from MoveOn.org showing that the tax deal looks bad if the good stuff sunsets over the next two years and the bad stuff is extended indefinitely:

moveonchart-thumb-440x299-30860.jpg

And that's true! But another way to say it is that if we begin passing bad policy rather than good policy in 2012, then after 2012, a lot of the policy we have in place will be bad.

There's a tendency in political commentary to take the outcome of a particular conflict with a distinct set of circumstances and use it to make broad, sweeping judgments on the character and tactical intelligence of the people involved. I'm certainly guilty of this. And it's not that there's nothing to the technique: When evaluating politicians, you don't really have a lot of options beyond looking at what they do.

But nor is it infallible. The story that the White House tells about the tax cuts is this: We have a shaky economy that can't afford a large tax increase. Congressional Democrats refused to vote the upper-income tax cuts out of existence before the election. They could've done it, the White House wanted them to do it, and Obama certainly would've signed the bill. But they didn't. And then they lost the election. Newly empowered Republicans refused to extend the tax cuts for income under $250,000 unless they also got the tax cuts for income over $250,000. This isn't a popular position in the country, but with the next election two years away, they're not worried about popularity. So given the choice between letting the cuts expire and potentially harm the recovery and negotiating a compromise which pumps hundreds of billions in extra stimulus into the economy over the next two years, the White House chose the latter.

In 2012, they say, things will be different. The economy will be stronger. The president will be on the ballot. The deficit will be a more legitimate concern. The Democrats won't be facing an election in which they're about to be decimated, or processing an election in which they were decimated.

If you're going to say that the cuts for the rich will definitely be extended, you have to ask which part of this the White House is wrong/lying about. If they're wrong about the recovery, and subsequently Obama gets kicked out of office and congressional Democrats get trounced, well, the question is moot. Alternatively, they could be lying about their assessment of the political situation, or their intention to fight on an issue that polls well for them, but it's not clear why they would do that.

This is a different question, incidentally, than whether this deal is a good deal now. That has more to do with your concerns about the deficit and inequality versus your assessment of the recovery and the need for more stimulus. But it doesn't seem obviously crazy for the White House to argue that the political and economic situation in 2010 is different than it is likely to be in 2012, and so they'll make different decisions. On the other hand, it's not crazy for someone to argue that the White House said they'd make a different decision in 2010 than they ultimately ended up making, and so their rationalizations lack credibility.

By Ezra Klein  | December 10, 2010; 4:48 PM ET
 
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Comments

The democrats seem to say that often: "Next time, things will be different."

The best prediction of their future behavior is looking at their past behavior; right now, it looks pretty clear that republicans will be able to scare enough of them into voting for a continuation that we'll be stuck with it for 10 years.

Posted by: goinupnup | December 10, 2010 4:54 PM | Report abuse

Man, the problem I'm having with liberals right now, though in my head I'm very much a liberal, is that nearly every critique they have is based on assumptions for which they have no evidence. As Ezra points out, there's nothing illogical with the White House's plan of pumping money into the economy now will help improve the economy (which most of the major economists that I've read seem to agree it will do) and put them in a better position in '12 than they are at this precise moment.

There's plenty that has already happened and which is happening right now that we can be frustrated with. Being frustrated with things that haven't happened yet will drive you crazy. And then that drives me crazy. So knock it off!

Posted by: MosBen | December 10, 2010 5:01 PM | Report abuse

The Republicans will find some excuse to claim tax cuts are necessary and will find some vital program to hold hostage. The Democrats will decide that raising taxes in an election year is a mistake. The economy will not be as strong as hoped.

The Republicans control the house. In two years they'll vote to extend tax cuts for all. Do you really think the senate will vote against this? That Obama will veto?

Posted by: fuse | December 10, 2010 5:03 PM | Report abuse

Give this tax deal honeymoon two months (if it passes like many expect).

Posted by: tuber | December 10, 2010 5:11 PM | Report abuse

"There's a tendency in political commentary to take the outcome of a particular conflict with a distinct set of circumstances and use it to make broad, sweeping judgments on the character and tactical intelligence of the people involved"

Actually, there's too little of that. Peter Orszag just took an enormous bribe from Citibank. Oh, I'm sorry, he's just going to take a job to be paid millions of dollars a year for his "advice" from a company that that was bailed out under his watch.

I think it's fair to say Ezra trusted Orszag as a wonk's wonk, a guy who gives unbiased, insightful analysis. Everything he ever said should now be in question, and so too should every one who might take such a job, which is everyone and their (Chelsea, cough, cough) daughter.

Posted by: Hopeful9 | December 10, 2010 5:14 PM | Report abuse

They don't have to be lying to be wrong. They may have every intention of fighting in the future. They may believe right now that they're going to do it. But their performance thus far (and not just Democrats in the current Administration or Congress, but politicians throughout history) strongly suggests their resolve will falter when it actually comes time to let the taxes go up.

Posted by: c2dh | December 10, 2010 5:14 PM | Report abuse

"there's nothing illogical with the White House's plan of pumping money into the economy now..."

Even Ezra admits that this bill isn't stimulative, it's anti-contractionary at best. Continuing the awful Bush tax cuts provides no stimulus; it maintains the status quo. Likewise the UI extension is necessary but hardly stimulative. The payroll tax holiday might provide a little stimulus, but that will be offset by eliminating the Making Work Pay tax credit, so that people making under $20K will see their taxes go up. (Didn't Obama promise that 95% of the public wouldn't see their taxes go up? Guess that other 5% was poor people, not rich people.)

A massive jobs program repairing our crumbling infrastructure is necessary to counter 10% unemployment and the lack of demand for goods. Yet once the Republicans get the rich their tax cuts, they'll turn right around and say that, thanks to the extra deficits it caused, there's no money for jobs programs.

Posted by: stonedone | December 10, 2010 5:31 PM | Report abuse

OK: absent some groundbreaking tax reform kumbaya moment between now and then, I am right now "going to say that the cuts for the rich will definitely be extended." And I absolutely agree with the WH prediction of the 2012 environment. But here's why that's irrelevant: Obama and the Dems failed to achieve DECOUPLIZATION. (New word. You're welcome.)

That means that any 2012 House bill seeking to extend the Bush tax cuts for the rich will almost certainly also seek to extend ALL the cuts, probably temporarily. If Boehner attempts just the high-end cuts, the Senate will obviously block it. But if he goes for all of it, for say another two years, that would have a good shot at passing in the Senate, because the only alternative would be the end of ALL the tax cuts.

So if that temporary extension of all the cuts passes Congress, will Obama veto it? It's the only tax bill he's going to see. He SHOULD do it: most of us on the left and most honest economists say we can't afford it. But I wouldn't take the over on those odds.

The only way I see Obama vetoing all the tax cuts is if Dems win back the House, and he can pass his own middle class cuts in 2013. Again, long odds.

Posted by: andrewlong | December 10, 2010 5:40 PM | Report abuse

If they're wrong about the recovery, which would be my answer, the question is not moot, Ezra. Obama could be getting a better deal right now that has stimulus with bigger "bang for buck" like infrastructure spending and aid to states. Instead it's mostly tax cuts. So 2012 rolls around, Obama is blamed and the tax cuts are permanently extended. If on the other hand we actually had a good deal right now with real stimulus, the economy might be better in 2012 and then I could see how the argument would be won to end the tax cuts then. I also agree with the other commenter who mentioned Republicans will control the House and thus will have more leverage of what kind of bill to send to the President.

Posted by: jfung79 | December 10, 2010 6:02 PM | Report abuse

Ezra, again, you just don't get it.

The payroll tax cut is LOVED by Republicans. Democrats have mixed opinions. The same is true for the equipment expensing and child credits. Republicans love all tax cuts, all the time, for anyone.

What Obama did was exchange something the left hates and the right loves for something the right merely likes a lot and the left has mixed feelings about. That's a really really dumb trade.

Ask yourself what portion of that things on your list are Republicans *against*. It is very small.

Posted by: brickcha | December 10, 2010 6:29 PM | Report abuse

Unemployment is almost 10 now. Hard environment to argue deficit fears against anything with even a slight stimulative effect. (Which is not to say that this wasn't the very argument used against a bigger stimulus package.) Anyway, not saying Democrats shouldn't fight to end the cuts, but I do find it pretty credible they'll fight harder if come 2012, there is less desperation and the deficit (which the GOP has lost all credibility on) is an election issue.

Ultimately expiring millionaire tax cut will always be more popular than cutting social security.

Posted by: birchbeer | December 10, 2010 9:52 PM | Report abuse

In 2012, not only will Obama be on the ticket but the electorate will be paying attention.

I'm pretty disgusted with how much of the left has responded to this. It's as if no one on the left can count. Where are you going to get the votes for a middle class tax cut and unemployment?

Here's the real problem: there aren't enough liberals in congress. Don't count Democrats, count liberals. The numbers aren't there. Given that circumstance, Obama managed to eke out something good for the people, at least in the short run.

To those who would suggest it would be better to give up the middle class tax cuts and unemployment extension, I would suggest you clearly are neither unemployed nor middle class. If you were, you would realize finding a solution is not academic.

Posted by: Dema | December 10, 2010 11:39 PM | Report abuse

As brickcha says above, the payroll tax "holiday" is LOVED by the Republicans. Not because they just love love love ALL tax cuts (I'm convinced they would vote in a heartbeat to end the tax cuts for those making UNDER $250,000). It's because Obama just handed them the bazooka to shoot Social Security with. Does anyone honestly believe the "holiday" will be allowed to expire next December? Really? Some Republican has already said that in the months leading up to December they are going to be pounding on it as an INCREASE in taxes. They will have forgotten what it felt like to pay the current rate, what will matter is the change. December is going to be part of the run-up to the election. Do you really think Senators and Congressmen are going to cast a vote for what everyone will feel is raising taxes? And decoupling the Social Security Trust Fund from its own tax base will give them cover to claim the system is broken and benefits have to be cut, and cut, and cut. Peter Orszag is already mounting an attack against Social Security disability. We need the stimulus in the other parts of this sellout, but putting the Social Security killer in there means it must be stopped at all costs. This is a horrible, horrible deal!

Posted by: Acharn | December 11, 2010 5:25 AM | Report abuse

"you have to ask which part of this the White House is wrong/lying about."

Not relevant. The real question should be, "How many voters will believe and trust Obama in 2012 when he says he's for ending tax cuts for the rich after the way he broke the identical previous campaign pledge?"

The despair I am hearing from average citizens who voted for Obama in 2008 is that he has created for himself something of a "Boy who cried wolf" syndrome. No one will believe his campaign pledges anymore, whatever the economy is like.

Posted by: jcbarrett44 | December 11, 2010 10:56 PM | Report abuse

Whaaaat?

Where's the majority of the deal- the decision not to increase rates for those under $250k?

What a deceptive piece of chartwork!!

Here's what's really stupid- why is the 2% payroll tax cut on the employee side? The only way that's good for job growth is if it allows employers to cut wages 2%...

Posted by: staticvars | December 12, 2010 11:41 PM | Report abuse

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