Democrats Livid At Obama For Tax Cuts Deal Talks

Democrats Angry Over Obama Tax Deal Talks


For almost a decade in Democratic politics, there was little disagreement: If you were running for office, you wanted do away with the Bush tax cuts for high-end earners.

Now, in the eyes of liberal and moderate Democrats alike, President Barack Obama has blinked — even before the new House Republican majority takes office.

Between Obama’s weekly address Saturday and comments Wednesday by his senior adviser David Axelrod, the White House has made clear that it intends to compromise — ceding to Republican demands to extend the high-end tax cuts temporarily in exchange for renewing the middle-class tax cuts due to expire at year’s end.

“The president should have stood firm on the expiration of the tax cuts on upper-income earners,” said Jim Kessler, vice president for policy at Third Way, a centrist think tank. “First, I don’t think it is good for our economy right now. There are better uses for the money in the short term. ... Second, we can’t afford it. It just means tax increases for future generations. And third, I think the president had the upper hand.”

On this point, Kessler found a rare point of agreement with Adam Green, co-founder of the Progressive Change Campaign Committee, which has been a frequent critic of Third Way's centrist politics.

“The winning blueprint of the White House these two years is to pick smart fights where the American people are overwhelmingly on their side and force Republicans to fight hard,” Green said. “The tax-cut fight would be a perfect place to start.”

“There is zero tolerance among progressives for Democrats caving on an issue where 98 percent of the American people would be on their side,” Green added.

On Capitol Hill, House Majority Leader Steny Hoyer (D-Md.) also is opposed to a compromise that extends the tax cuts for high-earners. “Mr. Hoyer wants to see the middle class tax cuts extended, but not at the expense of adding $700 billion to the deficit to give tax cuts to the wealthy," said his spokeswoman, Katie Grant, referring to the 10-year cost of the high-end tax cuts.

There may still be a debate, if Obama pushes for a permanent, rather just a temporary, extension of the middle-class tax cuts — a fight that congressional Democrats still hopes he wages. Obama does not support a permanent extension of the tax cuts for the wealthy.

But Obama hasn't made clear whether a permanent extension of the middle-class cuts will be his starting offer to Republicans. The White House did not respond to requests Thursday for clarification.

Republicans have said they won’t agree to “decoupling” the tax rates for the middle class from those for the wealthy, and have threatened to filibuster any bill that would so. An impasse means the tax cuts would expire Dec. 31, hitting paychecks with a tax hike the next day.



But that debate -- over temporary vs. permanent tax rates – is hardly what many Democrats had in mind, and seems less likely to have a visceral punch, especially when the White House has shown it’s willing to live with a temporary across-the-board extension for some time.

Even that deal, however, would run counter to one of Obama’s longest-standing and most often-repeated promises from the 2008 campaign – that he would end the tax cuts for wealthier individuals.

It’s hard to overstate just how much some Democrats, still reeling from the midterms, were relishing the prospect of the Bush tax cuts fight.

Polls show a majority of voters support raising taxes on the rich. Democrats could accuse Republicans of being hypocritical defenders of the elite. And the debate would be a well-timed rallying cry for Obama as he sought to reassert himself as champion of working Americans after the Democrats’ drubbing at the polls.

Now it doesn’t look like it’s going to play out that way.

Axelrod said the White House has to deal with “the world of what it takes to get this done” – a signal to Democrats that they don’t have the votes to kill the high-end tax cuts in the face of a new Republican House majority and resistance from Democratic moderates in the Senate.

“We have to deal with the world as we find it,” Axelrod told the Huffington Post.

The White House pushed back on characterizations that Axelrod’s comments represented a strategy shift. A spokeswoman said Axelrod was echoing what the president already stated in his weekly address.

And in an email to POLITICO, Axelrod added: "There is not one bit of news here. I didn't go beyond what we said before."

To progressives, and even some moderate Democrats in Congress, a temporary extension across-the-board would be a defeat. Renewing all of the tax cuts in tandem – without trying to separate the middle-class breaks – means that Congress would debate the issue again, likely in 2012, thrusting it into the presidential race when the stakes are higher.

“That would represent a complete cave,” said a senior Senate Democratic aide, who spoke on the condition of anonymity to speak candidly about party strategy. “It has been a cardinal truism among Democrats for 10 years that this policy was folly. That is a narrative we told for years and all of sudden we’re going to go back on that and punt on this? That would be dispiriting.”

Drew Westen, a psychologist and political consultant who has worked with Democrats on messaging, said a move to accept even a temporary extension on the high-end earners was "politically inexplicable and inexcusably bad public policy."

"It also eliminates any possibility that Democrats could draw a distinction between themselves as the party of the middle class and the GOP as the party that takes care of the rich and charges the bill to the children and grandchildren of working and middle class Americans," Westen wrote on POLITICO's Arena. "But the president and his senior advisers have proven incapable of understanding what Americans are feeling, unwilling to articulate any vision for moving forward, and uninterested in any principled position on virtually any issue for the last two years, so why start now."

By contrast, Republicans are united around one simple goal: No new taxes.

When Congress opens its lame duck session next week to debate taxes, no one may have more at stake than Obama, navigating his first major legislative showdown since Republicans won the House and picked up six seats in the Senate.

But just when Obama needs unity the most, Democrats are darting in every different direction, eager for the White House to offer definitive guidance, anxious over the party’s defeat in the elections and nervous about the persistently weak economy.

The president’s willingness to compromise is a tacit acknowledgment that the party can’t deal with the tax cuts on their own terms, and underscored how Democrats in Congress and the White House are far from united on the best path forward.

Some Democrats want to renew the tax cuts temporarily for all Americans, rich or not. Others prefer pushing a permanent break for the middle class, while phasing out those for the wealthy after two years – or sooner. Yet others say the income threshold should rise from $250,000 to $500,000. Or maybe even $1 million.

Even Treasury Secretary Timothy Geithner has argued that the tax cuts on the rich must expire.

''The world is likely to view any temporary extension of the income tax cuts for the top 2 percent as a prelude to a long-term or permanent extension, and that would hurt economic recovery as well by undermining confidence that we're prepared to make a commitment today to bring down our future deficits," Geithner said in August.

With the president overseas for the last week, Democrats want a clear sense of what Obama really wants them to fight for, according to senior Hill aides.

“People are waiting for the president to return,” a second senior Democratic aide said. “They’re looking for leadership. If they jump into that fight, they want to know he is there. They want to know what his roadmap is and how they can work to achieve their goal. This is direct involvement, publicly engaging folks through the media and in private meetings.”

There have been no negotiations in Congress this week. House and Senate Democratic leaders plan to take the temperature of their members in the early part of next week before settling on a strategy, aides said.

“I’ve been a little surprised by how this has played out,” Kessler said. “I thought this was an area where Democrats could have come out of the election with a pretty strong position.”


Sources: CNN, Politico